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<CONFORMED-NAME>WILLIAMS ENERGY PARTNERS L P
<CIK>0001126975
<ASSIGNED-SIC>4610
<IRS-NUMBER>731599053
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
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<FILM-NUMBER>02824375
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<STREET1>ONE WILLIAMS CENTER
<CITY>TULSA
<STATE>OK
<ZIP>74172
<PHONE>9185732000
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<STREET1>ONE WILLIAMS CENTER
<CITY>TULSA
<STATE>OK
<ZIP>74171
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<FILENAME>d01268e10vq.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>


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

                                    FORM 10-Q


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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       OR


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

              FOR THE TRANSITION PERIOD FROM _________ TO _________

                          COMMISSION FILE NO.: 1-16335


                          WILLIAMS ENERGY PARTNERS L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              DELAWARE                                 73-1599053
   (STATE OR OTHER JURISDICTION OF          (IRS EMPLOYER IDENTIFICATION NO.)
   INCORPORATION OR ORGANIZATION)


            ONE WILLIAMS CENTER, P.O. BOX 3448, TULSA, OKLAHOMA 74172
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

                                 (918) 573-2000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


         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
                                              ---    ---

    As of November 11, 2002, there were 13,679,694 common units outstanding.


<PAGE>


                                TABLE OF CONTENTS

                                     PART I

                              FINANCIAL INFORMATION

<Table>
<Caption>
                                                                           Page
                                                                           ----
<S>     <C>                                                                <C>

ITEM 1. FINANCIAL STATEMENTS

        WILLIAMS ENERGY PARTNERS L.P.

        Consolidated Statements of Income for the three and nine
        months ended September 30, 2002 and 2001 .........................   2

        Consolidated Balance Sheets as of September 30, 2002 and
        December 31, 2001 ................................................   3

        Consolidated Statements of Cash Flows for the nine months
        ended September 30, 2002 and 2001 ................................   4

        Notes to Consolidated Financial Statements .......................   5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS ........................................  15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .......  26

ITEM 4. CONTROLS AND PROCEDURES ..........................................  26

        FORWARD-LOOKING STATEMENTS .......................................  27


                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS ................................................  28

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ........................  28

ITEM 3. DEFAULTS UPON SENIOR SECURITIES ..................................  28

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS ............  28

ITEM 5. OTHER INFORMATION ................................................  28

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .................................  28

        CERTIFICATIONS ...................................................  31
</Table>

                                       1

<PAGE>
                                     PART I
                             FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                         WILLIAMS ENERGY PARTNERS L.P.
                       CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
                                  (UNAUDITED)

<Table>
<Caption>
                                                                 THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                    SEPTEMBER 30,                  SEPTEMBER 30,
                                                            ----------------------------    ----------------------------
                                                                2002            2001            2002            2001
                                                            ------------    ------------    ------------    ------------
<S>                                                         <C>             <C>             <C>             <C>

Transportation and terminalling revenues:
     Third party ........................................   $     84,878    $     81,846    $    240,940    $    234,571
     Affiliate ..........................................          8,560           7,699          24,966          19,682
Product sales revenues:
     Third party ........................................         13,818          10,264          29,941          35,389
     Affiliate ..........................................          6,120          18,178          24,091          44,317
Affiliate construction and management fee
  revenues ..............................................             --             213             210             807
                                                            ------------    ------------    ------------    ------------
          Total revenues ................................        113,376         118,200         320,148         334,766
Costs and expenses:
     Operating ..........................................         42,509          42,635         112,867         116,691
     Product purchases ..................................         18,039          25,428          48,463          71,919
     Depreciation and amortization ......................          8,753           8,813          26,345          26,497
     General and administrative .........................          9,776          12,995          32,731          34,958
                                                            ------------    ------------    ------------    ------------
          Total costs and expenses ......................         79,077          89,871         220,406         250,065
                                                            ------------    ------------    ------------    ------------
Operating profit ........................................         34,299          28,329          99,742          84,701
Interest expense:
     Affiliate interest expense .........................             --           1,593             407           7,135
     Other interest expense .............................          6,467           1,642          14,190           3,763
Interest income .........................................           (192)           (536)           (937)         (1,872)
Debt placement fee amortization .........................          2,191              80           7,221             160
Other income ............................................             --            (205)         (1,048)         (1,375)
                                                            ------------    ------------    ------------    ------------
Income before income taxes ..............................         25,833          25,755          79,909          76,890
Provision for income taxes ..............................             --           7,605           8,322          22,800
                                                            ------------    ------------    ------------    ------------
Net income ..............................................   $     25,833    $     18,150    $     71,587    $     54,090
                                                            ============    ============    ============    ============

Allocation of net income:
   Portion applicable to the pre-initial
      public offering period ............................   $         --    $         --    $         --    $        304
   Portion applicable to Williams Pipe Line
      earnings prior to its acquisition on
      April 11, 2002 ....................................             --          12,487          13,445          37,129
   Portion applicable to partners' interest .............         25,833           5,663          58,142          16,657
                                                            ------------    ------------    ------------    ------------
      Net income ........................................   $     25,833    $     18,150    $     71,587    $     54,090
                                                            ============    ============    ============    ============

Limited partners' interest in net income ................   $     24,428    $      5,550    $     55,414    $     16,324
General partner's interest in net income ................          1,405             113           2,728             333
                                                            ------------    ------------    ------------    ------------
Portion of net income applicable to partners' interest ..   $     25,833    $      5,663    $     58,142    $     16,657
                                                            ============    ============    ============    ============

Basic net income per limited partner unit ...............   $       0.90    $       0.49    $       2.75    $       1.44
                                                            ============    ============    ============    ============

Weighted average number of limited partner units
  outstanding used for basic net income per unit
  calculation ...........................................         27,190          11,359          20,131          11,359
                                                            ============    ============    ============    ============

Diluted net income per limited partner unit .............   $       0.90    $       0.49    $       2.75    $       1.44
                                                            ============    ============    ============    ============

Weighted average number of limited partner units
   outstanding used for diluted net income per unit
   calculation ..........................................         27,247          11,359          20,185          11,359
                                                            ============    ============    ============    ============
</Table>

                             See accompanying notes.


                                       2
<PAGE>

                          WILLIAMS ENERGY PARTNERS L.P.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 SEPTEMBER 30,   DECEMBER 31,
                                                                     2002            2001
                                                                 ------------    ------------
                                                                  (UNAUDITED)
<S>                                                              <C>             <C>
                             ASSETS
Current assets:
    Cash and cash equivalents ................................   $     42,564    $     13,837
    Accounts receivable (less allowance for doubtful
        accounts of $399 and $510 at September 30, 2002
        and December 31, 2001, respectively) .................         19,692          16,828
    Other accounts receivable ................................          7,583          11,598
    Affiliate accounts receivable ............................         10,872           8,228
    Inventory ................................................          4,401          21,057
    Deferred income taxes - affiliate ........................             --           1,690
    Other current assets .....................................         13,257           1,828
                                                                 ------------    ------------
        Total current assets .................................         98,369          75,066
Property, plant and equipment, at cost .......................      1,325,106       1,338,393
    Less: accumulated depreciation ...........................        394,608         374,653
                                                                 ------------    ------------
        Net property, plant and equipment ....................        930,498         963,740
Goodwill (less amortization of $145 for both
    September 30, 2002 and December 31, 2001) ................         22,209          22,282
Other intangibles (less amortization of $233 and $310 at
    September 30, 2002 and December 31, 2001, respectively)
 .............................................................          2,495           2,639
Long-term affiliate receivables ..............................         15,897          21,296
Long-term receivables ........................................         11,158           8,809
Other noncurrent assets ......................................          2,322          10,727
                                                                 ------------    ------------
          Total assets .......................................   $  1,082,948    $  1,104,559
                                                                 ============    ============

                   LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
    Accounts payable .........................................   $      9,351    $     12,636
    Affiliate accounts payable ...............................         17,199          10,157
    Affiliate income taxes payable ...........................             --           8,544
    Accrued affiliate payroll and benefits ...................          5,836           4,606
    Accrued taxes other than income ..........................         13,754           9,948
    Accrued interest payable .................................            125             277
    Environmental liabilities ................................         10,811           8,650
    Deferred revenue .........................................         11,955           5,103
    Other current liabilities ................................          6,262           8,503
    Affiliate distributions payable ..........................          5,291              --
    Acquisition payable ......................................             --           8,853
                                                                 ------------    ------------
        Total current liabilities ............................         80,584          77,277
Long-term debt ...............................................        559,000         139,500
Long-term affiliate note payable .............................             --         138,172
Long-term affiliate payable ..................................            450           1,262
Deferred income taxes ........................................             --         147,029
Other deferred liabilities ...................................            807           1,127
Environmental liabilities ....................................         12,087           8,260
Minority interest ............................................             --           2,250
Class B equity securities ....................................        304,388              --
Commitments and contingencies
Partners' Capital:
     Partners' capital .......................................        126,627         589,682
     Accumulated other comprehensive income ..................           (995)             --
                                                                 ------------    ------------
          Total partners' capital ............................        125,632         589,682
                                                                 ------------    ------------
          Total liabilities and partners' capital ............   $  1,082,948    $  1,104,559
                                                                 ============    ============
</Table>

                             See accompanying notes.


                                       3
<PAGE>


                          WILLIAMS ENERGY PARTNERS L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<Table>
<Caption>
                                                                                          NINE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                     ----------------------------
                                                                                         2002            2001
                                                                                     ------------    ------------
<S>                                                                                  <C>             <C>
Operating Activities:
    Net income ...................................................................   $     71,587    $     54,090
    Adjustments to reconcile net income to net cash provided by
      operating activities:
        Depreciation and amortization ............................................         26,345          26,497
        Debt placement fee amortization ..........................................          7,221             160
        Deferred compensation expense ............................................          1,857           1,199
        Deferred income taxes ....................................................          1,641           4,950
        Gain on sale of assets ...................................................         (1,032)             --
        Changes in components of operating assets and liabilities
          excluding certain assets and liabilities of Williams Pipe Line
        Company excluded as part of its acquisition:
           Accounts receivable and other accounts receivable .....................         (7,625)           (116)
           Affiliate accounts receivable .........................................         (4,140)           (898)
           Inventories ...........................................................          5,864         (18,304)
           Accounts payable ......................................................         (3,285)         (1,174)
           Affiliate accounts payable ............................................         (1,533)         15,049
           Accrued income taxes due affiliate ....................................            487           1,012
           Accrued affiliate payroll and benefits ................................          1,230            (709)
           Accrued taxes other than income .......................................          3,806           6,178
           Accrued interest payable ..............................................           (152)            269
           Long-term affiliate receivables .......................................         (8,225)           (441)
           Current and noncurrent environmental liabilities ......................          8,154           1,086
           Other current and noncurrent assets and liabilities ...................         (5,974)          4,566
                                                                                     ------------    ------------
               Net cash provided by operating activities .........................         96,226          93,414

Investing Activities:
    Additions to property, plant and equipment ...................................        (25,644)        (27,293)
    Purchase of businesses .......................................................       (692,493)        (29,100)
    Proceeds from sale of assets .................................................          1,367              --
    Payment of acquisition deposit ...............................................         (6,000)
    Other ........................................................................            (62)            (66)
                                                                                     ------------    ------------
        Net cash used by investing activities ....................................       (722,832)        (56,459)

Financing Activities:
    Distributions paid ...........................................................        (27,959)         (9,905)
    Borrowings under credit facility .............................................          8,500         119,500
    Borrowings under short-term note .............................................        700,000              --
    Payments on short-term note ..................................................       (289,000)             --
    Capital contributions by affiliate ...........................................         17,051             634
    Sales of common units to public (less underwriters' commissions) .............        284,568          92,460
    Debt placement costs .........................................................         (7,087)           (909)
    Payment of formation costs associated with initial public offering ...........             --          (3,098)
    Redemption of 600,000 common units from affiliate ............................             --         (12,060)
    Payments on affiliate note payable ...........................................        (29,780)       (216,815)
    Payment of interest rate hedge ...............................................           (995)             --
    Other ........................................................................             35              --
                                                                                     ------------    ------------
        Net cash provided (used) by financing activities .........................        655,333         (30,193)
                                                                                     ------------    ------------

Change in cash and cash equivalents ..............................................         28,727           6,762
Cash and cash equivalents at beginning of period .................................         13,837              10
                                                                                     ------------    ------------
Cash and cash equivalents at end of period .......................................   $     42,564    $      6,772
                                                                                     ============    ============

Supplemental non-cash investing and financing transactions:
    Contributions by affiliate of long-term debt, deferred income tax
      liabilities, and other assets and liabilities to Partnership
        capital ..................................................................        186,847          73,484
    Purchase of business .........................................................       (304,388)             --
    Issuance of Class B equity securities ........................................        304,388              --
                                                                                     ------------    ------------
        Total ....................................................................   $    186,847    $     73,484
                                                                                     ============    ============
</Table>

                             See accompanying notes.


                                       4
<PAGE>

                          WILLIAMS ENERGY PARTNERS L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION

         In the opinion of management, the accompanying financial statements of
Williams Energy Partners L.P. (the "Partnership"), which are unaudited, except
for the balance sheet as of December 31, 2001 which is derived from audited
financial statements, include all normal and recurring adjustments necessary to
present fairly the Partnership's financial position as of September 30, 2002,
the results of operations for the three and nine month periods ended September
30, 2002 and 2001, and its cash flows for the nine months ended September 30,
2002 and 2001. The results of operations for the three and nine months ended
September 30, 2002 and the cash flows for the nine months ended September 30,
2002 are not necessarily indicative of the results to be expected for the full
year ending December 31, 2002.

         The historical results for Williams Pipe Line Company ("Williams Pipe
Line") included income and expenses and assets and liabilities that were
conveyed to and assumed by an affiliate of Williams Pipe Line prior to its
acquisition by the Partnership. The assets principally included Williams Pipe
Line's interest in and agreements related to Longhorn Partners Pipeline
("Longhorn"), an inactive refinery site at Augusta, Kansas and the ATLAS 2000
software system. The liabilities principally included the environmental
liabilities associated with the inactive refinery site in Augusta, Kansas and
current and deferred income taxes and affiliate note payable. The current and
deferred income taxes and the affiliate note payable were contributed to the
Partnership in the form of a capital contribution by an affiliate of The
Williams Companies, Inc. ("Williams"). The income and expenses associated with
Longhorn have not been included in the financial results of the Partnership
since the acquisition of Williams Pipe Line by the Partnership in April 2002.
Also, as agreed between the Partnership and Williams, revenues from Williams
Pipe Line's blending operations, other than an annual blending fee of
approximately $3.0 million, have not been included in the financial results of
the Partnership since April 2002. In addition, general and administrative
expenses related to the Williams Pipe Line system that the Partnership has been
reimbursing to Williams GP LLC ("General Partner"), its General Partner, have
been limited to $30.0 million on an annual basis. See Note 12 - Subsequent
Events regarding changes to the General Partner after September 30, 2002.

         Pursuant to the rules and regulations of the Securities and Exchange
Commission, the financial statements do not include all of the information and
notes normally included with financial statements prepared in accordance with
accounting principles generally accepted in the United States. These financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 2001.

         Certain amounts in the financial statements for 2001 have been
reclassified to conform to the current period's presentation.


2. ORGANIZATION

         Williams Energy Partners L.P. is a Delaware limited partnership that
was formed in August 2000 to own, operate and acquire a diversified portfolio of
complementary energy assets. At the time of the Partnership's initial public
offering in February 2001, the Partnership owned: (a) selected petroleum
products terminals previously owned by Williams Energy Ventures, Inc., and (b)
an ammonia pipeline system, Williams Ammonia Pipeline Inc., previously owned by
Williams Natural Gas Liquids, Inc. ("WNGL"). Prior to the closing of the
Partnership's initial public offering in February 2001, Williams Energy
Ventures, Inc. was owned by Williams Energy Services, LLC ("WES"). Both WES and
WNGL are wholly owned subsidiaries of Williams. Williams GP LLC, a Delaware
limited liability company, was also formed in August 2000, to serve as General
Partner for the Partnership.


                                       5
<PAGE>


         On February 9, 2001, the Partnership completed its initial public
offering of 4 million common units representing limited partner interests in the
Partnership at a price of $21.50 per unit. The proceeds of $86.0 million were
used to pay underwriting discounts and commissions of $5.6 million and legal,
professional fees and costs associated with the initial public offering of $3.1
million, with the remainder used to reduce affiliate note balances with
Williams.

         As part of the initial public offering, the underwriters exercised
their over-allotment option and purchased 600,000 common units, also at a price
of $21.50 per unit. The net proceeds of $12.1 million, after underwriting
discounts and commissions of $0.8 million, from this over-allotment option were
used to redeem 600,000 of the common units held by WES to reimburse it for
capital expenditures related to the Partnership's assets. The Partnership
maintained the historical costs of the net assets in connection with the initial
public offering. Following the exercise of the underwriters' over-allotment
option, 40% of the Partnership was owned by the public and 60%, including the
General Partner's ownership, was owned by affiliates of the Partnership.
Generally, the limited partners' liability in the Partnership is limited to
their investment.

         On April 11, 2002, the Partnership acquired all of the membership
interests of Williams Pipe Line for approximately $1.0 billion (see Note 3 -
Acquisitions). Because Williams Pipe Line was an affiliate of the Partnership at
the time of the acquisition, the transaction was between entities under common
control and, as such, has been accounted for similarly to a pooling of
interests. Accordingly, the consolidated financial statements and notes of the
Partnership have been restated to reflect the combined historical results of
operations, financial position and cash flows of Williams Energy Partners and
Williams Pipe Line throughout the periods presented. Williams Pipe Line's
operations are presented as a separate operating segment of the Partnership (see
Note 4 - Segment Disclosures).

         On April 11, 2002, the Partnership issued 7,830,924 Class B units
representing limited partner interests to its General Partner, Williams GP LLC.
The securities, valued at $304.4 million, were issued as partial payment for the
acquisition of Williams Pipe Line (See Note 3 - Acquisitions). The Partnership
has the right to redeem the Class B units for cash based on the 20-day average
closing price of the common units prior to the redemption date. If the Class B
units are not redeemed by April 11, 2003, then upon the request of the General
Partner and approval of the holders of a majority of the common units voting at
a meeting of the unitholders, the Class B units will convert into common units.
If the approval of the conversion by the common unitholders is not obtained
within 120 days of the General Partner's request, the General Partner will be
entitled to receive distributions with respect to its Class B units, on a per
unit basis, equal to 115% of the amount of distributions paid on a common unit.
See Note 12 - Subsequent Events for changes to the unit voting rights and
changes to the General Partner.

         In May 2002, the Partnership issued 8 million common units representing
limited partner interests in the Partnership at a price of $37.15 per unit for
total proceeds of $297.2 million. Associated with this offering, Williams paid
the Partnership $6.1 million to maintain its 2% general partner interest. A
portion of the total proceeds was used to pay underwriting discounts and
commissions of $12.6 million. Legal, professional fees and costs associated with
this offering were approximately $1.7 million. The remaining cash proceeds of
$289.0 million were used to partially repay the $700.0 million short-term note
assumed by the Partnership to help finance the Williams Pipe Line acquisition
(see Note 7 - Debt).

         See Note 12 - Subsequent Events regarding changes to the General
Partner after September 30, 2002.

3. ACQUISITIONS

         On April 11, 2002, the Partnership acquired all of the membership
interests of Williams Pipe Line for approximately $1.0 billion. The Partnership
financed the transaction through equity issued to Williams and with short-term
debt. Consideration of $304.4 million was given to Williams in the form of Class
B units representing limited partner interests in the Partnership issued to the
General Partner. Williams retained $15.0 million of Williams Pipe Line's
accounts receivable and the remaining $680.6 million of the consideration for
Williams Pipe Line was settled by the Partnership remitting to Williams $674.4
million in cash, after netting Williams' $6.2 million required contribution to
maintain its 2% general partner interest. The Partnership borrowed $700.0
million from a group of financial institutions, paid WES $674.4 million and used
$7.1 million of the borrowed funds to pay debt fees. The Partnership reserved
$3.5 million of the borrowed funds to pay transaction costs and retained $15.0
million to meet working capital needs.


                                       6
<PAGE>


         Because Williams Pipe Line was an affiliate of the Partnership at the
time of the acquisition, the transaction was between entities under common
control. As such, generally accepted accounting principles required that
Williams Pipe Line's assets and liabilities be recorded on the Partnership's
consolidated financial statements at their historical values, despite their
having been acquired at market value. As a result, the General Partner's capital
account was decreased by $415.1 million, which equaled the difference between
the historical and market values of Williams Pipe Line. The effect of this
treatment on the Partnership's overall capital balance resulted in a
debt-to-total capitalization ratio of 56.5%. Excluding this treatment, the
debt-to-total capitalization ratio is 39.8%.

         On August 23, 2002, Williams Pipe Line entered into a purchase and sale
agreement ("PSA") with Tesoro Refining and Marketing Company ("Tesoro") to
acquire Tesoro's pipeline that runs from Mandan, North Dakota to Roseville,
Minneapolis for $110.0 million. Acquisition and transition costs are estimated
to be approximately $3.8 million. The line includes approximately 280 miles of
pipe and four marketing terminals. At the time the PSA was signed, Williams Pipe
Line paid Tesoro an acquisition commitment fee of $6.0 million. In the event
Williams Pipe Line is unable to close within five days of the Federal Trade
Commission's ("FTC") approval of the transaction, or if the Partnership breaches
the PSA, the $6.0 million commitment fee will belong to Tesoro. The expected
closing date is uncertain due to the extensive requests made by the FTC. The
Partnership will fund the acquisition through additional borrowings. See Note 12
- Subsequent Events for events, which occurred after September 30, 2002,
applicable to the Tesoro pipeline acquisition.


4. SEGMENT DISCLOSURES

         Management evaluates performance based upon segment profit or loss from
operations, which includes revenues from affiliate and external customers,
operating expenses, depreciation and affiliate general and administrative
expenses. Affiliate revenues, which reflect transactions that are generally at
market values, are accounted for as if the sales were to unaffiliated third
parties.

         The Partnership's reportable segments are strategic business units that
offer different products and services. The segments are managed separately
because each segment requires different marketing strategies and business
knowledge.

<Table>
<Caption>
                                                              THREE MONTHS ENDED SEPTEMBER 30, 2002
                                                    ---------------------------------------------------------
                                                                     PETROLEUM       AMMONIA
                                                      WILLIAMS        PRODUCTS      PIPELINE
                                                     PIPE LINE       TERMINALS       SYSTEM         TOTAL
                                                    ------------   ------------   ------------   ------------
                                                                    (IN THOUSANDS - UNAUDITED)
 <S>                                                 <C>            <C>            <C>            <C>
Revenues:
    Third party customers .......................   $     80,860   $     16,112   $      1,724   $     98,696
    Affiliate customers .........................         10,435          4,245             --         14,680
                                                    ------------   ------------   ------------   ------------
        Total revenues ..........................         91,295         20,357          1,724        113,376
Operating expenses ..............................         32,415          9,254            840         42,509
Product purchases ...............................         18,039             --             --         18,039
Depreciation and amortization ...................          5,664          2,924            165          8,753
Affiliate general and administrative expenses ...          7,500          2,141            135          9,776
                                                    ------------   ------------   ------------   ------------
Segment profit ..................................   $     27,677   $      6,038   $        584   $     34,299
                                                    ============   ============   ============   ============

</Table>

<Table>
<Caption>
                                                             THREE MONTHS ENDED SEPTEMBER 30, 2001
                                                    ---------------------------------------------------------
                                                                     PETROLEUM      AMMONIA
                                                      WILLIAMS        PRODUCTS      PIPELINE
                                                     PIPE LINE       TERMINALS       SYSTEM         TOTAL
                                                    ------------   ------------   ------------   ------------
                                                                   (IN THOUSANDS - UNAUDITED)
<S>                                                 <C>            <C>            <C>            <C>
Revenues:
    Third party customers .......................   $     74,596   $     14,303   $      3,211   $     92,110
    Affiliate customers .........................         21,826          4,264             --         26,090
                                                    ------------   ------------   ------------   ------------
        Total revenues ..........................         96,422         18,567          3,211        118,200
Operating expenses ..............................         33,318          8,009          1,308         42,635
Product purchases ...............................         25,428             --             --         25,428
Depreciation and amortization ...................          6,070          2,580            163          8,813
Affiliate general and administrative expenses ...         10,582          2,045            368         12,995
                                                    ------------   ------------   ------------   ------------
Segment profit ..................................   $     21,024   $      5,933   $      1,372   $     28,329
                                                    ============   ============   ============   ============
</Table>


                                       7
<PAGE>


<Table>
<Caption>
                                                              NINE MONTHS ENDED SEPTEMBER 30, 2002
                                                    ---------------------------------------------------------
                                                                     PETROLEUM      AMMONIA
                                                      WILLIAMS        PRODUCTS     PIPELINE
                                                     PIPE LINE       TERMINALS      SYSTEM           TOTAL
                                                    ------------   ------------   ------------   ------------
                                                                   (IN THOUSANDS - UNAUDITED)
<S>                                                 <C>            <C>            <C>            <C>

Revenues:
    Third party customers .......................   $    215,382   $     46,877   $      8,622   $    270,881
    Affiliate customers .........................         36,179         13,088             --         49,267
                                                    ------------   ------------   ------------   ------------
        Total revenues ..........................        251,561         59,965          8,622        320,148
Operating expenses ..............................         85,031         24,768          3,068        112,867
Product purchases ...............................         48,463             --             --         48,463
Depreciation and amortization ...................         17,347          8,505            493         26,345
Affiliate general and administrative expenses ...         25,279          6,454            998         32,731
                                                    ------------   ------------   ------------   ------------
Segment profit ..................................   $     75,441   $     20,238   $      4,063   $     99,742
                                                    ============   ============   ============   ============
</Table>

<Table>
<Caption>
                                                               NINE MONTHS ENDED SEPTEMBER 30, 2001
                                                    ---------------------------------------------------------
                                                                     PETROLEUM       AMMONIA
                                                      WILLIAMS        PRODUCTS      PIPELINE
                                                     PIPE LINE       TERMINALS       SYSTEM         TOTAL
                                                    ------------   ------------   ------------   ------------
                                                                   (IN THOUSANDS - UNAUDITED)
<S>                                                 <C>            <C>            <C>            <C>
Revenues:
    Third party customers .......................   $    218,295   $     41,590   $     10,075   $    269,960
    Affiliate customers .........................         52,761         12,045             --         64,806
                                                    ------------   ------------   ------------   ------------
        Total revenues ..........................        271,056         53,635         10,075        334,766
Operating expenses ..............................         90,785         22,653          3,253        116,691
Product purchases ...............................         71,919             --             --         71,919
Depreciation and amortization ...................         17,991          8,019            487         26,497
Affiliate general and administrative expenses ...         28,414          5,633            911         34,958
                                                    ------------   ------------   ------------   ------------
Segment profit ..................................   $     61,947   $     17,330   $      5,424   $     84,701
                                                    ============   ============   ============   ============
</Table>

5. RELATED PARTY TRANSACTIONS

         The Partnership has entered into agreements with various Williams
subsidiaries. Agreements with Williams Energy Marketing & Trading Company
("EM&T") provide for sales of pipeline inventory overages and product blending
and fractionation services, as well as lease storage capacity and, historically,
for sales of blended gasoline. (See Note 1 - Basis of Presentation for more
information about income and expenses associated with Williams Pipe Line
historical operations that are no longer being conducted by the Partnership).
Because of the nature of the Partnership's agreements with Williams, the
Partnership has limited commodity price exposure. The Partnership has several
agreements with EM&T, which provide for: (i) the access to and utilization of
one of the Partnership's inland terminals, (ii) approximately 2.8 million
barrels of storage and other ancillary services at the Partnership's marine
terminal facilities, (iii) capacity utilization rights to substantially all of
the capacity of the Gibson, Louisiana marine terminal facility, and (iv)
throughput commitments with Williams Pipe Line that allows Williams Pipe Line to
satisfy its throughput commitments on third party pipelines. Williams Pipe Line
has entered into agreements with Williams Petroleum Services Inc. and Williams
Bio-Energy, LLC ("Williams Bio-Energy"), affiliates of Williams, to provide
butane blending services and ethanol storage, respectively. Williams Bio-Energy
also leases ethanol storage at the Partnership's Galena Park, Texas marine
facility. Both EM&T and Williams Refining & Marketing, L.L.C. ship product on
the Williams Pipe Line system and EM&T leases tank storage on the Williams Pipe
Line system. Additionally, the Partnership has agreements with Williams Refining
& Marketing for access to and utilization of the Partnership's inland terminal
facilities and with Williams Bio-Energy for access to and utilization of both
the Partnership's inland and marine facilities. The following are revenues from
various Williams subsidiaries (in thousands):

<Table>
<Caption>
                                                   THREE MONTHS ENDED           NINE MONTHS ENDED
                                                      SEPTEMBER 30,               SEPTEMBER 30,
                                              ---------------------------   ---------------------------
                                                  2002           2001           2002           2001
                                              ------------   ------------   ------------   ------------
<S>                                           <C>            <C>            <C>            <C>
Williams Energy Marketing & Trading ........  $     10,212   $     20,995   $     35,495   $     53,193
Williams Refining & Marketing ..............         1,699          3,705          7,517          7,956
Williams Bio-Energy ........................         1,278          1,095          3,400          2,494
Williams Petroleum Services ................           875             --          1,750             --
Other ......................................           616            295          1,105          1,163
                                              ------------   ------------   ------------   ------------
     Total .................................  $     14,680   $     26,090   $     49,267   $     64,806
                                              ============   ============   ============   ============
</Table>


                                       8
<PAGE>


         Beginning with the closing date of the initial public offering, the
General Partner, through provisions included in the Omnibus Agreement, has
limited the amount of general and administrative costs charged to the
Partnership for the petroleum products terminals and ammonia pipeline system
operations. In addition, beginning with the acquisition of Williams Pipe Line,
the General Partner has limited the amount of general and administrative expense
charged to the Partnership for these operations. The additional general and
administrative costs incurred by the General Partner, but not charged to the
Partnership, totaled $6.2 million and $3.5 million for the three months ended
September 30, 2002 and 2001, respectively, and $15.3 million for the nine months
ended September 30, 2002 and $6.7 million for the period February 10, 2001
through September 30, 2001.

         On August 1, 2002, Williams announced that it had sold 98% of Mapletree
LLC, which owns Mid-America Pipeline Company ("MAPL") to Enterprise Products
Partners L.P. ("Enterprise). The Partnership has an agreement with MAPL, which
addresses shared operating costs as well as commercial and general and
administrative support costs related to the Partnership's ammonia pipeline
system. Enterprise has agreed to continue this agreement for a six-month
transition period, which can be extended to a one-year period unless either
party provides a 90-day written notification to cancel the agreement. However,
the agreement also stipulates that the shared operating costs with MAPL will
remain in effect as long as MAPL owns and operates the natural gas liquids
pipeline system adjoining the Partnership's ammonia pipeline system, unless the
parties mutually agree to terminate the agreement.


6. INVENTORIES

         Inventories at September 30, 2002 and December 31, 2001 were as follows
(in thousands):

<Table>
<Caption>
                                       SEPTEMBER 30,   DECEMBER 31,
                                           2002            2001
                                       -------------   ------------
<S>                                     <C>            <C>
Refined petroleum products ..........   $        257   $      5,926
Natural gas liquids .................          2,664         14,210
Additives ...........................          1,074            480
Other ...............................            406            441
                                        ------------   ------------
     Total inventories ..............   $      4,401   $     21,057
                                        ============   ============
</Table>

         The decrease in the natural gas liquids inventory is the result of the
Partnership changing its butane blending operations to that of a service
provider only. The decrease in refined petroleum products is the result of the
selling of inventories due to favorable market conditions during the current
quarter.

7. DEBT

         As of September 30, 2002, the Partnership had a $175.0 million bank
credit facility with $148.0 million borrowed under that facility and $27.0
million of additional borrowing capacity. The credit facility is comprised of a
$90.0 million term loan facility and an $85.0 million revolving credit facility,
which includes a $73.0 million acquisition sub-facility and a $12.0 million
working capital sub-facility. As of September 30, 2002, the Partnership had
borrowed $90.0 million under the term loan facility and $58.0 million under the
acquisition facility. The credit facility's term extends through February 5,
2004, with all amounts due at that time. Borrowings under the credit facility
carry an interest rate equal to the Eurodollar rate plus a spread from 1.0% to
1.5%, depending on the leverage ratio of Williams OLP, L.P. ("OLP"), a
subsidiary of the Partnership. Interest is also assessed on the unused portion
of the credit facility at a rate from 0.2% to 0.4%, depending on the OLP's
leverage ratio. The OLP's leverage ratio is defined as the ratio of consolidated
total debt to consolidated earnings before interest, income taxes, depreciation
and amortization for the period of the four fiscal quarters ending on such date.
Debt placement fees associated with the initiation of the credit facility were
$0.9 million, which are being amortized over the life of the facility. The
weighted average interest rate on the credit facility was 3.4% for both the
three and nine months ended September 30, 2002, and 5.5% for the three months
ended September 30, 2001, and 6.0% for the period February 9, 2001 through
September 30, 2001.

         In April 2002, the Partnership borrowed $700.0 million from a group of
financial institutions. This note was used to help finance the Partnership's
acquisition of Williams Pipe Line. During the second quarter of 2002, with net
proceeds from an equity offering, the Partnership repaid $289.0 million of the
note. The


                                       9
<PAGE>


weighted average interest rate on this note was 5.2% for the three months ended
September 30, 2002, and 4.6% for the period April 11, 2002 through September 30,
2002. Debt placement fees associated with the note were $7.1 million and were
amortized over the life of the note, including $2.1 million amortized in the
current quarter. In October 2002, the Partnership negotiated an extension to the
maturity of this note from October 8, 2002, to November 27, 2002. During the
extension period, the note will carry an interest rate equal to the Eurodollar
rate plus 4.0%, or the prime rate plus 3.0%, at the Partnership's discretion.
The Partnership paid debt financing costs of approximately $2.1 million
associated with the maturity date extension. Because the Partnership has both
the ability and the intent to refinance this loan with long-term debt, the loan
has been classified as long-term on the balance sheet. If the short-term note is
repaid after November 15, 2002, the Partnership will incur additional debt
financing costs of approximately $4.1 million.

         During September 2002, in anticipation of a new debt placement to
replace the short-term debt assumed to acquire Williams Pipe Line, the
Partnership entered into an interest rate hedge. The effect of this interest
rate hedge was to set the coupon rate on a portion of the fixed-rate debt at
7.75% prior to actual execution of the debt agreement. The cost of the hedge,
approximately $1.0 million, was recorded in other comprehensive income and will
be amortized over the five-year life of the fixed-rate debt that the Partnership
anticipates funding in November 2002. See Note 12 - Subsequent Events for
debt-related activity that occurred after September 30, 2002.


8. COMMITMENTS AND CONTINGENCIES

         WES has agreed to indemnify the Partnership against any covered
environmental losses, up to $15.0 million, relating to assets it contributed to
the Partnership at the time of the initial public offering that arose prior to
February 9, 2001, that become known within three years after February 9, 2001,
and that exceed all amounts recovered or recoverable by the Partnership under
contractual indemnities from third parties or under any applicable insurance
policies. Covered environmental losses are those non-contingent terminal and
ammonia system environmental losses, costs, damages and expenses suffered or
incurred by the Partnership arising from correction of violations of, or
performance of remediation required by, environmental laws in effect at February
9, 2001, due to events and conditions associated with the operation of the
assets and occurring before February 9, 2001.

         In connection with the acquisition of Williams Pipe Line, WES agreed to
indemnify the Partnership for any breach of a representation or warranty that
results in losses and damages of up to $110.0 million after the payment of a
$6.0 million deductible. With respect to any amount exceeding $110.0 million,
WES will be responsible for one-half of that amount up to $140.0 million. In no
event will WES' liability exceed $125.0 million. These indemnification
obligations will survive for one year, except that those relating to employees
and employee benefits will survive for the applicable statute of limitations and
those relating to real property, including title to WES' assets, will survive
for ten years. This indemnity also provides that the Partnership will be
indemnified for an unlimited amount of losses and damages related to tax
liabilities. In addition, any losses and damages related to environmental
liabilities that arose prior to the acquisition will be subject only to a $2.0
million deductible, which was met during the third quarter of 2002, with the
indemnification covering six years.

         Estimated liabilities for environmental costs were $22.9 million and
$16.9 million at September 30, 2002 and December 31, 2001, respectively.
Management estimates that expenditures associated with these environmental
remediation liabilities will be paid over the next five years. Receivables
associated with these environmental liabilities of $21.4 million and $5.1
million at September 30, 2002 and December 31, 2001, respectively, have been
recognized as recoverable from affiliates and third parties. These estimates,
provided on an undiscounted basis, were determined based primarily on data
provided by a third-party environmental evaluation service and Williams'
internal environmental engineers. These liabilities have been classified as
current or non-current based on management's estimates regarding the timing of
actual payments.

         In conjunction with the 1999 acquisition of the Gulf Coast marine
terminals from Amerada Hess Corporation ("Hess"), Hess has disclosed to the
Partnership all suits, actions, claims, arbitrations, administrative,
governmental investigation or other legal proceedings pending or threatened,
against or related to the assets acquired by the Partnership, which arise under
environmental law. In the event that any pre-acquisition releases of hazardous
substances at the Partnership's Corpus Christi and Galena Park, Texas and
Marrero, Louisiana marine terminal facilities were unknown at closing but
subsequently identified by the Partnership prior to July 30, 2004, the
Partnership will be liable for the first $2.5 million


                                       10
<PAGE>


of environmental liabilities, Hess will be liable for the next $12.5 million of
losses and the Partnership will assume responsibility for any losses in excess
of $15.0 million. Also, Hess agreed to indemnify the Partnership through July
30, 2014, against all known and required environmental remediation costs at the
Corpus Christi and Galena Park, Texas marine terminal facilities from any
matters related to pre-acquisition actions. Hess has indemnified the Partnership
for a variety of pre-acquisition fines and claims that may be imposed or
asserted against the Partnership under certain environmental laws. At both
September 30, 2002 and December 31, 2001, the Partnership had accrued $0.6
million for costs that may not be recoverable under Hess' indemnification.

         During 2001, the Partnership recorded an environmental liability of
$2.6 million at its New Haven, Connecticut facility, which was acquired in
September 2000. This liability was based on third-party environmental
engineering estimates completed as part of a Phase II environmental assessment,
routinely required by the State of Connecticut to be conducted by the purchaser
following the acquisition of a petroleum storage facility. The Partnership has
begun a Phase III environmental assessment at this facility, which will be
completed during the fourth quarter of 2002. The environmental liability at the
new Haven facility could change materially based on this more thorough analysis.
The seller of these assets agreed to indemnify the Partnership for certain of
these environmental liabilities. In addition, the Partnership purchased
insurance for up to $25.0 million of environmental liabilities associated with
these assets, which carries a deductible of $0.3 million. Any environmental
liabilities at this location not covered by the seller's indemnity and not
covered by insurance are covered by the WES environmental indemnifications to
the Partnership, subject to the $15.0 million limitation.

         During 2001, the Environmental Protection Agency ("EPA"), pursuant to
Section 308 of the Clean Water Act, preliminarily determined that Williams may
have systemic problems with petroleum discharges from pipeline operations. The
inquiry primarily focused on Williams Pipe Line, which was subsequently acquired
by the Partnership. The response to the EPA's information request was submitted
during November 2001. Any claims the EPA may assert relative to this inquiry
would be covered by the Partnership's environmental indemnifications from
Williams.

         WNGL will indemnify the Partnership for right-of-way defects or
failures in the ammonia pipeline easements for 15 years after the initial public
offering closing date. WES has also indemnified the Partnership for right-of-way
defects or failures associated with the marine terminal facilities at Galena
Park, Corpus Christi and Marrero for 15 years after the initial public offering
closing date.

         On May 31, 2002, Farmland Industries, Inc. ("Farmland") and several of
its subsidiaries filed for Chapter 11 bankruptcy protection. Farmland, the
largest customer on the ammonia pipeline system, is also a customer of Williams
Pipe Line and petroleum products terminals. The Partnership received
approximately $2.3 million in payments from Farmland during the preference
period prior to Farmland filing for bankruptcy. Management believes that the
Partnership will not be required to reimburse these funds to the bankruptcy
trustee because they were received in the ordinary course of business with
Farmland. Farmland's receivable balance with the Partnership at September 30,
2002, was $0.2 million. The Partnership has two five-year petroleum pipeline
lease capacity agreements with Farmland. The first of these agreements, which
expires on November 30, 2004, requires an annual payment by Farmland of $1.2
million on each November 30th during the contract period. The second agreement,
which expires on April 30, 2007, is for $0.5 million annually and is invoiced to
Farmland on a monthly basis.

         The Partnership is party to various other claims, legal actions and
complaints arising in the ordinary course of business. In the opinion of
management, the ultimate resolution of all claims, legal actions and complaints
after consideration of amounts accrued, insurance coverage or other
indemnification arrangements will not have a material adverse effect upon the
Partnership's future financial position, results of operations or cash flows.


                                       11
<PAGE>


9. RESTRICTED UNITS

         In February 2001, the General Partner adopted the Williams Energy
Partners' Long-Term Incentive Plan for Williams' employees who perform services
for Williams Energy Partners L.P. and directors of the General Partner. The
Long-Term Incentive Plan consists of two components: phantom units and unit
options. The Long-Term Incentive Plan permits the grant of awards covering an
aggregate of 700,000 common units. The Long-Term Incentive Plan is administered
by the compensation committee of the General Partner's board of directors.

         In April 2001, the General Partner issued grants of 92,500 restricted
units, which are also referred to as phantom units, to certain key employees
associated with the Partnership's initial public offering in February 2001.
These one-time initial public offering phantom units will vest over a 34-month
period ending on February 9, 2004, and are subject to forfeiture if employment
is terminated prior to vesting. These units are subject to early vesting if the
Partnership achieves certain performance measures. The Partnership achieved the
first of two performance measures in February 2002 and as a result, 46,250 of
the phantom units vested, resulting in a charge to compensation expense of
approximately $1.0 million. The Partnership recognized additional compensation
expense of $0.1 million and $0.4 million related to the remaining non-vested
units associated with these grants in the three and nine months ended September
30, 2002, respectively. When the $0.70 per unit distribution, approved by the
General Partner's board of directors on October 23, 2002, is paid on November
14, 2002, the final performance measure associated with the initial public
offering unit awards will be met. As a result, the remaining 46,250 awards will
vest at the earlier of: (i) the funding date of the Williams Pipe Line
short-term note replacement, or (ii) December 1, 2002. The Partnership expects
that it will recognize an expense of $0.7 million associated with the vesting of
these awards. The fair market value of the phantom units associated with this
grant was $2.8 million on the grant date.

         In April 2001, the General Partner issued grants of 64,200 phantom
units associated with the annual incentive compensation plan. The actual number
of units that will be awarded under this grant will be determined by the
Partnership on February 9, 2004. At that time, the Partnership will assess
whether certain performance criteria have been met and determine the number of
units that will be awarded, which could range from zero units up to a total of
128,400 units. These units are also subject to forfeiture if employment is
terminated prior to February 9, 2004. These awards do not have an early vesting
feature, unless there is a change in control of the Partnership's General
Partner. The Partnership is assuming that the full 128,400 will ultimately be
awarded and recognized $0.3 million and $0.9 million of compensation expense
associated with these awards for the three and nine months ended September 30,
2002. The fair market value of the phantom units associated with this grant was
$4.2 million on September 30, 2002.

         The Board of Directors of the Partnership's General Partner approved
22,150 phantom units associated with the 2002 incentive compensation plan. The
actual number of units that will be awarded under this grant will be determined
by the Partnership in early 2005. At that time, the Partnership will assess
whether certain performance criteria have been met and determine the number of
units that will be awarded, which could range from zero units up to a total of
44,300 units. These units are also subject to forfeiture if employment is
terminated prior to the vesting date. These awards do not have an early vesting
feature, unless there is a change in control of the Partnership's General
Partner. The Partnership is assuming that 22,150 units will ultimately be
awarded and recorded incentive compensation expense of $0.1 million during the
current quarter associated with these awards. Based on the closing price of
$32.50 per unit at September 30, 2002, these units were valued at $0.7 million.



                                       12
<PAGE>


10. DISTRIBUTIONS

         Distributions paid by the Partnership during 2001 and 2002 are as
follows:

<Table>
<Caption>
    DATE
    CASH               PER UNIT CASH         TOTAL
DISTRIBUTION            DISTRIBUTION         CASH
    PAID                  AMOUNT         DISTRIBUTION
------------------     -------------     ------------
<S>                    <C>              <C>

  05/15/01(a)             $0.2920        $3.4 million
  08/14/01                $0.5625        $6.5 million
  11/14/01                $0.5775        $6.7 million
  02/14/02                $0.5900        $6.9 million
  05/15/02                $0.6125        $7.2 million
  08/14/02(b)             $0.6750       $19.2 million
  11/14/02(b & c)         $0.7000       $20.1 million
</Table>

         (a) This distribution represented the prorated minimum quarterly
distribution for the 50-day period following the initial public offering closing
date, which included February 10, 2001 through March 31, 2001.

         (b) Total cash distributions on 8/14/02 and 11/14/02 include $5.3
million and $5.5 million, respectively, of distributions associated with the
Class B units. These distributions have been reserved and will not be
distributed until the short-term note, used to help finance the Williams Pipe
Line acquisition, is repaid.

         (c) The General Partner declared this cash distribution on October 23,
2002, to be paid on November 14, 2002, to unitholders of record at the close of
business on November 4, 2002. Total cash distributions of $20.1 million include
an incentive distribution to the Partnership's General Partner of $0.7 million.

11. NET INCOME PER UNIT

         The following tables provide details of the basic and diluted net
income per unit computations (in thousands, except per unit amounts):

<Table>
<Caption>
                                                                     FOR THE THREE MONTHS ENDED
                                                                         SEPTEMBER 30, 2002
                                                             ------------------------------------------
                                                                INCOME         UNITS         PER UNIT
                                                              (NUMERATOR)  (DENOMINATOR)      AMOUNT
                                                             ------------  -------------   ------------
<S>                                                          <C>            <C>            <C>
Limited partners' interest in net income .................   $     24,428

Basic net income per common and subordinated unit ........   $     24,428         27,190   $       0.90

Effect of dilutive restricted unit grants ................             --             57             --
                                                             ------------   ------------   ------------

Diluted net income per common and subordinated unit ......   $     24,428         27,247   $       0.90
                                                             ============   ============   ============
</Table>


<Table>
<Caption>
                                                                  FOR THE NINE MONTHS ENDED
                                                                      SEPTEMBER 30, 2002
                                                         ------------------------------------------
                                                             INCOME        UNITS         PER UNIT
                                                          (NUMERATOR)  (DENOMINATOR)      AMOUNT
                                                         ------------  -------------   ------------
<S>                                                      <C>           <C>             <C>

Limited partners' interest in net income .............   $     55,414

Basic net income per common and subordinated unit ....   $     55,414         20,131   $       2.75

Effect of dilutive restricted unit grants ............             --             54             --
                                                         ------------   ------------   ------------

Diluted net income per common and subordinated unit ..   $     55,414         20,185   $       2.75
                                                         ============   ============   ============
</Table>

      Units reported as dilutive securities are related to restricted unit
grants associated with the one-time initial public offering award (see Note 9).


                                       13
<PAGE>
12. SUBSEQUENT EVENTS

         In October 2002, the Partnership negotiated an extension of the
Williams Pipe Line short-term note to November 27, 2002. During the extension
period, the note carries an interest rate equal to the Eurodollar rate plus 4.0%
or the prime rate plus 3.0%, at the Partnership's discretion. The Partnership
paid debt financing costs of approximately $2.1 million associated with the
maturity date extension. If the short-term note is repaid after November 15,
2002, the Partnership will incur additional debt financing costs of
approximately $4.1 million.

         On October 25, 2002, the Partnership sold the Mobile, Alabama inland
terminal to Radcliff/Economy Marine Services, Inc. for approximately $1.3
million and recorded a gain on the sale of approximately $1.0 million. The
Mobile, Alabama terminal was considered to be a non-core asset of the
Partnership. The sale reduced the number of inland facilities owned by the
Partnership from 25 terminals to 24 terminals.

         On October 31, 2002, Williams Pipe Line entered into a private
placement debt agreement, effective October 1, 2002, with a group of financial
institutions for up to $200.0 million aggregate principal amount of Floating
Rate Series A Senior Secured Notes and up to $340.0 million aggregate principal
amount of Fixed Rate Series B Senior Secured Notes. The maturity date of both
notes is October 7, 2007. Two borrowings will occur in relation to these notes.
The first borrowing will be for $420.0 million, allocated pro rata between the
Series A notes and Series B notes, and will be used to repay Williams Pipe
Line's existing short-term note and pay related debt placement fees. The second
borrowing will be allocated pro rata between the Series A notes and Series B
notes and will be for either: (i) $120.0 million if the Tesoro pipeline
acquisition is consummated (See Note 3 - Acquisitions), or (ii) $60.0 million to
be used primarily for repayment of other debt of the Partnership. The Floating
Rate Series A Senior Secured Notes will carry an interest rate equal to the
six-month Eurodollar Rate plus: (i) 4.25% or (ii) an amount necessary to equal
the rate on the Series B note borrowings on a swap-equivalent basis, whichever
is greater. The Fixed Rate Series B Senior Secured Notes will carry an interest
rate of 7.67% on the first borrowing and a rate equal to the five year U.S.
Treasury Bond plus 4.70% on the second borrowing. Debt placement fees associated
with these notes are expected to be $12.1 million, which will be amortized over
the life of the notes. Payment of interest and repayment of the principal is
guaranteed by the Partnership. As part of this agreement, the Partnership agreed
that it will not redeem or retire the Partnership's Class B units held by
Williams or any of its affiliates except with the proceeds from equity issued by
the Partnership.

         During October 2002 and November 2002, several amendments were made to
the Partnership and General Partner agreements. The first change requires the
Partnership and the General Partner to maintain separateness from Williams
including formalities on interaction between the Partnership, the public and
Williams. Changes were also made to require the approval of the Conflicts
Committee (consisting of three independent directors) before the General Partner
can make bankruptcy-related decisions for the Partnership. In addition,
adjustments were made to the voting rights of units held by Williams. Williams'
Class B units no longer have voting rights, its subordinated units have one-half
vote for every one unit owned and its common units will be allowed to vote in
the subordinated class vote. Finally, election of the board members of the
General Partner has been moved to a vote of the common unitholders, with the
first vote to be held in 2003. The voting right changes and board member
election changes will be voided and reversed in the event of a foreclosure in a
Williams-related bankruptcy proceeding.

         In addition, Williams is in the process of creating a new General
Partner, WEG GP LLC. The new General Partner, which is owed by affiliates of
Williams, has all of the rights, privileges and responsibilities relative to the
Partnership previously held by the old General Partner, Williams GP LLC.
Williams GP LLC will continue to own the Class B units issued by Partnership in
April 2002.

         On November 4, 2002, Tesoro returned the $6.0 million acquisition
commitment fee (See Note 3 - Acquisitions) to the Partnership. In return, the
Partnership agreed to allow Tesoro to seek alternate potential acquirers for its
pipeline. The Partnership is still actively pursuing the acquisition of this
pipeline from Tesoro.


                                       14
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INTRODUCTION

         Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the consolidated financial
statements and notes thereto. Williams Energy Partners L.P. is a publicly traded
limited partnership formed by The Williams Companies, Inc. ("Williams") to own,
operate and acquire a diversified portfolio of complementary energy assets. We
are principally engaged in the transportation, storage and distribution of
refined petroleum products and ammonia. Our current asset portfolio consists of:

           -     the Williams Pipe Line system;

           -     five marine terminal facilities;

           -     24 inland terminals (some of which are partially owned); and

           -     an ammonia pipeline system.

         On April 11, 2002, we acquired, for approximately $1.0 billion, all of
the membership interests of Williams Pipe Line Company ("Williams Pipe Line"),
which owns and operates the Williams Pipe Line system. Because Williams Pipe
Line was an affiliate of ours at the time of the acquisition, the transaction
was between entities under common control and, as such, was accounted for
similarly to a pooling of interest. Accordingly, our consolidated financial
statements and notes have been restated to reflect the historical results of
operations, financial position and cash flows of Williams Energy Partners and
Williams Pipe Line on a combined basis throughout the periods presented.

         The historical results for Williams Pipe Line include revenue and
expenses and assets and liabilities that were conveyed to and assumed by an
affiliate of Williams Pipe Line prior to our acquisition of it. These assets
primarily include Williams Pipe Line's interest in and agreements related to
Longhorn Partners Pipeline ("Longhorn"), an inactive refinery site at Augusta,
Kansas and the ATLAS 2000 software system. The results from these assets have
not been included in our financial results since the acquisition of Williams
Pipe Line by the Partnership in April 2002. In addition, revenues from Williams
Pipe Line's blending operations, other than an annual blending fee of
approximately $3.0 million, have not been included in our financial results
since April 2002. We have reported the Williams Pipe Line system's operations as
a separate operating segment.


RECENT DEVELOPMENTS

         On August 23, 2002, we entered into a purchase and sale agreement
("PSA") with Tesoro Refining and Marketing Company ("Tesoro") to acquire
Tesoro's pipeline that runs from Mandan, North Dakota to Roseville, Minneapolis
for $110.0 million. Acquisition and transition costs are estimated to be
approximately $3.8 million. The line includes approximately 280 miles of pipe
and four marketing terminals. The expected closing date is uncertain due to the
extensive requests made by the Federal Trade Commission ("FTC"). We will fund
the acquisition through additional borrowings. At the time the PSA was signed,
we paid Tesoro an acquisition commitment fee of $6.0 million (See Note 3 -
Acquisitions). On November 4, 2002, Tesoro returned the $6.0 million acquisition
commitment fee to us. In return, we agreed to allow Tesoro to seek alternate
potential acquirers for its pipeline; however, we are still actively pursuing
this acquisition. Under the terms of PSA, in the event that we are unable to
close this transaction within five days of the FTC's approval of the
transaction, or if we breach the PSA, we will owe Tesoro the $6.0 million
commitment fee.

         On October 23, 2002, our General Partner declared an increase in the
quarterly cash distribution from $0.675 to $0.70 per unit, representing a 4%
increase over the previous quarter's distribution and a 33% increase since our
initial public offering in February 2001. The distribution increase is for the
period of July 1 through September 30, 2002. The distribution will be paid on
November 14, 2002 to unitholders of record at the close of business on November
4, 2002.


                                       15
<PAGE>
         In October 2002, we negotiated an extension to the maturity of the
Williams Pipe Line short-term note, extending the maturity date to November 27,
2002. During the extension period, the note will carry an interest rate equal to
the Eurodollar rate plus 4.0% or the prime rate plus 3.0%, at our discretion. We
paid debt financing costs of approximately $2.1 million associated with the
maturity date extension. If the short-term note is repaid after November 15,
2002, the Partnership will incur additional debt financing costs of $4.1
million.

         On October 25, 2002, we sold the Mobile, Alabama inland terminal to
Radcliff/Economy Marine Services, Inc. for approximately $1.3 million and
recorded a gain on the sale of approximately $1.0 million. The Mobile, Alabama
terminal was considered to be a non-core asset of the Partnership. The sale
reduced the number of inland facilities owned by us from 25 terminals to 24
terminals.

         On October 31, 2002, Williams Pipe Line entered into a private
placement debt agreement. See Liquidity beginning on page 24 for additional
information concerning this agreement.

         During October 2002 and November 2002, several amendments were made to
the Partnership and General Partner agreements. The first change requires our
General Partner and us to maintain separateness from Williams including
formalities on interaction between us, the public and Williams. Changes were
also made to require the approval of the Conflicts Committee (consisting of
three independent directors) before the General Partner can make
bankruptcy-related decisions for us. In addition, adjustments were made to the
voting rights of units held by Williams. Williams' Class B units no longer have
voting rights, its subordinated units have one-half vote for every one unit
owned and its common units will be allowed to vote in the subordinated class
vote. Finally, election of the board members of our General Partner has been
moved to a vote of the common unitholders, with the first vote to be held in
2003. The voting right changes and board member election changes will be voided
and reversed in the event of a foreclosure in a Williams-related bankruptcy
proceeding.

         In addition, Williams is in the process of creating a new General
Partner, WEG GP LLC. The new General Partner, which is owned by affiliates of
Williams, has all of the rights, privileges and responsibilities as the old
General Partner, Williams GP LLC. Williams GP LLC will continue to own the Class
B units issued by us in April 2002.


RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO SEPTEMBER 30, 2001

<Table>
<Caption>
                                                                                THREE MONTHS ENDED
                                                                                   SEPTEMBER 30,
                                                                           ---------------------------
                                                                               2002           2001
                                                                           ------------   ------------
                                                                                 ($ in millions)
<S>                                                                        <C>            <C>
FINANCIAL HIGHLIGHTS
Revenues:
    Williams Pipe Line system transportation and related activities ....   $       72.6   $       67.8
    Petroleum products terminals .......................................           20.4           18.5
    Ammonia pipeline system ............................................            1.7            3.2
                                                                           ------------   ------------
       Revenues excluding product and construction revenues ............   $       94.7   $       89.5
    Williams Pipe Line system product and construction revenues ........           18.7           28.7
                                                                           ------------   ------------
       Total revenues ..................................................   $      113.4   $      118.2
Operating expenses:
    Williams Pipe Line system transportation and related activities ....   $       32.4   $       33.3
    Petroleum products terminals .......................................            9.3            8.0
    Ammonia pipeline system ............................................            0.8            1.3
                                                                           ------------   ------------
       Operating expenses excluding product purchases ..................   $       42.5   $       42.6
    Williams Pipe Line system product purchases ........................           18.0           25.4
                                                                           ------------   ------------
       Total operating expenses ........................................   $       60.5   $       68.0
                                                                           ------------   ------------
       Total operating margin ..........................................   $       52.9   $       50.2
                                                                           ============   ============
</Table>


                                       16
<PAGE>

<Table>
<Caption>
                                                                                    THREE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                               ---------------------------
                                                                                   2002            2001
                                                                               ------------   ------------
                                                                                    ($ in millions)

<S>                                                                            <C>            <C>

OPERATING STATISTICS
Williams Pipe Line system:
    Transportation revenue per barrel shipped (cents per barrel) ...........           98.2           93.9
    Transportation barrels shipped (million barrels) .......................           60.5           60.2
    Barrel miles (billions) ................................................           19.4           18.6
Petroleum products terminals:
    Marine terminal facilities:
       Average storage capacity utilized per month (barrels in millions) ...           16.3           15.8
       Throughput (barrels in millions)(a) .................................            5.4            1.8
    Inland terminals:
       Throughput (barrels in millions) ....................................           14.5           16.2
Ammonia pipeline system:
    Volume shipped (tons in thousands) .....................................             87            171
</Table>

----------
(a)      For the three months ended Sept. 30, 2002, represents throughput at the
         Gibson and New Haven marine facilities. As the Gibson facility was
         acquired in October 2001, the three months ended Sept. 30, 2001
         represents throughput at the New Haven facility only.

         Combined revenues excluding product and construction revenues for the
three months ended September 30, 2002 were $94.7 million compared to $89.5
million for the three months ended September 30, 2001, an increase of $5.2
million, or 6%. This increase was a result of:

         o an increase in Williams Pipe Line system's transportation and related
activities revenues of $4.8 million, or 7%. This increase was partially
attributable to higher transportation revenue per barrel shipped, resulting from
a tariff increase on July 1, 2002 and customers transporting products longer
distances. Williams Pipe Line revenue further increased due to increased storage
utilization, higher rates imposed on data services and increased ethanol
terminal volumes;

         o an increase in petroleum products terminals revenues of $1.9 million,
or 10%, primarily due to the acquisition of the Gibson marine facility that was
acquired in October 2001 and higher utilization and increased rates at our Gulf
Coast facilities due to a favorable marketing environment;

         o a decrease in ammonia pipeline system revenues of $1.5 million, or
47%, due to less shipments on the pipeline, primarily as a result of one of our
shippers filing for Chapter 11 bankruptcy during May. The weighted average
tariff increased between periods from $16.38 in 2001 to $17.63 during 2002.

         Operating expenses excluding product purchases for the third quarter
were basically unchanged from $42.6 million in 2001 compared to $42.5 million
for 2002. This slight decrease consisted of:

         o a decrease in Williams Pipe Line system expenses of $0.9 million, or
3%. Reductions in environmental expenses were partially offset by increased
pipeline lease expenses. Environmental costs were lower due to the
indemnification from Williams for environmental issues resulting from operations
prior to our ownership of the pipeline. The pipeline lease expenses represent
costs, which are charged back to our customers, for tariffs paid on connecting
pipelines to move a customer's product to its ultimate destination. This service
began in the current year, hence, there are no associated pipeline lease
expenses in the prior year quarter;

         o an increase in petroleum products terminals expenses of $1.3 million,
or 16%, primarily due to the addition of the Gibson marine facility and higher
maintenance expenses at the Gulf Coast facilities. The increase in maintenance
costs was primarily attributable to the timing of tank cleaning and American
Petroleum Institute ("API") 653 inspection expenses;

         o a decrease in ammonia pipeline system expenses of $0.5 million, or
38%, primarily due to lower environmental expenses.

         Revenues from Williams Pipe Line product sales were $18.7 million for
the three months ended September 30, 2002, while product purchases were $18.0
million, resulting in a net margin of $0.7 million


                                       17
<PAGE>


in 2002. The 2002 net margin represents a decrease of $2.4 million compared to a
net margin in 2001 of $3.1 million resulting from product sales in 2001 of $28.5
million and product purchases of $25.4 million. This margin decline primarily
results from butane blending activities prior to the partnership's ownership. In
conjunction with our acquisition of Williams Pipe Line, we will provide butane
blending services for a fee of $0.8 million per quarter rather than operating on
a margin basis.

         Affiliate construction and management fee revenues for the three months
ended September 30, 2002 were zero compared to $0.2 million for the three months
ended September 30, 2001. Historically, Williams Pipe Line received a fee to
manage Longhorn and to provide consulting services associated with the
pipeline's construction and start-up, as needed. Prior to our acquisition of
Williams Pipe Line, this Longhorn obligation was transferred to an affiliate of
Williams Pipe Line and will not be provided by us.

         Depreciation and amortization expense for the three months ended
September 30, 2002 was unchanged from 2001 at $8.8 million. Additional
depreciation associated with acquisitions and capital improvements was offset by
the elimination of depreciation associated with assets we did not acquire as
part of the Williams Pipe Line acquisition.

         General and administrative expenses for the three months ended
September 30, 2002 were $9.8 million compared to $13.0 million for the three
months ended September 30, 2001, a decrease of $3.2 million, or 25%. General and
administrative expenses are allocated from Williams as defined by the Omnibus
Agreement. For 2002, these expense allocations are limited to $9.2 million per
quarter plus equity-based incentive compensation expenses related to Williams
Energy Partners' performance. The amount of general and administrative expenses
incurred by the General Partner but not allocated to us was $6.2 million for the
three months ended September 30, 2002. Incentive compensation costs associated
with our equity-based long-term incentive plan are specifically excluded from
the expense limitation and were $0.6 million during the three months ended
September 30, 2002. Prior to our acquisition, Williams Pipe Line was allocated
general and administrative costs from Williams based on a three-factor formula
that considers operating margin, payroll costs and property, plant and
equipment. The limit on general and administrative expenses that can be charged
by our General Partner to us will continue to be adjusted in the future to
reflect additional general and administrative expenses incurred with
acquisitions and annual adjustments allowed by the Omnibus Agreement.

         Net interest expense for the three months ended September 30, 2002 was
$6.3 million compared to $2.7 million for the three months ended September 30,
2001. The increase in interest expense was primarily related to the additional
debt associated with the acquisition of Williams Pipe Line, partially offset by
lower weighted average interest rates, which decreased from 4.9% for the three
months ended September 30, 2001 to 4.8% for the three months ended September 30,
2002.

         We do not pay income taxes because we are a partnership.

         Net income for the three months ended September 30, 2002 was $25.8
million compared to $18.2 million for the three months ended September 30, 2001,
an increase of $7.6 million, or 42%. The operating margin increased by $2.7
million during the period, largely as a result of increased revenues and reduced
expenses on the Williams Pipe Line system and enhanced earnings from the
acquisition of the Gibson marine terminal, partially offset by reduced ammonia
revenues and product sales margins. General and administrative expenses
decreased by $3.2 million while net interest expenses increased by $3.6 million.
Debt placement fee amortization expense increased $2.1 million due to the
amortization of the debt costs associated with the financing of Williams Pipe
Line. Other income decreased $0.2 million because the 2001 quarter included
amounts received by Williams Pipe Line from certain insurance settlements.
Income taxes decreased $7.6 million due to the elimination of income taxes on
Williams Pipe Line in the partnership structure.


                                       18
<PAGE>


NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO SEPTEMBER 30, 2001

<Table>
<Caption>
                                                                                NINE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                          ---------------------------
                                                                              2002           2001
                                                                          ------------   ------------
                                                                                ($ in millions)
<S>                                                                       <C>            <C>
FINANCIAL HIGHLIGHTS
Revenues:
    Williams Pipe Line system transportation and related activities ...   $      198.5   $      190.6
    Petroleum products terminals ......................................           60.0           53.6
    Ammonia pipeline system ...........................................            8.6           10.1
                                                                          ------------   ------------
       Revenues excluding product and construction revenues ...........   $      267.1   $      254.3
    Williams Pipe Line system product and construction revenues .......           53.0           80.5
                                                                          ------------   ------------
       Total revenues .................................................   $      320.1   $      334.8
Operating expenses:
    Williams Pipe Line system transportation and related activities ...   $       85.0   $       90.8
    Petroleum products terminals ......................................           24.8           22.6
    Ammonia pipeline system ...........................................            3.1            3.3
                                                                          ------------   ------------
       Operating expenses excluding product purchases .................   $      112.9   $      116.7
    Williams Pipe Line system product purchases .......................           48.5           71.9
                                                                          ------------   ------------
       Total operating expenses .......................................   $      161.4   $      188.6
                                                                          ------------   ------------
       Total operating margin .........................................   $      158.7   $      146.2
                                                                          ============   ============
OPERATING STATISTICS Williams Pipe Line system:
    Transportation revenue per barrel shipped (cents per barrel) ......           94.3           91.0
    Transportation barrels shipped (million barrels) ..................          172.1          175.2
    Barrel miles (billions) ...........................................           52.1           52.2
Petroleum products terminals:
    Marine terminal facilities:
       Average storage capacity utilized per month
         (barrels in millions) ........................................           16.3           15.6
       Throughput (barrels in millions) (a) ...........................           15.8            7.4
    Inland terminals:
       Throughput (barrels in millions) ...............................           43.6           41.4
Ammonia pipeline system:
    Volume shipped (tons in thousands) ................................            478            511
</Table>

(a)      For the nine months ended September 30, 2002, represents throughput at
         the Gibson and New Haven marine facilities. As the Gibson facility was
         acquired in October 2001, the nine months ended September 30, 2001
         represents throughput at the New Haven facility only.

         Combined revenues excluding product and construction revenues for the
nine months ended September 30, 2002 were $267.1 million compared to $254.3
million for the nine months ended September 30, 2001, an increase of $12.8
million, or 5%. This increase consisted of:

         o an increase in Williams Pipe Line system's transportation and related
activities revenues of $7.9 million, or 4%. Transportation revenues increased
between periods due to a higher tariff that more than offset lower shipments.
The tariff was higher due to mid-year tariff increases and our customers
transporting products longer distances. Further, increased rates imposed on data
services as well as higher ethanol loading and storage volumes resulted in
additional revenue;

         o an increase in petroleum products terminals revenues of $6.4 million,
or 12%, primarily due to the acquisition of our Gibson marine facility in
October 2001 and two Little Rock inland terminals in June 2001. Higher
utilization at the Gulf Coast marine facilities was offset by reduced throughput
at our inland terminals;

         o a decrease in ammonia pipeline system revenues of $1.5 million or
15%, primarily due to a throughput deficiency billing in the prior year that
resulted from a shipper not meeting its minimum annual throughput commitment for
the contract year ended June 2001. In addition, revenue also declined due to
reduced volume as a result of one of our shippers filing for Chapter 11
bankruptcy during May 2002.


                                       19
<PAGE>


Partially offsetting these decreases was a higher weighted average tariff of
$16.84 in 2002 compared to $16.19 during the prior year.

         Operating expenses excluding product purchases for the nine months
ended September 30, 2002 were $112.9 million compared to $116.7 million for the
nine months ended September 30, 2001, a decrease of $3.8 million, or 3%. This
increase consisted of:

         o a decrease in Williams Pipe Line system expenses of $5.8 million, or
6%, primarily due to lower environmental expenses and reduced power costs.
Environmental costs were lower due to the indemnification from Williams for
environmental issues resulting from operations prior to our ownership of the
pipeline, and power expenses declined due to less volume transported coupled
with reduced power rates. Partially offsetting these reductions was an increase
in pipeline lease expenses, which represent costs charged back to our customers
for tariffs paid on connecting pipelines to move a customer's product to its
ultimate destination. This service began in the current year, hence, there are
no associated pipeline lease expenses in the prior year;

         o an increase in petroleum products terminals expenses of $2.2 million,
or 10%, primarily due to the addition of the Gibson marine facility and Little
Rock inland terminals. Increased maintenance expenses were also incurred at our
other locations due to the timing of tank cleaning and API 653 inspections.
Lower utility expenses at the Gulf Coast facilities partially offset these
increases;

         o a decrease in ammonia pipeline system expenses of $0.2 million
primarily due to lower environmental expenses.

         Revenues from Williams Pipe Line product sales were $52.8 million for
the nine months ended September 30, 2002, while product purchases were $48.5
million, resulting in a net margin of $4.3 million in 2002. The 2002 net margin
represents a decrease of $3.5 million compared to a net margin in 2001 of $7.8
million resulting from product sales in 2001 of $79.7 million and product
purchases of $71.9 million. This margin decline results from butane blending
activities prior to the partnership's ownership. In conjunction with our
acquisition of Williams Pipe Line, we will provide butane blending services for
a fee of $0.8 million per quarter rather than operating on a margin basis.

         Affiliate construction and management fee revenues for the nine months
ended September 30, 2002 were $0.2 million compared to $0.8 million for the nine
months ended September 30, 2001. Historically, Williams Pipe Line received a fee
to manage Longhorn and to provide consulting services associated with the
pipeline's construction and start-up, as needed. Prior to our acquisition of
Williams Pipe Line, this Longhorn obligation was transferred to an affiliate of
Williams Pipe Line and will not be provided by us.

         Depreciation and amortization expense for the nine months ended
September 30, 2002 was $26.3 million, representing a $0.2 million decrease from
2001 at $26.5 million. Additional depreciation associated with acquisitions and
capital improvements primarily offset the elimination of depreciation associated
with assets we did not acquire as part of the Williams Pipe Line acquisition.

         General and administrative expenses for the nine months ended September
30, 2002 were $32.7 million compared to $35.0 million for the nine months ended
September 30, 2001, a decrease of $2.3 million, or 7%. General and
administrative expenses are allocated from Williams as defined by the Omnibus
Agreement. For 2002, these expense allocations are limited to $9.2 million per
quarter plus equity-based incentive compensation expenses related to Williams
Energy Partners' performance. The amount of general and administrative expenses
incurred by the General Partner but not allocated to us was $15.3 million for
the nine months ended September 30, 2002. Incentive compensation costs
associated with our long-term incentive plan are specifically excluded from the
expense limitation and were $2.4 million during the nine months ended September
30, 2002. The first-quarter incentive compensation costs included a $1.0 million
charge associated with the early vesting of a portion of the phantom units
issued to key employees at the time of our initial public offering. The early
vesting was triggered as a result of meeting the target for our growth in cash
distributions paid to unitholders. Prior to our acquisition, Williams Pipe Line
was allocated general and administrative costs from Williams based on a
three-factor formula that considers operating margin, payroll costs and
property, plant and equipment. The limit on general and administrative expenses
that can be charged by our General Partner to us will continue to be adjusted in
the future to reflect additional general and administrative expenses incurred
with acquisitions as well as the annual adjustments allowed by the Omnibus
Agreement.


                                       20
<PAGE>


         Net interest expense for the nine months ended September 30, 2002 was
$13.7 million compared to $9.0 million for the nine months ended September 30,
2001. The increase in interest expense was primarily related to the additional
debt associated with the acquisition of Williams Pipe Line, partially offset by
lower weighted average interest rates, which decreased from 4.9% for the nine
months ended September 30, 2001 to 4.1% for the nine months ended September 30,
2002.

         We do not pay income taxes because we are a partnership. However,
Williams Pipe Line was subject to income taxes prior to our acquisition of it in
April 2002, and our pre-initial public offering earnings in 2001 were also
taxable. We primarily based our income tax rate of 38.2% and 37.9% for the nine
months ended September 30, 2002 and 2001, respectively, upon the effective
income tax rate for Williams. The effective income tax rate exceeds the U.S.
federal statutory income tax rate primarily due to state income taxes.

         Net income for the nine months ended September 30, 2002 was $71.6
million compared to $54.1 million for the nine months ended September 30, 2001,
an increase of $17.5 million, or 32%. The operating margin increased by $12.5
million during the period, largely as a result of increased revenues and
decreased expenses on the Williams Pipe Line system, earnings from the
acquisitions of the Little Rock and Gibson terminal facilities and enhanced
utilization of the Gulf Coast marine facilities, partially offset by lower
product sales margins. Depreciation expense and general and administrative
expenses decreased by $0.2 million and $2.3 million, respectively, while net
interest expenses increased by $4.6 million. Debt placement fee amortization
expense increased $7.0 million primarily due to the amortization of the debt
costs from the debt associated with the acquisition of Williams Pipe Line. Other
income decreased $0.3 million. Income taxes decreased $14.5 million due to the
elimination of income taxes because of our partnership structure.

         OTHER KNOWN TRENDS OR EVENTS

         We have significant relationships with Williams, the owner of our
General Partner, Farmland Industries, Inc. ("Farmland") and other third-party
entities that impact our operating results. Williams has completed a number of
asset sales and entered into secure credit facilities to address its liquidity
needs, and Farmland has filed for bankruptcy. Our relationships with these two
entities are described below:

         Williams - During the past year, Williams has experienced financial and
liquidity difficulties and currently does not have an investment grade credit.
We are engaged contractually with Williams on several fronts, including
commercial relationships, contracted services and indemnities. The extent of
these relationships include:

         o        Williams is the owner of our General Partner and owns
                  approximately 55% of the partnership.

         o        Williams is a customer, representing approximately 15% of our
                  September 30, 2002, year-to-date revenues. We expect to
                  replace a majority of these revenues, without significant
                  impact to our results of operations, if Williams is unable to
                  perform on its existing obligations.

         o        Williams provides various services for us. Through these
                  services, Williams operates our assets and provides general
                  and administrative services. All employees supporting our
                  partnership are employees of Williams. We pay full cost for
                  the operating expenses associated with our assets, and we
                  incur an additional cost of approximately $40.0 million per
                  year for general and administrative services. Through
                  September 30, 2002, general and administrative charges to our
                  General Partner from Williams exceeded the amount charged to
                  us per the provisions of the Omnibus Agreement by $15.3
                  million. We believe a majority of those excess charges
                  incurred by the General Partner do not relate to services
                  essential for our ongoing operations.

                  One of the services provided by Williams and its affiliates is
                  the shared operating costs of the ammonia pipeline system with
                  Mid-America Pipeline Company. On August 1, 2002, Williams
                  announced that it had sold 98% of Mapletree LLC, which owns
                  Mid-America Pipeline Company ("MAPL"), to Enterprise Products
                  Partners L.P. ("Enterprise"). The Partnership has an agreement
                  with MAPL, which addresses shared operating costs as well as
                  commercial and


                                       21
<PAGE>


                  general and administrative support costs related to the
                  Partnership's ammonia pipeline system. Enterprise has agreed
                  to continue this agreement for a six-month transition period,
                  which can be extended to a one-year period unless either party
                  provides a 90-day written notification to cancel the
                  agreement. However, the agreement also stipulates that the
                  shared operating costs with MAPL will remain in effect as long
                  as MAPL owns and operates the natural gas liquids pipeline
                  system adjoining our ammonia pipeline system, unless the
                  parties mutually agree to terminate the agreement. The
                  operating costs of the ammonia pipeline could increase based
                  on a re-evaluation by Enterprise of the operating costs for
                  MAPL to dispatch the ammonia system and operate the shared
                  facilities on the ammonia pipeline system.

         o        For assets included in our initial public offering, Williams
                  has agreed to provide maintenance capital reimbursements for
                  expenditures in excess of $4.9 million during 2002. We have
                  received $4.0 million reimbursement so far this year
                  associated with the initial public offering assets and expect
                  to receive an additional $6.5 million through the remainder of
                  2002. In addition, Williams has agreed to pay maintenance
                  capital associated with the Williams Pipe Line system in
                  excess of $19.0 million per year for 2002, 2003 and 2004 up to
                  a cumulative maximum of $15.0 million. We expect to spend less
                  than $19.0 million annually for maintenance capital for the
                  Williams Pipe Line system and do not expect any reimbursement
                  from Williams associated with this asset.

         o        Williams has provided various indemnifications to us. The most
                  significant indemnification covers environmental remediation
                  costs associated with assets purchased from Williams relating
                  to events prior to our purchase. For assets involved in our
                  initial public offering, this indemnification extends until
                  February 2004 up to an aggregate liability of $15.0 million.
                  For the Williams Pipe Line system, this indemnification
                  extends until April 2008 up to an aggregate liability of
                  $125.0 million. Receivables from Williams associated with
                  these indemnifications were $22.9 million at September 30,
                  2002.


         Farmland - Farmland filed for Chapter 11 bankruptcy protection on May
31, 2002. Farmland is the largest customer on our ammonia pipeline system.
Farmland also owns and operates a refinery in Coffeyville, Kansas, with its
products marketed through a third party that ships on Williams Pipe Line. This
third party shipper is not affiliated with either Farmland or Williams. Combined
total revenues associated with Farmland's ammonia shipments and this third party
shipper on the Williams Pipe Line were $25.3 million and $31.3 million for the
nine months ended September 30, 2002 and 2001, respectively, and $43.0 million
for the year ended December 31, 2001, representing 7.9%, 9.3% and 9.6% of total
revenues for the nine months ended September 30, 2002, September 30, 2001 and
the twelve months ended December 31, 2001, respectively. We cannot predict the
impact Farmland's bankruptcy may have on our financial position, results of
operations or cash flows. However, demand for products from Farmland's
Coffeyville, Kansas refinery have continued to be strong and we expect that this
demand will remain strong for the foreseeable future. Also, we believe that
Farmland will either continue to operate its Coffeyville, Kansas refinery or
will sell it to a third party who will continue its operation. Additionally,
demand for anhydrous ammonia has not changed significantly, and we believe that
we will continue to meet this demand through shipments of anhydrous ammonia that
is either produced at Farmland's facility, whether owned by them or a subsequent
buyer of its production facility, or produced by one of our other ammonia
pipeline customers. For the nine months ended September 30, 2002, the ammonia
pipeline system accounted for 3% of our total operating margin.


LIQUIDITY AND CAPITAL RESOURCES


CASH FLOWS AND CAPITAL EXPENDITURES

         Net cash provided by operating activities for the nine months ended
September 30, 2002 was $96.2 million compared to $93.4 million for the nine
months ended September 30, 2001. The $2.8 million increase in cash was primarily
a result of increased net income, partially offset by changes in working
capital. Affiliate and long-term affiliate receivables increased during 2002
resulting in a $11.0 million use of cash primarily due to the indemnification
from Williams for environmental liabilities occurring prior to our ownership of
Williams Pipe Line. As part of our acquisition of Williams Pipe Line, Williams
retained $15.0 million of its accounts receivable. Therefore, accounts
receivable increased during 2002 as those receivables were replaced as part of
the ongoing operations of that business, resulting in a $7.5 million use of
cash. In addition, affiliate accounts payable decreased, resulting in a $16.6
million use of cash between periods. Prior to our ownership of it, Williams Pipe
Line did not settle intercompany payables with cash on


                                       22
<PAGE>


a monthly basis, allowing the affiliate payable to increase. Subsequent to our
ownership of Williams Pipe Line, we pay the affiliate amounts each month, which
resulted in a cash reduction between periods. Partially offsetting these working
capital items which utilized cash, inventories decreased between periods
resulting in a cash inflow of $24.2 million. Inventory balances were lower due
to the elimination of butane blending inventories as we now perform butane
blending as a service provider without carrying the relevant inventory and due
to the selling of refined petroleum products inventories because of a favorable
market condition during the current quarter.

         Net cash used by investing activities for the nine months ended
September 30, 2002 and 2001 was $722.8 million and $56.5 million, respectively.
Investing activities for 2002 include the acquisition of Williams Pipe Line and
the Aux Sable pipeline as well as a deposit for the pending acquisition of a
refined petroleum products pipeline from Tesoro Petroleum Corporation. Investing
activities for 2001 include the acquisition of two inland terminals in Little
Rock, Arkansas. Maintenance capital for the period ended September 30, 2002 was
$17.7 million, compared to $15.9 million during 2001. Please see Capital
Requirements below for more discussion of capital expenditures.

         Net cash provided by financing activities for the nine months ended
September 30, 2002 was $655.3 million compared to net cash used of $30.2 million
in 2001. The cash provided during the first nine months of 2002 principally
involved the debt and equity funding associated with our acquisition of Williams
Pipe Line. Cash was used in 2001 to repay affiliate notes associated with both
our initial public offering assets as well as the Williams Pipe Line, partially
offset by proceeds from debt borrowings and equity issued in our initial public
offering.

         Federal Energy Regulatory Commission ("FERC") Notice of Proposed
Rulemaking - On August 1, 2002, the FERC issued a Notice of Proposed Rulemaking
that, if adopted, would amend its Uniform Systems of Accounts for public
utilities, natural gas companies and oil pipeline companies by requiring
specific written documentation concerning the management of funds from a
FERC-regulated subsidiary by a non-FERC-regulated parent. Under the proposed
rule, as a condition for participating in a cash management or money pool
arrangement, the FERC-regulated entity would be required to maintain a minimum
proprietary capital balance (stockholder's equity) of 30 percent, and the
FERC-regulated entity and its parent would be required to maintain investment
grade credit ratings. If either of these conditions is not met, the
FERC-regulated entity would not be eligible to participate in the cash
management or money pool arrangement. The period for interested companies to
make comments to the FERC relative to this proposed rule has ended and the FERC
is evaluating its position on the issue. We do not know when or if the rule will
be enacted. Although it appears that, if enacted, the rule may affect the way in
which we manage cash, we are unable, at this time, to predict the full impact of
this proposed regulation on our business.


CAPITAL REQUIREMENTS

         The transportation, storage and distribution business requires
continual investment to upgrade or enhance existing operations and to ensure
compliance with safety and environmental regulations. The capital requirements
of our businesses consist primarily of:

         o        maintenance capital expenditures, such as those required to
                  maintain and upgrade equipment reliability and safety and to
                  address environmental regulations; and

         o        expansion capital expenditures to acquire additional
                  complementary assets to grow our business and to expand or
                  upgrade our existing facilities, such as projects that
                  increase storage or throughput volumes or develop pipeline
                  connections to new supply sources.

         Williams has agreed to reimburse us for maintenance capital
expenditures incurred in 2001 and 2002 in excess of $4.9 million per year
related to the assets contributed to us at the time of our initial public
offering. This reimbursement obligation is subject to a maximum combined
reimbursement for 2001 and 2002 of $15.0 million. During 2001, we incurred $8.8
million of maintenance capital expenditures for these assets and recorded a
reimbursement from Williams of $3.9 million. As a result of these
reimbursements, the maximum reimbursement obligation of Williams with respect to
these assets was reduced to $11.1 million for 2002. As of September 30, 2002, we
have recorded a reimbursement from Williams of $4.0 million and we expect
maintenance capital expenditures for the full year of 2002 for our petroleum
products terminals and ammonia pipeline system to be approximately $15.5
million, with $10.5 million being reimbursed by Williams.


                                       23
<PAGE>


         In connection with the acquisition of the Williams Pipe Line system,
Williams has agreed to reimburse us for maintenance capital expenditures
incurred in 2002, 2003 and 2004 in excess of $19.0 million per year related to
the Williams Pipe Line system, subject to a maximum combined reimbursement for
all years of $15.0 million. In 2002, we expect to incur maintenance capital
expenditures related to the Williams Pipe Line system of approximately $13.0
million and, therefore, do not anticipate any reimbursements from Williams
associated with Williams Pipe Line's 2002 maintenance capital expenditures.

         We expect to incur aggregate maintenance capital expenditures for 2002
for all of our businesses, net of reimbursements from Williams, of $18.0
million.

         In addition to maintenance capital, we are also planning to incur
expansion and upgrade capital expenditures at our existing facilities, including
pipeline connections. The total we plan to spend for expansion is approximately
$12.5 million in 2002, not including capital needs associated with additional
acquisitions, if any. We expect to fund our future expansion capital
expenditures, including any acquisitions, from:

         o        cash provided by operations;

         o        borrowings under the revolving credit facility discussed below
                  and other borrowings; and

         o        the issuance of additional common units.


LIQUIDITY

         Operating Partnership Credit Facility. Subsequent to the closing of our
initial public offering on February 9, 2001, we have relied on cash generated
from internal operations as our primary source of funding for uses other than
acquisition capital expenditures. Additional funding requirements are met by a
$175.0 million credit facility of our operating partnership that expires on
February 5, 2004. This credit facility is comprised of a $90.0 million term loan
and an $85.0 million revolving credit facility. The revolving credit facility is
comprised of a $73.0 million acquisition sub-facility and a $12.0 million
working capital sub-facility. As of September 30, 2002, $15.0 million was
available under the acquisition sub-facility and $12.0 million was available
under the working capital sub-facility.

         The credit facility contains various operational and financial
covenants. Management believes that we are in compliance with all of these
covenants.

         Williams Pipe Line Short-term Loan. In connection with the acquisition
of the Williams Pipe Line system, we and our subsidiary, Williams Pipe Line,
entered into a six-month $700.0 million credit agreement. In October 2002 we
negotiated an extension of the maturity of the Williams Pipe Line short-term
note from October 8, 2002 to November 27, 2002. All of the proceeds from this
loan were used to finance the Williams Pipe Line acquisition. During May 2002,
we issued an additional 8.0 million common units to the public at a price of
$37.15 per unit. After paying underwriter discounts and commissions and equity
issuance fees, we received net proceeds of $283.1 million from the common equity
issuance. In addition, Williams contributed $6.1 million to maintain its 2%
general partner interest. Using these proceeds, we repaid $289.0 million on the
loan, resulting in an outstanding balance of $411.0 million at September 30,
2002.

         Our obligations under this short-term loan are unsecured. This
indebtedness ranks equally with all of our outstanding unsecured and
non-subordinated debt. We may prepay this short-term loan at any time, in whole
or in part, without penalty. Our operating partnership is not a borrower under
this credit agreement.

         The credit agreement contains various covenants limiting our and
Williams Pipe Line's ability to:

         o        incur additional unsecured indebtedness other than under our
                  operating partnership's credit facility described above;

         o        grant liens other than tax liens, mechanic's and materialman's
                  liens and other liens and encumbrances incurred in the
                  ordinary course of business;

         o        make investments, other than investments in the Williams Pipe
                  Line system, cash and short-term securities and acquisitions;

         o        merge or consolidate;


                                       24
<PAGE>


         o        dispose of assets;

         o        make distributions other than from available cash or, in the
                  case of Williams Pipe Line, in excess of $7.5 million in each
                  quarter;

         o        engage in any business other than the transportation, storage
                  and distribution of hydrocarbons and ammonia;

         o        create obligations for some lease payments; or

         o        engage in transactions with affiliates other than arm's-length
                  transactions.

         The credit agreement also contains a covenant requiring Williams Pipe
Line to maintain EBITDA (as defined in the credit agreement) of at least $20.0
million for each fiscal quarter. Management believes that we are in compliance
with all of these covenants. If this short-term loss is repaid after November
15, 2002, the partnership will incur additional debt placement fees of
approximately $4.1 million.


         On October 31, 2002, Williams Pipe Line entered into a private
placement debt agreement, effective October 1, 2002, with a group of financial
institutions for up to $200.0 million aggregate principal amount of Floating
Rate Series A Senior Secured Notes and up to $340.0 million aggregate principal
amount of Fixed Rate Series B Senior Secured Notes. The maturity date of both
notes is October 7, 2007. Two borrowings will occur in relation to these notes.
The first borrowing will be for $420.0 million, allocated pro rata between the
Series A notes and Series B notes, and will be used to repay Williams Pipe
Line's existing short-term note and related debt placement fees. The second
borrowing will be allocated pro rata between the Series A notes and Series B
notes and will be for either: (i) $120.0 million if the Tesoro pipeline
acquisition is consummated (See Note 3 - Acquisitions), or (ii) $60.0 million to
be used primarily for repayment of our other debt. The Floating Rate Series A
Senior Secured Notes will carry an interest rate equal to the six-month
Eurodollar Rate plus (i) 4.25% or (ii) an amount necessary to equal the rate on
the Series B note borrowings on a swap-equivalent basis, whichever is greater.
The Fixed Rate Series B Senior Secured Notes will carry an interest rate of
7.67% on the first borrowing and a rate equal to the five year U.S. Treasury
Bond plus 4.70% on the second borrowing. Debt placement fees associated with
these notes are expected to be $12.1 million, which will be amortized over the
life of the notes. Payment of interest and repayment of the principal is
guaranteed by Williams Energy Partners. As part of this agreement, we also
agreed that we will not redeem or retire the Partnership's Class B units held by
Williams or any of its affiliates except with the proceeds from our equity
issuances. Our ability to secure new financing and the cost of future debt could
be influenced by Williams' financial position.

         Debt-to-Total Capitalization - The ratio of debt-to-total
capitalization is a measure frequently used by the financial community to assess
the reasonableness of a company's debt levels compared to total capitalization,
calculated by summing total debt and total equity. Based on the figures shown in
our balance sheet, debt-to-total capitalization appears to be 57%. Since
accounting rules require that the acquisition of Williams Pipe Line be recorded
at historical book value due to the affiliate nature of the transaction, the
$415.1 million difference between the purchase price and book value was recorded
as a decrease to the General Partner's capital account, thus lowering the equity
component. If the pipeline had been purchased from a third party, the asset
would have been recorded at market value, resulting in a debt to total
capitalization of 40%. Management has indicated that it is targeting a
debt-to-total capitalization of approximately 40%.


NEW ACCOUNTING PRONOUNCEMENTS

         In May 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 145, "Rescission of
FASB Statements No. 4, 44 and 64, Amendment of FASB Statement 13 and Technical
Corrections." The provisions of SFAS No. 145 regarding the rescission of
Statement 4 are effective for financial statements issued for fiscal years
beginning after May 15, 2002. Any gain or loss on extinguishment of debt that
was classified as an extraordinary item in prior periods presented that does not
meet the criteria in APB 30 for classification as an extraordinary item should
be reclassified. Certain provisions of this Statement related to Statement 13
are effective for transactions occurring after May 15, 2002. All other
provisions of this Statement will be effective for


                                       25
<PAGE>


financial statements issued on or after May 15, 2002. We plan to adopt this
standard in January 2003, and it is not expected to have a material impact on
our results of operations or financial position.

         In August 2001, 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 to
be applied prospectively and is effective for financial statements issued for
fiscal years beginning after December 15, 2001. We adopted this standard in
January 2002. The Statement had no initial impact on our results of operations
or financial position.

         In June 2002, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations," which is effective for fiscal years beginning after
June 15, 2002. The Statement requires legal obligations associated with the
retirement of long-lived assets to be recognized at their fair value at the time
that the obligations are incurred. Upon initial recognition of a liability, that
cost should be capitalized as a part of the related long-lived asset and
allocated to expense over the useful life of the asset. We will adopt the new
rules on asset retirement obligations on January 1, 2003. Application of the new
rules is not expected to have a material impact on our results of operations or
financial position. The estimated obligations will consider current factors such
as expected future inflation rates, current costs of borrowing, estimated
retirement dates and estimated expected costs of required retirement activities.
Retirement obligations have not been estimated for pipeline transmission and
terminal assets because their remaining life is not currently determinable.

         In June 2001, the 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 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 this Statement, goodwill and
intangible assets with indefinite useful lives will no longer be amortized but
will be tested annually for impairment. The Statement becomes effective for all
fiscal years beginning after December 15, 2001. We have applied the new rules on
accounting for goodwill and other intangible assets beginning January 1, 2002.
Based on the amount of goodwill recorded as of December 31, 2001, application of
the non-amortization provision of the Statement resulted in a decrease to
amortization expense in the first nine months of 2002 of approximately $0.6
million.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risk is the risk of loss arising from adverse changes in market
rates and prices. The principal market risk to which we are exposed is interest
rate risk. Debt we incur under our credit facility and the Williams Pipe Line
short-term loan bear variable interest based on the Eurodollar rate. If the
Eurodollar rate changed by 0.125%, our annual debt coverage obligations
associated with the $148.0 million of outstanding borrowings under the credit
facility at September 30, 2002 and the $411.0 million of outstanding borrowings
under the Williams Pipe Line short-term loan would change by approximately $0.7
million.


ITEM 4. CONTROLS AND PROCEDURES

         An evaluation of the effectiveness of the design and operation of the
Partnership's disclosure controls and procedures (as defined in rule 13a-14(c)
of the Securities Exchange Act) was performed within the 90 days prior to the
filing date of this report. This evaluation was performed under the supervision
and with the participation of the Partnership's management, including the
General Partner's Chief Executive Officer and Chief Financial Officer. Based
upon that evaluation, the General Partner's Chief Executive Officer and Chief
Financial Officer concluded that these disclosure controls and practices are
effective.


                                       26
<PAGE>


         A self-evaluation of the Partnership's internal controls was performed
during October 2002. The Partnership concluded that there were no significant
deficiencies or material weaknesses in its internal controls. There have been no
significant changes in the Partnership's internal controls or in other factors
that could significantly affect internal controls subsequent to the date of the
certifying officers' most recent evaluation.


FORWARD-LOOKING STATEMENTS

         Certain matters discussed in this Quarterly Report on Form 10-Q include
forward-looking statements - statements that discuss our expected future results
based on current and pending business operations. We make 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", "estimates", "forecasts", "projects" and
other similar expressions. Although we believe our forward-looking statements
are based on reasonable assumptions, statements made regarding future results
are subject to numerous assumptions, uncertainties and risks that may cause
future results to be materially different from the results stated or implied in
this document.

         The following are among the important factors that could cause actual
results to differ materially from any results projected, forecasted, estimated
or budgeted:

         o        Price trends and overall demand for natural gas liquids,
                  refined petroleum products, natural gas, crude oil and ammonia
                  in the United States and globally; economic activity, weather,
                  alternative energy sources, conservation and technological
                  advances may affect price trends and demand;

         o        Our failure to make principal or interest payments on our
                  short-term loan incurred to finance the acquisition of
                  Williams Pipe Line;

         o        Mergers among our customers and competitors could result in
                  lower volumes being shipped on our pipelines and/or demand for
                  product storage and terminal services at our terminal
                  facilities;

         o        The closure of mid-continent refineries that supply the
                  Williams Pipe Line could result in disruptions or reductions
                  in the volumes transported on the system;

         o        Changes in demand for refined petroleum products that we store
                  and distribute;

         o        Changes in demand for storage in our petroleum products
                  terminals;

         o        Changes in our tariff rate implemented by the Federal Energy
                  Regulatory Commission and the United States Surface
                  Transportation Board;

         o        Shut-downs or cutbacks at major refineries, petrochemical
                  plants, ammonia production facilities or other businesses that
                  use our services or supply services to us;

         o        Changes in the throughput on petroleum products pipelines
                  owned and operated by third parties and connected to our
                  petroleum products terminals;

         o        Loss of Williams Energy Marketing & Trading Company or
                  Williams Refining & Marketing, L.L.C. as customers;

         o        Loss of one or more of our three customers on our ammonia
                  pipeline system: in particular, the loss of volumes from
                  Farmland Industries, which filed for Chapter 11 bankruptcy
                  protection on May 31, 2002;

         o        An increase in the price of natural gas, which increases
                  ammonia production costs and could reduce the amount of
                  ammonia transported through our ammonia pipeline system;

         o        Changes in the federal government's policy regarding farm
                  subsidies, which could negatively impact the demand for
                  ammonia and reduce the amount of ammonia transported through
                  our ammonia pipeline system;

         o        An increase in the competition our petroleum products
                  terminals and ammonia pipeline system encounter;

         o        The occurrence of an operational hazard, act of terrorism or
                  unforeseen interruption for which we are not adequately
                  insured;

         o        Our ability to integrate any acquired operations into our
                  existing operations;

         o        Changes in the general economic conditions in the United
                  States;

         o        Changes in laws and regulations to which we are subject,
                  including tax, safety, environmental and employment laws and
                  regulations;

         o        The condition of the capital markets and equity markets in the
                  United States;


                                       27
<PAGE>

         o        The cost and effects of legal and administrative claims and
                  proceedings against us or our subsidiaries;

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

         o        The effect of changes in accounting policies;

         o        The ability to control costs;

         o        The political and economic stability of the oil producing
                  nations of the world; and

         o        Our relationship with Williams, which subjects us to risks
                  that are beyond our control.


                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         During 2001, the Environmental Protection Agency ("EPA"), pursuant to
Section 308 of the Clean Water Act, preliminarily determined that Williams may
have systemic problems with petroleum discharges from pipeline operations. The
inquiry primarily focused on Williams Pipe Line, which was subsequently acquired
by the Partnership. The response to the EPA's information request was submitted
during November 2001.

         No other material litigation or claims were filed against the
Partnership during the three months ended September 30, 2002, and there have
been no material changes in legal proceedings previously disclosed.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None.

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

         None.

ITEM 5. OTHER INFORMATION

         None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits:

               Exhibit 10.1 -  SERVICES AGREEMENT dated September 30, 2002
               Exhibit 10.2 -  THIRD AMENDMENT TO OMNIBUS AGREEMENT dated
                                  September 30, 2002
               Exhibit 10.3 -  SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
                                  PARTNERSHIP OF WILLIAMS ENERGY PARTNERS L.P.
                                  dated September 30, 2002
               Exhibit 10.4 -  THIRD AMENDED AND RESTATED LIMITED LIABILITY
                                  COMPANY AGREEMENT OF WILLIAMS GP LLC dated
                                  September 30, 2002
               Exhibit 10.5 -  FIRST AMENDMENT TO CREDIT AGREEMENT dated
                                  October 9, 2002
               Exhibit 10.6 -  NOTE PURCHASE AGREEMENT dated October 31, 2002
               Exhibit 10.7 -  SECURITY AGREEMENT dated October 31, 2002
               Exhibit 10.8 -  COLLATERAL AGENCY AGREEMENT dated October 31,
                                  2002


                                       28
<PAGE>
         (b)   Reports on Form 8-K:

                    On November 4, 2002, the Partnership reported on Form 8-K,
               that while it is continuing its acquisition efforts with Tesoro
               Refining & Marketing Company ("Tesoro") and discussions with the
               Federal Trade Commission, Tesoro has the right to enter into
               discussions with other potential buyers of its petroleum products
               pipeline.

                   On October 29, 2002, the Partnership reported on Form 8-K,
               its earnings for the three and nine months ended September 30,
               2002 and 2001.

                   On October 23, 2002, the Partnership announced that it had
               extended the maturity of its short-term loan associated with the
               acquisition of Williams Pipe Line to November 27, 2002, and is
               negotiating long-term debt financing to retire the short-term
               loan within the timeframe of the extension.

                  On August 26, 2002, the Partnership reported on Form 8-K, an
               agreement to acquire a refined petroleum products pipeline from
               Tesoro Refining & Marketing Company for $110 million.

                  On August 14, 2002, the Partnership submitted on Form 8-K,
               voluntary filings by the chief executive officer and the chief
               financial officer of Williams GP LLC, the general partner of the
               Partnership, complying with the Securities and Exchange
               Commission's file No. 4-460 Order requiring the filing of sworn
               statements pursuant to Section 21(a)(1) of the Securities and
               Exchange Act of 1934.

                  On August 14, 2002, the Partnership submitted on Form 8-K, the
               certification of the Partnership's Quarterly Report on Form 10-Q
               for the quarterly period ended June 30, 2002 by the chief
               executive officer and the chief financial officer of Williams GP
               LLC, the general partner of the Partnership, as required pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.

                  On July 31, 2002, the Partnership reported on Form 8-K, its
               earnings for the three and six months ended June 30, 2002 and
               2001.

                  On July 25, 2002, the Partnership reported on Form 8-K, that
               it had held a conference call with analysts on July 23, 2002 to
               discuss the news announced on July 22, 2002, by Williams, the
               owner of the Partnership's General Partner.


                                       29
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in Tulsa, Oklahoma, on November 14, 2002.


                                        WILLIAMS ENERGY PARTNERS L.P.

                                        By: Williams GP LLC
                                            its General Partner




                                        /s/ John D. Chandler
                                        -------------------------------------
                                        John D. Chandler
                                        Chief Financial Officer
                                        and Treasurer (Principal Accounting and
                                        Financial Officer)



                                       30
<PAGE>
                                 CERTIFICATIONS

I, Don R. Wellendorf, President and Chief Executive Officer of Williams GP LLC,
the General Partner of Williams Energy Partners L.P. (the "Partnership"),
certify that:

1. I have reviewed this quarterly report on Form 10-Q of Williams Energy
Partners L.P.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:

(a)  Designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including it consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

(b)  Evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

(c)  Presented in this quarterly report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or other persons performing the equivalent
function):

(a)  all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

(b)  any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including ay corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 14, 2002


                                                  /s/ Don R. Wellendorf
                                                  ---------------------
                                                  Don R. Wellendorf,
                                                  Chief Executive Officer,
                                                  Williams GP LLC



                                       31
<PAGE>


I, John D. Chandler, Chief Financial Officer of WEG GP LLC, the General Partner
of Williams Energy Partners L.P. (the "Partnership"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of Williams Energy
Partners L.P.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:

(a)  Designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including it consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

(b)  Evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

(c)  Presented in this quarterly report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or other persons performing the equivalent
function):

(a)  all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

(b)  any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including ay corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 13, 2002


                                                  /s/ John D. Chandler
                                                  --------------------
                                                  John D. Chandler,
                                                  Chief Financial Officer,
                                                  Williams GP LLC



                                       32
<PAGE>


                                INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER         DESCRIPTION
-------        -----------
<S>            <C>

   10.1        SERVICES AGREEMENT dated September 30, 2002

   10.2        THIRD AMENDMENT TO OMNIBUS AGREEMENT dated September 30, 2002

   10.3        SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
               WILLIAMS ENERGY PARTNERS L.P. dated September 30, 2002

   10.4        THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
               WILLIAMS GP LLC dated September 30, 2002

   10.5        FIRST AMENDMENT TO CREDIT AGREEMENT dated October 9, 2002

   10.6        NOTE PURCHASE AGREEMENT dated October 31, 2002

   10.7        SECURITY AGREEMENT dated October 31, 2002

   10.8        COLLATERAL AGENCY AGREEMENT dated October 31, 2002

</Table>


                                       33



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>d01268exv10w1.txt
<DESCRIPTION>SERVICES AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

================================================================================

                               SERVICES AGREEMENT

                                      AMONG

                                 WILLIAMS GP LLC

                          WILLIAMS ENERGY PARTNERS L.P.

                       WILLIAMS PETROLEUM SERVICES, L.L.C.

                                       AND

                        WILLIAMS ENERGY SERVICES, L.L.C.

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
                                    ARTICLE I
                                   DEFINITIONS

1.01  Definitions........................................................     1
1.02  Construction.......................................................     3

                                ARTICLE II
                 RETENTION OF WILLIAMS; SCOPE OF SERVICES

2.01  Retention of Williams..............................................     3
2.02  Scope of Services..................................................     3
2.03  Exclusion of Services..............................................     3
2.04  Performance of Services by Affiliates..............................     4
2.05  Representations and Warranties of WES and WPS......................     4
2.06  Representations and Warranties of GP and WEG.......................     4
2.07  Intellectual Property..............................................     5

                                ARTICLE III
                       BOOKS, RECORDS AND REPORTING

3.01  Books and Records..................................................     5
3.02  Audits.............................................................     5
3.03  Reports............................................................     5

                                ARTICLE IV
                           REIMBURSEMENT AMOUNT

4.01  Reimbursement Amount...............................................     6
4.02  Payment of Reimbursement Amount....................................     6
4.03  Disputed Charges...................................................     6
4.04  Set Off............................................................     6

                                 ARTICLE V
                               FORCE MAJEURE

5.01  Force Majeure......................................................     6

                                ARTICLE VI
                       ASSIGNMENTS AND SUBCONTRACTS

6.01  Assignments........................................................     7
6.02  Williams's Employees...............................................     7
6.03  Other Requirements.................................................     7

                                ARTICLE VII
                            DISPUTE RESOLUTION

7.01  Disputes...........................................................     7
7.02  Negotiation to Resolve Disputes....................................     8
</TABLE>


                                       i
<PAGE>

<TABLE>
<S>                                                                          <C>
7.03  Selection of Arbitrator............................................     8
7.04  Conduct of Arbitration.............................................     8

                               ARTICLE VIII
                                TERMINATION

8.01  Termination by GP..................................................     9
8.02  Termination by Williams............................................    10
8.03  Effect of Termination..............................................    10

                                ARTICLE IX
                            GENERAL PROVISIONSW

9.01  Notices............................................................    10
9.02  Entire Agreement; Superseding Effect...............................    11
9.03  Effect of Waiver or Consent........................................    11
9.04  Amendment or Restatement...........................................    11
9.05  Restriction on Assignment; Binding Effect..........................    11
9.06  Governing Law; Severability........................................    11
9.07  Further Assurances.................................................    11
9.08  Directly or Indirectly.............................................    12
9.09  Counterparts.......................................................    12
</TABLE>


                                       ii
<PAGE>

                               SERVICES AGREEMENT

      This Services Agreement (this "Agreement") is entered into as of the [   ]
day of [   ], 2002 (the "Effective Date"), among Williams Energy Partners L.P.,
a Delaware limited partnership ("WEG"), Williams GP LLC, a Delaware limited
liability company ("GP"), Williams Petroleum Services, L.L.C., a Delaware
limited liability company ("WPS"), and Williams Energy Services, L.L.C., a
Delaware limited liability company ("WES", and collectively with WEG, GP and
WPS, the "Parties").

                                    RECITALS

      A.    WEG is the owner of interests in certain pipelines and terminals
            (the "Assets," as hereinafter defined);

      B.    GP, in its capacity as the general partner of WEG, desires to engage
            WES and WPS, Affiliates of GP, on its own behalf and for the benefit
            of WEG, to provide the services necessary to operate the Assets in
            accordance with the direction of GP; and

      C.    WPS and WES (collectively, "Williams") are willing to undertake such
            engagement, subject to the terms and conditions of this Agreement;

      NOW, THEREFORE, WEG, GP, for itself and in its capacity as the general
partner of WEG, and WILLIAMS agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

      1.01 DEFINITIONS. As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Sections referred to
below:

      "AFFILIATE" shall mean with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, through the ownership of voting securities, by contract or
otherwise.

      "AGREEMENT" is defined in the introductory paragraph.

      "ASSETS" shall mean the assets of Williams Energy Partners L.P., Williams
OLP, L.P. and Williams Pipe Line Company, LLC and any Person controlled by any
of them.

      "ARBITRATION NOTICE" is defined in Section 7.02 (c).

      "ARBITRATOR" is defined in Section 7.03(a).

      "BANKRUPT" with respect to any Person shall mean such Person shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally,

<PAGE>

or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against such Person seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), shall remain undismissed or unstayed for a period of
30 days; or such Person shall take any action to authorize any of the actions
set forth above.

      "CHANGE OF CONTROL" is defined in the Omnibus Agreement.

      "WILLIAMS" is defined in the recitals hereof.

      "DEFAULT RATE" shall mean an interest rate (which shall in no event be
higher than the rate permitted by applicable law) equal to 300 basis points over
LIBOR.

      "DISPUTE" is defined in Section 7.01(a).

      "EFFECTIVE DATE" is defined in the introductory paragraph.

      "FORCE MAJEURE" shall mean any cause beyond the reasonable control of a
Party, including the following causes (unless they are within such Party's
reasonable control): including, without limitation, acts of God, strikes,
lockouts, acts of the public enemy, wars or warlike action (whether actual or
impending), arrests and other restraints of government (civil or military),
blockades, embargoes, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fires, sabotage, tornadoes, named tropical storms and hurricanes,
and floods, civil disturbances, terrorism, mechanical breakdown of machinery or
equipment, explosions, confiscation or seizure by any government or other public
authority, any order of any court of competent jurisdiction, regulatory agency
or governmental body having jurisdiction.

      "GENERAL PARTNER INTEREST" shall have the meaning set forth in Article I
of the Partnership Agreement.

      "GP" is defined in the introductory paragraph.

      "OMNIBUS AGREEMENT" shall mean that Omnibus Agreement dated as of February
9, 2001 among WEG, GP, WES, The Williams Companies, Inc., Williams Natural Gas
Liquids, Inc., Williams Pipe Line Company, LLC, Williams Information Services
Corporation, and Williams OLP, L.P., as amended from time to time.

      "PARTICIPANTS" is defined in Section 7.01.

      "PARTIES" is defined in the introductory paragraph.

      "PARTNERSHIP AGREEMENT" shall mean that Amended and Restated Agreement of
Limited Partnership of Williams Energy Partners L.P. dated as of February 9,
2001, as amended from time to time.


                                       2
<PAGE>

      "PERSON" means an individual, corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or other entity.

      "REIMBURSEMENT AMOUNT" is defined in Section 4.01.

      "SERVICES" is defined in Section 2.02.

      "SETTLEMENT DATE" shall mean the 20th day of each calendar month for the
preceding month. In the event the 20th day falls on a Saturday or a bank holiday
other than a Monday, the "Settlement Date" shall be the immediately preceding
bank day. In the event the 20th day falls on a Sunday or Monday bank holiday,
the "Settlement Date" shall be the following bank day.

      "WEG" is defined in the introductory paragraph.

      "WES" is defined in the introductory paragraph.

      "WILLIAMS" is defined in the recitals hereof.

      "WPS" is defined in the introductory paragraph.

Other terms defined herein have the meanings so given them.

      1.02 CONSTRUCTION. Unless the context requires otherwise: (a) the gender
(or lack of gender) of all words used in this Agreement includes the masculine,
feminine, and neuter; (b) references to Articles and Sections refer to Articles
and Sections of this Agreement; (c) references to Exhibits refer to the Exhibits
attached to this Agreement, each of which is made a part hereof for all
purposes; and (d) references to money refer to legal currency of the United
States of America.

                                   ARTICLE II
                    RETENTION OF WILLIAMS; SCOPE OF SERVICES

      2.01 RETENTION OF WILLIAMS. (a) GP, on its own behalf for the benefit of
WEG, hereby engages Williams to perform the Services (as defined below) and to
provide all employees and any facilities and equipment not otherwise provided by
WEG necessary to perform the Services. Williams hereby accepts such engagement
and agrees to perform the Services and to provide any facilities and equipment
not otherwise provided by WEG, and to provide all employees necessary to perform
the Services.

      2.02 SCOPE OF SERVICES. The "Services" shall consist of any services
necessary to operate the Assets and the conduct of the business associated with
the Assets, including, without limitation, those services described on Exhibit 1
hereto. The Services shall be provided as directed by the officers of GP, and
the scope of the Services shall be provided consistent with the Services
provided as of July 31, 2002 unless agreed otherwise by GP and Williams.

      2.03 EXCLUSION OF SERVICES. At any time, either GP or Williams may
temporarily or permanently exclude any particular service from the scope of the
Services upon 90 days notice to


                                       3
<PAGE>

the other Party. GP may permanently exclude services from the scope of Services
related to Williams Ammonia Pipeline, L.P. upon reasonable notice to Williams.

      2.04 PERFORMANCE OF SERVICES BY AFFILIATES. The Parties hereby agree that
in discharging its obligations hereunder, Williams may engage any of its
Affiliates to perform the Services (or any part of the Services) on its behalf
and that the performance of the Services (or any part of the Services) by any
such Affiliate shall be treated as if Williams performed such Services itself.
Notwithstanding the foregoing, nothing contained herein shall relieve Williams
of its obligations hereunder.

      2.05 REPRESENTATIONS AND WARRANTIES OF WES AND WPS. Each of WES and WPS
hereby represents, warrants and covenants to WEG and to GP that the following
statements shall be true and correct as of the date hereof:

      (a) Each of WES and WPS is duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware; each of WES and WPS is
duly qualified and in good standing in the States required in order to perform
the Services except where failure to be so qualified or in good standing could
not reasonably be expected to have a material adverse impact on GP or WEG; and
each of WES and WPS has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;

      (b) Each of WES and WPL has duly executed and delivered this Agreement,
and it constitutes the legal, valid and binding obligation of such Person,
enforceable against such Person in accordance with its terms (except as may be
limited by bankruptcy, insolvency or similar laws of general application and by
the effect of general principles of equity, regardless of whether considered at
law or in equity); and

      (c) The authorization, execution, delivery, and performance of this
Agreement by each of WES and WPS does not and will not (i) conflict with, or
result in a breach, default or violation of, (A) the certificate of
incorporation or bylaws of such Person, (B) any contract or agreement to which
such Person is a party or is otherwise subject, or (C) any law, order, judgment,
decree, writ, injunction or arbitral award to which such Person is subject; or
(ii) require any consent, approval or authorization from, filing or registration
with, or notice to, any governmental authority or other Person, unless such
requirement has already been satisfied.

      2.06 REPRESENTATIONS AND WARRANTIES OF GP AND WEG. Each of GP and WEG
hereby represents, warrants and covenants to Williams that the following
statements shall be true and correct as of the date hereof:

      (a) Each of GP and WEG is duly incorporated, validly existing, and in good
standing under the laws of the jurisdiction of its formation; each of GP and WEG
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder;

      (b) Each of GP and WEG has duly executed and delivered this Agreement, and
it constitutes the legal, valid and binding obligation of such Person
enforceable against it in accordance with its terms (except as may be limited by
bankruptcy, insolvency or similar laws of general application and by the effect
of general principles of equity, regardless of whether considered at law or in
equity);


                                       4
<PAGE>

      (c) The authorization, execution, delivery, and performance of this
Agreement by each of GP and WEG does not and will not (i) conflict with, or
result in a breach, default or violation of, (A) the organizational documents of
such Person, (B) any contract or agreement to which such Person is a party or is
otherwise subject, or (C) any law, order, judgment, decree, writ, injunction or
arbitral award to which such Person is subject; or (ii) require any consent,
approval or authorization from, filing or registration with, or notice to, any
governmental authority or other Person, unless such requirement has already been
satisfied;

      2.07 INTELLECTUAL PROPERTY. (a) Any (i) inventions, whether patentable or
not, developed or invented, or (ii) copyrightable material (and the intangible
rights of copyright therein) developed, by Williams, its Affiliates or its or
their employees in connection with the performance of the Services shall be the
property of Williams; provided, however, that WEG shall be granted an
irrevocable, royalty-free, non-exclusive and non-transferable right and license
to use such inventions or material; and further provided, however, that WEG
shall only be granted such a right and license to the extent such grant does not
conflict with, or result in a breach, default, or violation of a right or
license to use such inventions or material granted to Williams by any Person
other than an Affiliate of Williams. Notwithstanding the foregoing, Williams
will use all commercially reasonable efforts to grant such right and license to
WEG.

      (b) WEG hereby grants to Williams and its Affiliates an irrevocable,
royalty-free, non-exclusive and non-transferable right and license to use,
during the term of this Agreement, any intellectual property provided by WEG to
Williams, but only to the extent such use is necessary for the performance of
the Services. Williams agrees that it and its Affiliates will utilize such
intellectual property solely in connection with the performance of the Services.

                                  ARTICLE III
                          BOOKS, RECORDS AND REPORTING

      3.01 BOOKS AND RECORDS. Williams shall maintain accurate books and records
regarding the performance of the Services and its calculation of the
Reimbursement Amount, and shall maintain such books and records for the period
required by applicable accounting practices or law.

      3.02 AUDITS. GP shall have the right, upon reasonable notice, and at all
reasonable times during usual business hours, to audit, examine and make copies
of the books and records referred to in Section 3.01. Such right may be
exercised through any agent or employee of GP designated in writing by it or by
an independent public accountant, engineer, attorney or other Williams so
designated. GP shall bear all costs and expenses incurred in any inspection,
examination or audit. Williams shall review and respond in a timely manner to
any claims or inquiries made by the GP regarding matters revealed by any such
inspection, examination or audit.

      3.03 REPORTS. Williams shall prepare and deliver to the GP any reports
provided for in this Agreement and such other reports as the GP may request from
time to time regarding the performance of the Services.


                                       5
<PAGE>

                                   ARTICLE IV
                              REIMBURSEMENT AMOUNT

      4.01 REIMBURSEMENT AMOUNT. Within 5 days after the end of each calendar
month, Williams shall charge via intercompany accounts to GP the amount equal to
the actual cost of all direct and indirect expenses incurred by Williams during
such calendar month in connection with its performance of the Services (the
"Reimbursement Amount"). Provided, however, that any portion of the Services
that were considered by the Parties to be general and administrative expenses as
of July 31, 2002 shall be subject to the reimbursement limitations set forth in
Article IV of the Omnibus Agreement.Payment of Reimbursement Amount. On or
before the Settlement Date, GP shall pay to Williams in immediately available
funds, the full Reimbursement Amount due by ACH debit.

      4.02 DISPUTED CHARGES. GP MAY, WITHIN 120 DAYS AFTER RECEIPT OF THE
INTERCOMPANY ACCOUNT CHARGE FROM WILLIAMS, TAKE WRITTEN EXCEPTION TO SUCH
CHARGE, ON THE GROUND THAT THE SAME WAS NOT A REASONABLE COST INCURRED BY
WILLIAMS IN CONNECTION WITH THE SERVICES. GP SHALL NEVERTHELESS PAY IN FULL WHEN
DUE THE FULL REIMBURSEMENT AMOUNT CHARGED TO GP BY WILLIAMS. SUCH PAYMENT SHALL
NOT BE DEEMED A WAIVER OF THE RIGHT OF GP TO RECOUP ANY CONTESTED PORTION OF ANY
AMOUNT SO CHARGED. HOWEVER, IF THE AMOUNT AS TO WHICH SUCH WRITTEN EXCEPTION IS
TAKEN, OR ANY PART THEREOF, IS ULTIMATELY DETERMINED IN ACCORDANCE WITH ARTICLE
7 NOT TO BE A REASONABLE COST INCURRED BY WILLIAMS IN CONNECTION WITH ITS
PROVIDING THE SERVICES HEREUNDER, SUCH AMOUNT OR PORTION THEREOF (AS THE CASE
MAY BE) SHALL BE REFUNDED BY WILLIAMS TO GP TOGETHER WITH INTEREST THEREON AT
THE DEFAULT RATE DURING THE PERIOD FROM THE DATE OF PAYMENT BY GP TO THE DATE OF
REFUND BY WILLIAMS.

      4.04 SET OFF. In the event that Williams owes GP an amount under any other
agreement, then any such amounts shall be aggregated and the GP and Williams
shall discharge their obligations by netting those amounts against any amounts
owed by GP to Williams under this Agreement. If GP or Williams owes the other
party a greater aggregate amount, that party shall pay to the other party the
difference between the amounts owed.

                                   ARTICLE V
                                  FORCE MAJEURE

      5.01 FORCE MAJEURE. A Party's obligation under this Agreement shall be
excused when and to the extent its performance of that obligation is prevented
due to Force Majeure; provided, however, that a Party shall not be excused by
Force Majeure from any obligation to pay money. The Party that is prevented from
performing its obligation by reason of Force Majeure shall promptly notify the
other Parties of that fact and shall exercise due diligence to end its inability
to perform as promptly as practicable. Notwithstanding the foregoing, a Party is
not required to settle any strike, lockout or other labor dispute in which it
may be involved; provided, however, that, in the event of a strike, lockout or
other labor dispute affecting


                                       6
<PAGE>

Williams, Williams shall use reasonable efforts to continue to perform all
obligations hereunder by utilizing its management personnel and that of its
Affiliates.

                                   ARTICLE VI
                          ASSIGNMENTS AND SUBCONTRACTS

      6.01 ASSIGNMENTS. (a) Without the prior consent of Williams, neither WEG
nor GP may sell, assign, transfer or convey any of its rights, or delegate any
of its obligations, under this Agreement to any Person. Provided, however, GP
may assign its right and delegate its obligations under this Agreement to a
transferee of its General Partner Interest pursuant to Section 4.6(a)(ii)(A) of
the Partnership Agreement.

      (b) Without the prior consent of GP, Williams may not sell, assign,
transfer or convey of any of its rights, or delegate any of its obligations,
under this Agreement to any Person, other than the delegation of performance of
Services to an Affiliate of Williams as permitted by Section 2.04.

      6.02 WILLIAMS'S EMPLOYEES. The obligations under Sections 4.01 and 4.02
shall be limited to reimbursement of Williams for expenses in connection with
its employees engaged in the provision of Services hereunder, and GP shall not
be obligated to pay to Williams's employees directly any compensation, salaries,
wages, bonuses, benefits, social security taxes, workers' compensation
insurance, retirement and insurance benefits, training and other such expenses.

      6.03 OTHER REQUIREMENTS. Subject to the other provisions hereof:

      (a) All materials and workmanship used or provided in performing the
Services shall be in accordance with applicable drawings, specifications, and
standards.

      (b) Williams shall exercise reasonable diligence to obtain the most
favorable terms or warranties available from vendors, suppliers and other third
parties, and where appropriate, Williams shall assign such warranties to WEG.

      (c) In rendering the Services, Williams shall not discriminate against any
employee or applicant for employment because of race, creed, color, religion,
sex, national origin, age or handicap, and shall comply with all applicable
provisions of Executive Order 11246 of September 24, 1965, and any successor
order thereto. Subject to the above, Williams shall, to the extent practicable,
engage employees who reside in or whose businesses are located in the local area
or state where the Services are performed.

      (d) Williams covenants and agrees to exercise reasonable diligence to
ensure that, during the term of this Agreement, it shall not employ unauthorized
aliens as defined in the Immigration Reform and Control Act of 1986, or any
successor law.


                                       7
<PAGE>

                                  ARTICLE VII
                               DISPUTE RESOLUTION

      7.01 DISPUTES. This Article 7 shall apply to any dispute arising under or
related to this Agreement (whether arising in contract, tort or otherwise, and
whether arising at law or in equity), including (a) any dispute regarding the
construction, interpretation, performance, validity or enforceability of any
provision of this Agreement or whether any Person is in compliance with, or
breach of, any provisions of this Agreement, and (b) the applicability of this
Article 7 to a particular dispute (collectively, a "Dispute"). The provisions of
this Article 7 shall be the exclusive method of resolving Disputes. For purposes
of this Article , each of WES, WPS and GP, acting for itself and on behalf of
WEG, shall be a "Participant".

      7.02 NEGOTIATION TO RESOLVE DISPUTES. If a Dispute arises, the
Participants shall attempt to resolve such Dispute through the following
procedure:

      (a) first, an executive officer of WES, an executive officer of WPS, and
an executive officer of GP shall promptly meet (whether by phone or in person)
in a good faith attempt to resolve the Dispute;

      (b) second, if the Dispute is still unresolved after 20 days following the
commencement of the negotiations described in Section 7.02(a), then the chief
executive officers of WES, WPS and GP will promptly meet (whether by phone or in
person) in a good faith attempt to resolve the Dispute; and

      (c) third, if the Dispute is still unresolved after 10 days following the
commencement of the negotiations described in Section 7.02(b), then any
Participant may submit such Dispute to binding arbitration under this Article 7
by notifying the other Participants (an "Arbitration Notice").

      7.03 SELECTION OF ARBITRATOR. (a) Any arbitration conducted under this
Article 7 shall be heard by a sole arbitrator (the "Arbitrator") selected in
accordance with this Section 7.03. Each Participant and each proposed Arbitrator
shall disclose to the other Participants any business, personal or other
relationship or affiliation that may exist between such Participant and such
proposed Arbitrator, and any Participant may disapprove of such proposed
Arbitrator on the basis of such relationship or affiliation.

      (b) The Participant that submits a Dispute to arbitration shall designate
a proposed Arbitrator in its Arbitration Notice. If any other Participant
objects to such proposed Arbitrator, it may, on or before the tenth day
following delivery of the Arbitration Notice, notify the other Participants of
such objection. The Participants shall attempt to agree upon a
mutually-acceptable Arbitrator. If they are unable to do so within 20 days
following delivery of the notice described in the immediately-preceding
sentence, any Participant may request the AAA to designate the Arbitrator. If
the Arbitrator so chosen shall die, resign or otherwise fail or becomes unable
to serve as Arbitrator, a replacement Arbitrator shall be chosen in accordance
with this Section 7.03.

      7.04 CONDUCT OF ARBITRATION. The Arbitrator shall expeditiously (and, if
possible, within 90 days after the Arbitrator's selection) hear and decide all
matters concerning the


                                       8
<PAGE>

Dispute. Except as the Participants agree otherwise, arbitration hearing shall
be held in the City of Tulsa, Oklahoma. Except as the Participants agree
otherwise, the arbitration shall be conducted in accordance with the
then-current Commercial Arbitration Rules of the AAA (excluding rules governing
the payment of arbitration, administrative or other fees or expenses to the
Arbitrator or the AAA), to the extent that such rules do not conflict with the
terms of this Agreement. Except as expressly provided to the contrary in this
Agreement, the Arbitrator shall have the power (a) to gather such materials,
information, testimony and evidence in the manner as it deems appropriate
relevant to the dispute before it (and each Participant will provide such
materials, information, testimony and evidence requested by the Arbitrator,
except to the extent any information so requested is proprietary, subject to a
third-party confidentiality restriction or to an attorney-client or other
privilege) and (b) to grant injunctive relief and enforce specific performance.
If it deems necessary, the Arbitrator may propose to the Participants that one
or more other experts be retained to assist it in resolving the Dispute. The
retention of such other experts shall require the unanimous consent of the
Participants, which shall not be unreasonably withheld. Each Participant, the
Arbitrator and any proposed expert shall disclose to each other any business,
personal or other relationship or affiliation that may exist between such
Participant (or the Arbitrator) and such proposed expert; and any Participant
may disapprove of such proposed expert on the basis of such relationship or
affiliation. The decision of the Arbitrator (which shall be rendered in writing)
shall be final, nonappealable and binding upon the Participants and may be
enforced in any court of competent jurisdiction; provided that the Participants
agree that the Arbitrator and any court enforcing the award of the Arbitrator
shall not have the right or authority to award punitive or exemplary damages to
any Participant. The responsibility for paying the costs and expenses of the
arbitration, including compensation to the Arbitrator and any experts retained
by the Arbitrator, shall be allocated between the Participants in a manner
determined by the Arbitrator to be fair and reasonable under the circumstances.
Each Participant shall be responsible for the fees and expenses of its
respective counsel, consultants and witnesses, unless the Arbitrator determines
that compelling reasons exist for allocating all or a portion of such costs and
expenses in another manner. Any costs or expenses incurred by a Participant(s)
in enforcing any Award of the Arbitrator shall be borne by the Participant
challenging the enforcement.

                                  ARTICLE VIII
                                   TERMINATION

      8.01 TERMINATION BY GP. (a) Upon the occurrence of any of the following
events, GP may terminate this Agreement by giving notice of such termination to
Williams:

            (i) Williams or The Williams Companies, Inc. becomes Bankrupt;

            (ii) Williams or The Williams Companies, Inc. dissolves and
      commences liquidation or winding-up; or

            (iii) Change of Control of GP.

Any termination under this Section 8.01(a) shall become effective immediately
upon delivery of the notice first described in this Section 8.01(a), or such
later time (not to exceed the first anniversary of the delivery of such notice)
as may be specified by GP.


                                       9
<PAGE>

      (b) In addition to its rights under Section 8.01(a), GP may terminate this
Agreement at any time by giving notice of such termination to Williams. Any
termination under this Section 8.01(b) shall become effective 90 days after
delivery of such notice, or such later time (not to exceed the first anniversary
of the delivery of such notice) as may be specified by GP.

      8.02 TERMINATION BY WILLIAMS. (a) Upon the occurrence of any of the
following events, Williams may terminate this Agreement by giving notice of such
termination to GP (with copies to the WEG):

            (i) Change of Control of GP.

Any termination under this Section 8.02(a) shall become effective immediately
upon delivery of the notice first described in this Section 8.02(a).

      (b) In addition to its rights under Section 8.02(a), Williams may
terminate this Agreement at any time by giving notice of such termination to GP
(with copies to WEG). Any termination under this Section 8.02(b) shall become
effective 90 days after delivery of such notice, or such later time (not to
exceed the first anniversary of the delivery of such notice) as may be specified
by either GP or Williams.

      8.03 EFFECT OF TERMINATION. If this Agreement is terminated in accordance
with Section 8.01 or 8.02, all rights and obligations under this Agreement shall
cease except for (a) obligations that expressly survive termination of this
Agreement; (b) liabilities and obligations that have accrued prior to such
termination, including the obligation to pay any amounts that have become due
and payable prior to such termination, and (c) the obligation to pay any portion
of the Reimbursement Amount that has accrued prior to such termination, even if
such portion has not become due and payable at that time.

                                   ARTICLE IX
                               GENERAL PROVISIONS

      9.01 NOTICES. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile, telegram, telex,
cablegram or similar transmission; and a notice, request or consent given under
this Agreement is effective on receipt by the Party to receive it; provided,
however, that a facsimile or other electronic transmission that is transmitted
after the normal business hours of the recipient shall be deemed effective on
the next Business Day. All notices, requests and consents to be sent to Williams
must be sent to or made at the address given below for Williams, or such other
address as Williams may specify by notice to WEG and GP. All notices, requests
and consents to be sent to WEG must be sent to GP. All notices, requests and
consents (including copies thereof) to be sent to GP must be sent to or made at
the address given below for GP.


                                       10
<PAGE>

Address for Notices:    WES:                     WPS:

                        GP:                      WEG:

                        Attn: President          Attn: President

      9.02 ENTIRE AGREEMENT; SUPERSEDING EFFECT. This Agreement constitutes the
entire agreement of the Parties relating to the matters contained herein,
superseding all prior contracts or agreements, whether oral or written, relating
to the matters contained herein.

      9.03 EFFECT OF WAIVER OR CONSENT. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Party in the performance by that Party of its obligations under
this Agreement is not a consent or waiver to or of any other breach or default
in the performance by that Party of the same or any other obligations of that
Party under this Agreement. Except as otherwise provided in this Agreement,
failure on the part of a Party to complain of any act of another Party or to
declare another Party in default under this Agreement, irrespective of how long
that failure continues, does not constitute a waiver by that Party of its rights
with respect to that default until the applicable statute-of-limitations period
has run.

      9.04 AMENDMENT OR RESTATEMENT. This Agreement may be amended or restated
only by a written instrument executed by each of the Parties.

      9.05 RESTRICTION ON ASSIGNMENT; BINDING EFFECT. Subject to Article 6, this
Agreement is binding on and shall inure to the benefit of the Parties and their
respective successors and permitted assigns.

      9.06 GOVERNING LAW; SEVERABILITY. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE CONSTRUCTION OR THE
INTERPRETATION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any
provision of this Agreement or the application thereof to any Person or any
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provision to other Persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.

      9.07 FURTHER ASSURANCES. In connection with this Agreement and the
transactions contemplated hereby, each Party shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.


                                       11
<PAGE>

      9.08 DIRECTLY OR INDIRECTLY. Where any provision of this Agreement refers
to action to be taken by any Party, or which such Party is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Party, including actions taken by or on behalf of any
Affiliate of such Party.

      9.09 COUNTERPARTS. This Agreement may be executed in counterparts with the
same effect as if each signing party had signed the same document. All
counterparts shall be construed together and shall constitute one and the same
instrument.


                                       12
<PAGE>

      IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

                                    WILLIAMS GP LLC

                                    By:
                                    Name: ______________________________________
                                    Title: _____________________________________


                                    WILLIAMS ENERGY PARTNERS L.P.

                                    By: WILLIAMS GP LLC, its general partner

                                    By:_________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________


                                    WILLIAMS ENERGY SERVICES, L.L.C.

                                    By:_________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________


                                    WILLIAMS PETROLEUM SERVICES, L.L.C.

                                    By:_________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________


                                       13
<PAGE>

                                    EXHIBIT 1

      The Services shall include any services necessary for the operation of the
Assets and shall include, without limitation the following services for the
following named entities:

1.    Williams Terminals Holdings, L.P.

      (a) facility maintenance services, including preventative maintenance
      activities and equipment repairs

      (b)operations services, including loading rack operations, internal
      product quality control, sampling, blending, general maintenance, building
      and grounds maintenance, and routine inspection

      (c) terminal marketing services

      (d) technical services, including engineering, safety, environmental and
      real estate services

      (e) professional services, including legal accounting, insurance, tax,
      credit, finance, government affairs, and regulatory affairs.

2.    Williams Pipe Line Company LLC

      (a) facility maintenance services, including preventative maintenance
      activities and equipment repairs

      (b) operations services, including loading rack operations, internal
      product quality control, sampling, blending, engineering, manifold
      operations, filter vessels, ethanol unloading, rail loadings, general
      maintenance, building and grounds maintenance, routine inspection, lab
      services, mainline maintenance, right of way patrol, right of way
      clearing, line depth issues, damage prevention program, emergency
      response, scheduling services, and pipeline control services.

      (c) terminal and pipeline marketing services

      (d) technical services, including engineering, safety, environmental and
      real estate services

      (e) professional services, including legal, accounting, insurance, tax,
      credit, finance, government affairs, and regulatory affairs.

3.    Williams Ammonia Pipeline, L.P.


                                       14
<PAGE>

      (a) facility maintenance services, including preventative maintenance
      activities and equipment repairs

      (b) operations services, including loading rack operations, internal
      product quality control, manifold operations, engineering, general
      maintenance, building and grounds maintenance, routine inspection,
      scheduling services, mainline maintenance, including right of way patrol,
      right of way clearing, line depth issues, damage prevention program,
      emergency response and pipeline control services

      (c) pipeline marketing services

      (d) technical services, including engineering, safety, environmental and
      real estate services

      (e) professional services, including legal accounting, insurance, tax,
      credit, finance, government affairs, and regulatory affairs.


                                       15

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>d01268exv10w2.txt
<DESCRIPTION>THIRD AMENDMENT TO THE OMNIBUS AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.2

                                 THIRD AMENDMENT
                                       TO
                                OMNIBUS AGREEMENT

      This Third Amendment ("Amendment") is made this 30th day of September,
2002, to that certain Omnibus Agreement among The Williams Companies, Inc.,
Williams Energy Services, LLC, Williams Natural Gas Liquids, Inc., Williams Pipe
Line Company, LLC, Williams Information Technology, Inc. (formerly Williams
Information Services Corporation), Williams Energy Partners L.P., Williams GP
LLC, and Williams OLP, L.P., as amended by the first amendment thereto dated
January 28, 2002 and the second amendment thereto dated April 11, 2002 (the
"Omnibus Agreement"). The parties hereto agree as follows:

1. Section 5.1 of the Omnibus Agreement is amended in its entirety to read as
follows:

5.1 GRANT OF LICENSE. The Licensors hereby grant to each Licensee, and each
Licensee hereby accepts, a non-exclusive, world-wide, non-transferable,
royalty-free, perpetual license during the term of this Agreement on an "AS IS,
WHERE IS" basis to use the Software under the terms and conditions provided
herein. Licensors shall deliver to the Licensees the source code and all related
materials, instructions and documentation included in the Software (i) existing
as of this Amendment, within 10 days of the date of this Amendment; and (ii)
relating to any future material enhancements, upgrades, modifications and new
versions of the Software, within 10 days of their creation. The parties shall
fully cooperate to facilitate such delivery in form and media useful to the
Licensees.

2. Section 5.2 of the Omnibus Agreement is amended in its entirety to read as
follows:

      5.2 RESTRICTIONS ON SOFTWARE. (a) Each of the Licensees agrees that it
      shall not sublicense, license, disclose or otherwise make available any
      part of the Software to any person other than: (i) each of Licensees'
      employees who is required to have access to the Software for the Licensees
      to enjoy the benefits of the Software; and (ii) each of Licensees'
      consultants who is required to have access to the Software for the
      Licensees to enjoy the benefits of the Software and who has executed a
      non-disclosure agreement containing obligations of confidence consistent
      with the restrictions set forth in this Agreement.

            (b) Each Licensee shall keep the Software in a secure environment
      and shall take reasonable commercial steps necessary to protect the
      Software, or any part thereof, from unauthorized disclosure or release.

            (c) Each Licensee shall be entitled to create a sufficient number of
      copies of the Software for backup, archival, maintenance, and support
      purposes only provided that such Licensee reproduces and applies all
      copyright notices and any other proprietary rights notices that appear on
      the original copies supplied by Licensors. The Licensees shall use the
      source code and related materials, instructions and documentation included
      in the Software and modify and create derivative works of the Software
      solely for the purpose of maintaining and supporting the functionality of
      the Software for Licensees internal business purposes.

            (d) Each of the Licensees agrees that it shall not use the Software
      for any development or analysis purposes whatsoever.


                                  Page 1 of 3
<PAGE>

            (e) Each Licensee acknowledges and agrees that Licensors shall own
      all intellectual property rights in and to the Software.

            (f) The foregoing notwithstanding, the Licensees may sublicense use
      of the object code and any enhancements, upgrades, modifications, and new
      versions of Automated Transportation Activity Logistics Activity System
      a/k/a "Atlas 2000" to Licensees' customers. Any such sublicense shall be
      on a non-exclusive, non-transferable basis and shall be subject to
      obligations of confidence consistent with the restrictions set forth in
      this Agreement.

2. Unless defined otherwise herein, terms used in this Third Amendment shall
have the same defined meaning as set forth in the Agreement.

3. Except as expressly amended hereby, the Omnibus Agreement shall remain in
full force and effect without modification.

4. (a) Negotiation of Rights of Limited Partners, Assignees, and Third Parties.
The provisions of this Amendment are enforceable solely by the parties to this
Amendment, and no Limited Partner, Assignee or other Person of the MLP or the
OLP shall have the right, separate and apart from the MLP or the OLP, to enforce
any provision of this Amendment or to compel any party to this Amendment to
comply with the terms of this Amendment.

      (b) Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.

      (c) Severability. If any provision of this Amendment or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Amendment and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.

      IN WITNESS WHEREOF, the parties have caused this Third Amendment to be
executed as of the date first above written.


                                       THE WILLIAMS COMPANIES, INC.

                                       By:
                                                --------------------------------
                                       Name:    Mark D. Wilson
                                       Title:   Vice President


                                       WILLIAMS ENERGY SERVICES, LLC

                                       By:
                                                --------------------------------
                                       Name:    Phillip D. Wright
                                       Title:   President and CEO


                                  Page 2 of 3
<PAGE>

                                WILLIAMS NATURAL GAS LIQUIDS, INC.

                                By:
                                         ---------------------------------------
                                Name:    Phillip D. Wright
                                Title:   President and CEO


                                WILLIAMS PIPE LINE COMPANY, LLC
                                By Williams Energy Partners L.P.,
                                   Its Managing Member
                                By Williams GP, LLC, Its General Partner

                                By:
                                         ---------------------------------------
                                Name:    Don R. Wellendorf
                                Title:   President and CEO


                                WILLIAMS INFORMATION TECHNOLOGY, INC.

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


                                WILLIAMS ENERGY PARTNERS L.P.
                                By:      WILLIAMS GP LLC, its general partner

                                By:
                                         ---------------------------------------
                                Name:    Don R. Wellendorf
                                Title:   President and CEO


                                WILLIAMS OLP, L.P.
                                By:      WILLIAMS GP LLC, its general partner

                                By:
                                         ---------------------------------------
                                Name:    Don R. Wellendorf
                                Title:   President and CEO


                                WILLIAMS GP LLC

                                By:
                                         ---------------------------------------
                                Name:    Don R. Wellendorf
                                Title:   President and CEO


                                   Page 3 of 3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>d01268exv10w3.txt
<DESCRIPTION>SECOND AMENDED/RESTATED AGREEMENT OF LP
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.3

                           SECOND AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                          WILLIAMS ENERGY PARTNERS L.P.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                <C>
                                                      ARTICLE I.
                                                      DEFINITIONS

Section 1.1.      Definitions.................................................................................      5
Section 1.2.      Construction................................................................................     24

                                               ARTICLE II. ORGANIZATION

Section 2.1.      Formation...................................................................................     25
Section 2.2.      Name........................................................................................     25
Section 2.3.      Registered Office; Registered Agent; Principal Office; Other Offices........................     25
Section 2.4.      Purpose and Business........................................................................     25
Section 2.5.      Powers......................................................................................     26
Section 2.6.      Power of Attorney...........................................................................     26
Section 2.7.      Term........................................................................................     27
Section 2.8.      Title to Partnership Assets.................................................................     28
Section 2.9.      Certain Undertakings Relating to the Separateness of the Partnership........................     28

                                                     ARTICLE III.
                                              RIGHTS OF LIMITED PARTNERS

Section 3.1.      Limitation of Liability.....................................................................     29
Section 3.2.      Management of Business......................................................................     29
Section 3.3.      Outside Activities of the Limited Partners..................................................     30
Section 3.4.      Rights of Limited Partners..................................................................     30

                                                      ARTICLE IV.
                           CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
                                          REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1.      Certificates................................................................................     31
Section 4.2.      Mutilated, Destroyed, Lost or Stolen Certificates...........................................     31
Section 4.3.      Record Holders..............................................................................     32
Section 4.4.      Transfer Generally..........................................................................     32
Section 4.5.      Registration and Transfer of Limited Partner Interests......................................     33
Section 4.6.      Transfer of the General Partner's General Partner Interest..................................     34
Section 4.7.      Transfer of Incentive Distribution Rights...................................................     34
Section 4.8.      Restrictions on Transfers...................................................................     35
Section 4.9.      Citizenship Certificates; Non-citizen Assignees.............................................     36
Section 4.10.     Redemption of Partnership Interests of Non-citizen Assignees................................     36

                                                      ARTICLE V.
                              CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1.      Organizational Contributions................................................................     38
Section 5.2.      Contributions by the General Partner and its Affiliates.....................................     38
</TABLE>


                                      -i-
<PAGE>

<TABLE>
<S>                                                                                                                <C>
Section 5.3.      Contributions by Initial Limited Partners and Reimbursement of the General Partner..........     39
Section 5.4.      Interest and Withdrawal.....................................................................     39
Section 5.5.      Capital Accounts............................................................................     40
Section 5.6.      Issuances of Additional Partnership Securities..............................................     42
Section 5.7.      Limitations on Issuance of Additional Partnership Securities................................     43
Section 5.8.      Conversion of Subordinated Units............................................................     45
Section 5.9.      Limited Preemptive Right....................................................................     47
Section 5.10.     Splits and Combination......................................................................     47
Section 5.11.     Fully Paid and Non-Assessable Nature of Limited Partner Interests...........................     48
Section 5.12.     Establishment of Class B Common Units.......................................................     48

                                                      ARTICLE VI.
                                             ALLOCATIONS AND DISTRIBUTIONS

Section 6.1.      Allocations for Capital Account Purposes....................................................     50
Section 6.2.      Allocations for Tax Purposes................................................................     58
Section 6.3.      Requirement and Characterization of Distributions; Distributions to Record Holders..........     60
Section 6.4.      Distributions of Available Cash from Operating Surplus......................................     60
Section 6.5.      Distributions of Available Cash from Capital Surplus........................................     62
Section 6.6.      Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.................     63
Section 6.7.      Special Provisions Relating to the Holders of Subordinated Units............................     63
Section 6.8.      Special Provisions Relating to the Holders of Incentive Distribution Rights.................     64
Section 6.9.      Entity-Level Taxation.......................................................................     64

                                                     ARTICLE VII.
                                         MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1.      Management..................................................................................     64
Section 7.2.      Certificate of Limited Partnership..........................................................     66
Section 7.3.      Restrictions on General Partner's Authority.................................................     67
Section 7.4.      Reimbursement of the General Partner........................................................     68
Section 7.5.      Outside Activities..........................................................................     69
Section 7.6.      Loans from the General Partner; Loans or Contributions from the Partnership;
                  Contracts with Affiliates; Certain Restrictions on the General Partner......................     70
Section 7.7.      Indemnification.............................................................................     71
Section 7.8.      Liability of Indemnitees....................................................................     73
Section 7.9.      Resolution of Conflicts of Interest.........................................................     74
Section 7.10.     Other Matters Concerning the General Partner................................................     75
Section 7.11.     Purchase or Sale of Partnership Securities..................................................     76
Section 7.12.     Registration Rights of the General Partner and its Affiliates...............................     76
Section 7.13.     Reliance by Third Parties...................................................................     78

                                                     ARTICLE VIII.
                                        BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1.      Records and Accounting......................................................................     79
Section 8.2.      Fiscal Year.................................................................................     79
</TABLE>


                                      -ii-
<PAGE>

<TABLE>
<S>                                                                                                                <C>
Section 8.3.      Reports.....................................................................................     79

                                                      ARTICLE IX.
                                                      TAX MATTERS

Section 9.1.      Tax Returns and Information.................................................................     80
Section 9.2.      Tax Elections...............................................................................     80
Section 9.3.      Tax Controversies...........................................................................     80
Section 9.4.      Withholding.................................................................................     80

                                                      ARTICLE X.
                                                 ADMISSION OF PARTNERS

Section 10.1.     Admission of Initial Limited Partners.......................................................     81
Section 10.2.     Admission of Substituted Limited Partner....................................................     81
Section 10.3.     Admission of Successor General Partner......................................................     82
Section 10.4.     Admission of Additional Limited Partners....................................................     82
Section 10.5.     Amendment of Agreement and Certificate of Limited Partnership...............................     82

                                                      ARTICLE XI.
                                           WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1.     Withdrawal of the General Partner...........................................................     82
Section 11.2.     Removal of the General Partner..............................................................     84
Section 11.3.     Interest of Departing Partner and Successor General Partner.................................     85
Section 11.4.     Termination of Subordination Period, Conversion of Subordinated
                  Units and Extinguishment of Cumulative Common Unit Arrearages...............................     86
Section 11.5.     Withdrawal of Limited Partners..............................................................     86

                                                     ARTICLE XII.
                                              DISSOLUTION AND LIQUIDATION

Section 12.1.     Dissolution.................................................................................     86
Section 12.2.     Continuation of the Business of the Partnership After Dissolution...........................     87
Section 12.3.     Liquidator..................................................................................     88
Section 12.4.     Liquidation.................................................................................     88
Section 12.5.     Cancellation of Certificate of Limited Partnership..........................................     89
Section 12.6.     Return of Contributions.....................................................................     89
Section 12.7.     Waiver of Partition.........................................................................     89
Section 12.8.     Capital Account Restoration.................................................................     89

                                                     ARTICLE XIII.
                               AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.1.     Amendment to be Adopted Solely by the General Partner.......................................     90
Section 13.2.     Amendment Procedures........................................................................     91
Section 13.3.     Amendment Requirements......................................................................     92
Section 13.4.     Special Meetings............................................................................     93
Section 13.5.     Notice of a Meeting.........................................................................     93
Section 13.6.     Record Date.................................................................................     93
</TABLE>


                                     -iii-
<PAGE>

<TABLE>
<S>                                                                                                               <C>
Section 13.7.     Adjournment.................................................................................     93
Section 13.8.     Waiver of Notice; Approval of Meeting; Approval of Minutes..................................     94
Section 13.9.     Quorum......................................................................................     94
Section 13.10.    Conduct of a Meeting........................................................................     95
Section 13.11.    Action Without a Meeting....................................................................     95
Section 13.12.    Voting and Other Rights.....................................................................     96

                                                     ARTICLE XIV.
                                                        MERGER

Section 14.1.     Authority...................................................................................     96
Section 14.2.     Procedure for Merger or Consolidation.......................................................     96
Section 14.3.     Approval by Limited Partners of Merger or Consolidation.....................................     97
Section 14.4.     Certificate of Merger.......................................................................     98
Section 14.5.     Effect of Merger............................................................................     98

                                                      ARTICLE XV.
                                      RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1.     Right to Acquire Limited Partner Interests..................................................     99

                                                     ARTICLE XVI.
                                                  GENERAL PROVISIONS

Section 16.1.     Addresses and Notices.......................................................................    100
Section 16.2.     Further Action..............................................................................    101
Section 16.3.     Binding Effect..............................................................................    101
Section 16.4.     Integration.................................................................................    101
Section 16.5.     Creditors...................................................................................    101
Section 16.6.     Waiver......................................................................................    102
Section 16.7.     Counterparts................................................................................    102
Section 16.8.     Applicable Law..............................................................................    102
Section 16.9.     Invalidity of Provisions....................................................................    102
Section 16.10.    Consent of Partners.........................................................................    102
Section 16.11.    Amendments to Reflect GP Reorganization Agreement...........................................    102
</TABLE>


                                      -iv-
<PAGE>

                           SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                          WILLIAMS ENERGY PARTNERS L.P.

[NOTE: APPROPRIATE CHANGES WILL BE MADE WHEN THE GENERAL PARTNER INTEREST IS
TRANSFERRED TO A NEW GP.]

      THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
WILLIAMS ENERGY PARTNERS L.P. dated as of ___________ __, 2002, is entered into
by and among Williams GP LLC, a Delaware limited liability company, as the
General Partner, and Williams GP LLC, as the lawful agent and attorney-in-fact
for the Limited Partners, together with any other Persons who become Partners in
the Partnership or parties hereto as provided herein.

      WHEREAS, the General Partner and the other parties thereto entered into
that certain Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of February 9, 2001 (the "2001 Agreement");

      WHEREAS, the General Partner and the other parties thereto entered into
that certain Reorganization Agreement (the "GP Reorganization Agreement"), dated
as of March 4, 2002, pursuant to which the General Partner transferred its
general partner interest in the Operating Partnership to the Operating General
Partner;

      WHEREAS, the General Partner effected Amendment No. 1 to the 2001
Agreement on April 11, 2002 to provide for the issuance of Class B Common Units;

      WHEREAS, the General Partner desires to amend and restate the 2001
Agreement in its entirety to reflect each of the foregoing amendments together
with such other changes as the General Partner has determined are necessary and
appropriate; and

      WHEREAS, Section 13.1 of the 2001 Agreement permits the General Partner,
without the approval of any Limited Partner or Assignee, to amend the 2001
Agreement to effect the intent hereof.

      NOW, THEREFORE, the General Partner does hereby amend and restate the 2001
Agreement to provide, in its entirety, as follows:

                                   ARTICLE I.
                                   DEFINITIONS

Section 1.1. Definitions.

      The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.

      "Acquisition" means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a

<PAGE>

portion of the assets, properties or business of another Person for the purpose
of increasing the operating capacity or revenues of the Partnership Group from
the operating capacity or revenues of the Partnership Group existing immediately
prior to such transaction.

      "Additional Book Basis" means the portion of any remaining Carrying Value
of an Adjusted Property that is attributable to positive adjustments made to
such Carrying Value as a result of Book-Up Events. For purposes of determining
the extent that Carrying Value constitutes Additional Book Basis:

            (i) Any negative adjustment made to the Carrying Value of an
      Adjusted Property as a result of either a Book-Down Event or a Book-Up
      Event shall first be deemed to offset or decrease that portion of the
      Carrying Value of such Adjusted Property that is attributable to any prior
      positive adjustments made thereto pursuant to a Book-Up Event or Book-Down
      Event.

            (ii) If Carrying Value that constitutes Additional Book Basis is
      reduced as a result of a Book-Down Event and the Carrying Value of other
      property is increased as a result of such Book-Down Event, an allocable
      portion of any such increase in Carrying Value shall be treated as
      Additional Book Basis; provided that the amount treated as Additional Book
      Basis pursuant hereto as a result of such Book-Down Event shall not exceed
      the amount by which the Aggregate Remaining Net Positive Adjustments after
      such Book-Down Event exceeds the remaining Additional Book Basis
      attributable to all of the Partnership's Adjusted Property after such
      Book-Down Event (determined without regard to the application of this
      clause (ii) to such Book-Down Event).

      "Additional Book Basis Derivative Items" means any Book Basis Derivative
Items that are computed with reference to Additional Book Basis. To the extent
that the Additional Book Basis attributable to all of the Partnership's Adjusted
Property as of the beginning of any taxable period exceeds the Aggregate
Remaining Net Positive Adjustments as of the beginning of such period (the
"Excess Additional Book Basis"), the Additional Book Basis Derivative Items for
such period shall be reduced by the amount that bears the same ratio to the
amount of Additional Book Basis Derivative Items determined without regard to
this sentence as the Excess Additional Book Basis bears to the Additional Book
Basis as of the beginning of such period.

      "Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 10.4 and who is shown as such on the books
and records of the Partnership.

      "Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms


                                      -6-
<PAGE>

of this Agreement or otherwise to the extent they exceed offsetting increases to
such Partner's Capital Account that are reasonably expected to occur during (or
prior to) the year in which such distributions are reasonably expected to be
made (other than increases as a result of a minimum gain chargeback pursuant to
Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
"Adjusted Capital Account" of a Partner in respect of a General Partner
Interest, a Common Unit, a Subordinated Unit or an Incentive Distribution Right
or any other specified interest in the Partnership shall be the amount which
such Adjusted Capital Account would be if such General Partner Interest, Common
Unit, Subordinated Unit, Incentive Distribution Right or other interest in the
Partnership were the only interest in the Partnership held by a Partner from and
after the date on which such General Partner Interest, Common Unit, Subordinated
Unit, Incentive Distribution Right or other interest was first issued.

      "Adjusted Operating Surplus" means, with respect to any period, Operating
Surplus generated during such period (a) less (i) any net increase in Working
Capital Borrowings during such period and (ii) any net reduction in cash
reserves for Operating Expenditures during such period not relating to an
Operating Expenditure made during such period, and (b) plus (i) any net decrease
in Working Capital Borrowings during such period and (ii) any net increase in
cash reserves for Operating Expenditures during such period required by any debt
instrument for the repayment of principal, interest or premium. Adjusted
Operating Surplus does not include that portion of Operating Surplus included in
clause (a)(i) of the definition of Operating Surplus.

      "Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).

      "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

      "Aggregate Remaining Net Positive Adjustments" means, as of the end of any
taxable period, the sum of the Remaining Net Positive Adjustments of all the
Partners.

      "Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).

      "Agreed Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction
among each separate property on a basis proportional to the fair market value of
each Contributed Property.


                                      -7-
<PAGE>

      "Agreement" means this Second Amended and Restated Agreement of Limited
Partnership of Williams Energy Partners L.P., as it may be amended, supplemented
or restated from time to time.

      "Assignee" means a Non-citizen Assignee or a Person to whom one or more
Limited Partner Interests have been transferred in a manner permitted under this
Agreement and who has executed and delivered a Transfer Application as required
by this Agreement, but who has not been admitted as a Substituted Limited
Partner.

      "Associate" means, when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a director, officer
or partner or is, directly or indirectly, the owner of 20% or more of any class
of voting stock or other voting interest; (b) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same
principal residence as such Person.

      "Available Cash" means, with respect to any Quarter ending prior to the
Liquidation Date,

            (a) the sum of (i) all cash and cash equivalents of the Partnership
      Group on hand at the end of such Quarter, and (ii) all additional cash and
      cash equivalents of the Partnership Group on hand on the date of
      determination of Available Cash with respect to such Quarter resulting
      from Working Capital Borrowings made subsequent to the end of such
      Quarter, less

            (b) the amount of any cash reserves that is necessary or appropriate
      in the reasonable discretion of the General Partner to (i) provide for the
      proper conduct of the business of the Partnership Group (including
      reserves for future capital expenditures and for anticipated future credit
      needs of the Partnership Group) subsequent to such Quarter, (ii) comply
      with applicable law or any loan agreement, security agreement, mortgage,
      debt instrument or other agreement or obligation to which any Group Member
      is a party or by which it is bound or its assets are subject or (iii)
      provide funds for distributions under Section 6.4 or 6.5 in respect of any
      one or more of the next four Quarters; provided, however, that the General
      Partner may not establish cash reserves pursuant to (iii) above if the
      effect of such reserves would be that the Partnership is unable to
      distribute the Minimum Quarterly Distribution on all Common Units, plus
      any Cumulative Common Unit Arrearage on all Common Units, with respect to
      such Quarter; and, provided further, that disbursements made by a Group
      Member or cash reserves established, increased or reduced after the end of
      such Quarter but on or before the date of determination of Available Cash
      with respect to such Quarter shall be deemed to have been made,
      established, increased or reduced, for purposes of determining Available
      Cash, within such Quarter if the General Partner so determines.

            Notwithstanding the foregoing, "Available Cash" with respect to the
      Quarter in which the Liquidation Date occurs and any subsequent Quarter
      shall equal zero.


                                      -8-
<PAGE>

      "Bank Loan" means the loan evidenced by the Credit Agreement, dated as of
April 11, 2002, among Williams Pipe Line Company, LLC, Williams Energy Partners
L.P., Bank of America, N.A., Lehman Commercial Paper, Inc., Salomon Smith
Barney, Inc., J.P. Morgan Securities, Inc., and Merrill Lynch and Co., as the
same may be extended, amended and restated.

      "Book Basis Derivative Items" means any item of income, deduction, gain or
loss included in the determination of Net Income or Net Loss that is computed
with reference to the Carrying Value of an Adjusted Property (e.g.,
depreciation, depletion, or gain or loss with respect to an Adjusted Property).

      "Book-Down Event" means an event which triggers a negative adjustment to
the Capital Accounts of the Partners pursuant to Section 5.5(d).

      "Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.

      "Book-Up Event" means an event which triggers a positive adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).

      "Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Oklahoma shall not be regarded as a
Business Day.

      "Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5. The "Capital Account" of a Partner in respect of a
General Partner Interest, a Common Unit, a Subordinated Unit, an Incentive
Distribution Right or any other Partnership Interest shall be the amount which
such Capital Account would be if such General Partner Interest, Common Unit,
Subordinated Unit, Incentive Distribution Right or other Partnership Interest
were the only interest in the Partnership held by a Partner from and after the
date on which such General Partner Interest, Common Unit, Subordinated Unit,
Incentive Distribution Right or other Partnership Interest was first issued.

      "Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to this Agreement or the Contribution and Conveyance Agreement.

      "Capital Improvement" means any (a) addition or improvement to the capital
assets owned by any Group Member or (b) acquisition of existing, or the
construction of new capital assets (including, without limitation, pipeline
systems, terminals, storage facilities and related assets), in each case made to
increase the operating capacity or revenues of the Partnership Group from the
operating capacity or revenues of the Partnership Group existing immediately
prior to such addition, improvement, acquisition or construction.


                                      -9-
<PAGE>

      "Capital Surplus" has the meaning assigned to such term in Section 6.3(a).

      "Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.

      "Cause" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.

      "Certificate" means a certificate (i) substantially in the form of Exhibit
A to this Agreement, (ii) issued in global form in accordance with the rules and
regulations of the Depositary or (iii) in such other form as may be adopted by
the General Partner in its discretion, issued by the Partnership evidencing
ownership of one or more Common Units or a certificate, in such form as may be
adopted by the General Partner in its discretion, issued by the Partnership
evidencing ownership of one or more other Partnership Securities.

      "Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.

      "Citizenship Certification" means a properly completed certificate in such
form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.

      "Claim" has the meaning assigned to such term in Section 7.12(c).

      "Closing Date" means the first date on which Common Units are sold by the
Partnership to the Underwriters pursuant to the provisions of the Underwriting
Agreement.

      "Closing Price" has the meaning assigned to such term in Section 15.1(a).

      "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
successor law.

      "Combined Interest" has the meaning assigned to such term in Section
11.3(a).

      "Commission" means the United States Securities and Exchange Commission.


                                      -10-
<PAGE>

      "Common Unit" means a Partnership Security representing a fractional part
of the Partnership Interests of all Limited Partners and Assignees and of the
General Partner (exclusive of its interest as a holder of the General Partner
Interest and Incentive Distribution Rights) and having the rights and
obligations. specified with respect to Common Units in this Agreement. The term
"Common Unit" does not refer to a Subordinated Unit prior to its conversion into
a Common Unit pursuant to the terms hereof.

      "Common Unit Arrearage" means, with respect to any Common Unit, whenever
issued, as to any Quarter within the Subordination Period, the excess, if any,
of (a) the Minimum Quarterly Distribution with respect to a Common Unit in
respect of such Quarter over (b) the sum of all Available Cash distributed with
respect to a Common Unit in respect of such Quarter pursuant to Section
6.4(a)(i).

      "Conflicts Committee" means a committee of the Board of Directors of the
General Partner composed entirely of three or more directors who meet the
independence and experience requirements as set forth most recently by the New
York Stock Exchange.

      "Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 5.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.

      "Contribution and Conveyance Agreement" means that certain Contribution,
Conveyance and Assumption Agreement, dated as of the Closing Date, among the
General Partner, the Partnership, the Operating Partnership and certain other
parties, together with the additional conveyance documents and instruments
contemplated or referenced thereunder.

      "Cumulative Common Unit Arrearage" means, with respect to any Common Unit,
whenever issued, and as of the end of any Quarter, the excess, if any, of (a)
the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters within the Subordination Period
ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second
sentence of Section 6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such Quarters).

      "Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).

      "Current Market Price" has the meaning assigned to such term in Section
15.1(a).

      "Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. ss. 17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.

      "Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or 11.2.


                                      -11-
<PAGE>

      "Depositary" means, with respect to any Units issued in global form, The
Depository Trust Company and its successors and permitted assigns.

      "Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).

      "Eligible Citizen" means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business or proposes to
do business from time to time, and whose status as a Limited Partner or Assignee
does not or would not subject such Group Member to a significant risk of
cancellation or forfeiture of any of its properties or any interest therein.

      "Event of Withdrawal" has the meaning assigned to such term in Section
11.1(a).

      "Final Subordinated Units" has the meaning assigned to such term in
Section 6.1(d)(x).

      "First Liquidation Target Amount" has the meaning assigned to such term in
Section 6.1(c)(i)(D).

      "First Target Distribution" means $0.5775 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on March 31,
2001, it means the product of $0.5775 multiplied by a fraction of which the
numerator is the number of days in such period, and of which the denominator is
90), subject to adjustment in accordance with Sections 6.6 and 6.9.

      "General Partner" means Williams GP LLC and its successors and permitted
assigns as general partner of the Partnership.

      "General Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) which may be evidenced by
Partnership Securities or a combination thereof or interest therein, and
includes any and all benefits to which the General Partner is entitled as
provided in this Agreement, together with all obligations of the General Partner
to comply with the terms and provisions of this Agreement.

      "GP Reorganization Agreement" means the Reorganization Agreement, dated as
of March 4, 2002, among the Partnership, the Operating Partnership, the General
Partner and the Operating General Partner.

      "Group" means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Securities.

      "Group Member" means a member of the Partnership Group.


                                      -12-
<PAGE>

      "Holder" as used in Section 7.12, has the meaning assigned to such term in
Section 7.12(a).

      "Incentive Distribution Right" means a non-voting Limited Partner Interest
issued to the General Partner in connection with the transfer of substantially
all of its general partner interest in Williams Ammonia Pipeline, L.P. and
Williams Terminals Holdings, L.P. to the Partnership pursuant to Section 5.2,
which Partnership Interest will confer upon the holder thereof only the rights
and obligations specifically provided in this Agreement with respect to
Incentive Distribution Rights (and no other rights otherwise available to or
other obligations of a holder of a Partnership interest). Notwithstanding
anything in this Agreement to the contrary, the holder of an Incentive
Distribution Right shall not be entitled to vote such Incentive Distribution
Right on any Partnership matter except as may otherwise be required by law.

      "Incentive Distributions" means any amount of cash distributed to the
holders of the Incentive Distribution Rights pursuant to Sections 6.4(a)(v),
(vi) and (vii) and 6.4(b)(iii), (iv) and (v).

      "Indemnified Persons" has the meaning assigned to such term in Section
7.12(c).

      "Indemnitee" means (a) the General Partner, (b) any Departing Partner, (c)
any Person who is or was an Affiliate of the General Partner or any Departing
Partner, (d) any Person who is or was a member, partner, officer, director,
employee, agent or trustee of any Group Member, the General Partner or any
Departing Partner or any Affiliate of any Group Member, the General Partner or
any Departing Partner, and (e) any Person who is or was serving at the request
of the General Partner or any Departing Partner or any Affiliate of the General
Partner or any Departing Partner as an officer, director, employee, member,
partner, agent, fiduciary or trustee of another Person; provided, that a Person
shall not be an Indemnitee by reason of providing, on a fee-for-services basis,
trustee, fiduciary or custodial services.

      "Initial Common Units" means the Common Units sold in the Initial
Offering.

      "Initial Limited Partners" means the General Partner (with respect to the
Incentive Distribution Rights received by it pursuant to Section 5.2) Williams
Natural Gas Liquids, Inc., Williams Energy Services and the Underwriters, in
each case upon being admitted to the Partnership in accordance with Section
10.1.

      "Initial Offering" means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.

      "Initial Unit Price" means (a) with respect to the Common Units and the
Subordinated Units, the initial public offering price per Common Unit at which
the Underwriters offered the Common Units to the public for sale as set forth on
the cover page of the prospectus included as part of the Registration Statement
and first issued at or after the time the Registration Statement first became
effective or (b) with respect to any other class or series of Units, the price
per Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the General Partner, in each case adjusted as the
General Partner determines to be appropriate to give effect to any distribution,
subdivision or combination of Units.


                                      -13-
<PAGE>

      "Interim Capital Transactions" means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than Working Capital
Borrowings and other than for items purchased on open account in the ordinary
course of business) by any Group Member; (b) sales of equity interests by any
Group Member (other than the Common Units sold to the Underwriters pursuant to
the exercise of their over-allotment option); and (c) sales or other voluntary
or involuntary dispositions of any assets of any Group Member other than (i)
sales or other dispositions of inventory, accounts receivable and other assets
in the ordinary course of business, and (ii) sales or other dispositions of
assets as part of normal retirements or replacements.

      "Issue Price" means the price at which a Unit is purchased from the
Partnership, after taking into account any sales commission or underwriting
discount charged to the Partnership.

      "Limited Partner" means, unless the context otherwise requires, (a) the
Organizational Limited Partner prior to its withdrawal from the Partnership,
each Initial Limited Partner, each Substituted Limited Partner, each Additional
Limited Partner and any Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 11.3 or (b) solely for purposes
of Articles V, VI, VII and IX, each Assignee; provided, however, that when the
term "Limited Partner" is used herein in the context of any vote or other
approval, including without limitation Articles XIII and XIV, such term shall
not, solely for such purpose, include any holder of an Incentive Distribution
Right except as may otherwise be required by law.

      "Limited Partner Interest" means the ownership interest of a Limited
Partner or Assignee in the Partnership, which may be evidenced by Common Units,
Subordinated Units, Incentive Distribution Rights or other Partnership
Securities or a combination thereof or interest therein, and includes any and
all benefits to which such Limited Partner or Assignee is entitled as provided
in this Agreement, together with all obligations of such Limited Partner or
Assignee to comply with the terms and provisions of this Agreement; provided,
however, that when the term "Limited Partner Interest" is used herein in the
context of any vote or other approval, including without limitation Articles
XIII and XIV, such term shall not, solely for such purpose, include any holder
of an Incentive Distribution Right except as may otherwise be required by law.

      "Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.

      "Liquidator" means one or more Persons selected by the General Partner to
perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.

      "Merger Agreement" has the meaning assigned to such term in Section 14.1.

      "Minimum Quarterly Distribution" means $0.525 per Unit per Quarter (or
with respect to the period commencing on the Closing Date and ending on
March 31, 2001, it means the product


                                      -14-
<PAGE>

of $0.525 multiplied by a fraction of which the numerator is the number of days
in such period and of which the denominator is 90), subject to adjustment in
accordance with Sections 6.6 and 6.9.

      "National Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq National Market or any successor thereto.

      "Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.

      "Net Income" means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d); provided that
the determination of the items that have been specially allocated under Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.

      "Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d); provided that the
determination of the items that have been specially allocated under Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.

      "Net Positive Adjustments" means, with respect to any Partner, the excess,
if any, of the total positive adjustments over the total negative adjustments
made to the Capital Account of such Partner pursuant to Book-Up Events and
Book-Down Events.

      "Net Termination Gain" means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).


                                      -15-
<PAGE>

      "Net Termination Loss" means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).

      "Non-citizen Assignee" means a Person whom the General Partner has
determined in its discretion does not constitute an Eligible Citizen and as to
whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 4.9.

      "Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.

      "Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (including, without limitation, any expenditures described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse
Liability.

      "Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).

      "Notice of Election to Purchase" has the meaning assigned to such term in
Section 15.1(b).

      "Omnibus Agreement" means that Omnibus Agreement, dated as of the Closing
Date, among The Williams Companies, Inc., Williams Energy Services, LLC,
Williams Natural Gas Liquids, Inc., Williams Pipe Line Company, LLC, Williams
Information Services Corporation, the General Partner, the Partnership and the
Operating Partnership, as such agreement may be amended, supplemented or
restated from time to time.

      "Operating Expenditures" means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partner,
repayment of Working Capital Borrowings, debt service payments, and capital
expenditures, subject to the following:

            (a) Payments (including prepayments) of principal of and premium on
      indebtedness other than Working Capital Borrowings shall not constitute
      Operating Expenditures.

            (b) Operating Expenditures shall not include (i) capital
      expenditures made for Acquisitions or for Capital Improvements, (ii)
      payment of transaction expenses relating to Interim Capital Transactions
      or (iii) distributions to Partners. Where capital expenditures are made in
      part for Acquisitions or for Capital Improvements and in part for other
      purposes, the General Partner's good faith allocation between the amounts
      paid for each shall be conclusive.


                                      -16-
<PAGE>

      "Operating General Partner" means Williams GP Inc., a Delaware corporation
and wholly owned subsidiary of the Partnership, and any successors and permitted
assigns as the general partner of the Operating Partnership.

      "Operating Partnership" means Williams OLP, L.P., a Delaware limited
partnership, and such other Persons that are treated as partnerships for federal
income tax purposes that are majority-owned by the Partnership and controlled by
the Partnership (whether by direct or indirect ownership of the general partner
of such Person or otherwise) and established or acquired for the purpose of
conducting the business of the Partnership.

      "Operating Partnership Agreement" means the agreement of limited
partnership of any Operating Partnership that is a limited partnership, or any
limited liability company agreement of any Operating Partnership that is a
limited liability company that is treated as a partnership for federal income
tax purposes, as such may be amended, supplemented or restated from time to
time.

      "Operating Surplus" means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without duplication,

            (a) the sum of (i) $15 million plus all cash and cash equivalents of
      the Partnership Group on hand as of the close of business on the Closing
      Date, (ii) all cash receipts of the Partnership Group for the period
      beginning on the Closing Date and ending with the last day of such period,
      other than cash receipts from Interim Capital Transactions (except to the
      extent specified in Section 6.5) and (iii) all cash receipts of the
      Partnership Group after the end of such period but on or before the date
      of determination of Operating Surplus with respect to such period
      resulting from Working Capital Borrowings, less

            (b) the sum of (i) Operating Expenditures for the period beginning
      on the Closing Date and ending with the last day of such period and (ii)
      the amount of cash reserves that is necessary or advisable in the
      reasonable discretion of the General Partner to provide funds for future
      Operating Expenditures; provided, however, that disbursements made
      (including contributions to a Group Member or disbursements on behalf of a
      Group Member) or cash reserves established, increased or reduced after the
      end of such period but on or before the date of determination of Available
      Cash with respect to such period shall be deemed to have been made,
      established, increased or reduced, for purposes of determining Operating
      Surplus, within such period if the General Partner so determines.

      Notwithstanding the foregoing, "Operating Surplus" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.

      "Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of its
Affiliates) acceptable to the General Partner in its reasonable discretion.

      "Option Closing Date" means the date or dates on which any Common Units
are sold by the Partnership to the Underwriters upon exercise of the
Over-Allotment Option.


                                      -17-
<PAGE>

      "Organizational Limited Partner" means Williams Energy Services, LLC in
its capacity as the organizational limited partner of the Partnership pursuant
to this Agreement.

      "Outstanding" means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and reflected as
outstanding on the Partnership's books and records as of the date of
determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any
Outstanding Partnership Securities of any class then Outstanding, all
Partnership Securities owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending notices of a
meeting, of Limited Partners to vote on any matter (unless otherwise required by
law), calculating required votes, determining the presence of a quorum or for
other similar purposes under this Agreement, except that Common Units so owned
shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such
Common Units shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement); provided, further, that the
foregoing limitation shall not apply (i) to any Person or Group who acquired 20%
or more of any Outstanding Partnership Securities of any class then Outstanding
directly from the General Partner or its Affiliates or (ii) to any Person or
Group who acquired 20% or more of any Outstanding Partnership Securities of any
class then Outstanding directly or indirectly from a Person or Group described
in clause (i) provided that the General Partner shall have notified such Person
or Group in writing that such limitation shall not apply; and provided, further,
that none of the Class B Common Units shall be deemed to be Outstanding for
purposes of determining if any Class B Common Units are entitled to
distributions of Available Cash unless such Class B Common Units shall have been
reflected on the books of the Partnership as outstanding during such Quarter and
on the Record Date for the determination of any distribution of Available Cash.

      "Over-Allotment Option" means the over-allotment option granted to the
Underwriters by the Partnership pursuant to the Underwriting Agreement.

      "Parity Units" means Common Units and all other Units of any other class
or series that have the right to participate (i) in distributions of Available
Cash from Operating Surplus pursuant to each of subclauses (a)(i) and (a)(ii) of
Section 6.4 in the same order of priority with respect to the participation of
Common Units in such distributions or (ii) to participate in allocations of Net
Termination Gain pursuant to Section 6.1(c)(i)(B) in the same order of priority
with the Common Units. Units whose participation in such (i) distributions of
Available Cash from Operating Surplus and (ii) allocations of Net Termination
Gain are subordinate in order of priority to such distributions and allocations
on Common Units shall not constitute Parity Units even if such Units are
convertible under certain circumstances into Common Units or Parity Units.

      "Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).

      "Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).


                                      -18-
<PAGE>

      "Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.

      "Partners" means the General Partner and the Limited Partners.

      "Partnership" means Williams Energy Partners L.P., a Delaware limited
partnership, and any successors thereto.

      "Partnership Group" means the Partnership, the Operating Partnership and
any Subsidiary of any such entity, including the Operating General Partner,
treated as a single consolidated entity.

      "Partnership Interest" means an interest in the Partnership, which shall
include the General Partner Interest and Limited Partner Interests.

      "Partnership Minimum Gain" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).

      "Partnership Security" means any class or series of equity interest in the
Partnership (but excluding any options, rights, warrants and appreciation rights
relating to an equity interest in the Partnership), including without
limitation, Common Units, Subordinated Units and Incentive Distribution Rights.

      "Percentage Interest" means as of the date of such determination (a) as to
the General Partner, 2% and (b) as to any Limited Partner or Assignee holding
Units, the product of (i) 98% multiplied by (ii) the quotient of (x) the number
of Units held by such Limited Partner or Assignee divided by (y) the total
number of all Units then Outstanding; provided, however, that following any
issuance of additional Units by the Partnership in accordance with Section 5.6
hereof, proper adjustment shall be made to the Percentage Interest represented
by each Unit to reflect such issuance. The Percentage Interest with respect to
an Incentive Distribution Right shall at all times be zero.

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

      "Per Unit Capital Amount" means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person other than the General Partner or any Affiliate of the General Partner
who holds Units.

      "Pro Rata" means (a) when modifying Units or any class thereof,
apportioned equally among all designated Units in accordance with their relative
Percentage Interests, (b) when modifying Partners and Assignees, apportioned
among all Partners and Assignees in accordance with their relative Percentage
Interests and (c) when modifying holders of Incentive Distribution Rights,
apportioned equally among all holders of Incentive Distribution Rights in
accordance with the relative number of Incentive Distribution Rights held by
each such holder.


                                      -19-
<PAGE>

      "Purchase Date" means the date determined by the General Partner as the
date for purchase of all Outstanding Units of a certain class (other than Units
owned by the General Partner and its Affiliates) pursuant to Article XV.

      "Quarter" means, unless the context requires otherwise, a fiscal quarter,
or with respect to the first fiscal quarter after the Closing Date the portion
of such fiscal quarter after the Closing Date, of the Partnership.

      "Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or Section 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

      "Record Date" means the date established by the General Partner for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution or to
participate in any offer.

      "Record Holder" means the Person in whose name a Common Unit is registered
on the books of the Transfer Agent as of the opening of business on a particular
Business Day, or with respect to other Partnership Securities, the Person in
whose name any such other Partnership Security is registered on the books which
the General Partner has caused to be kept as of the opening of business on such
Business Day.

      "Redeemable Interests" means any Partnership Interests for which a
redemption notice has been given, and has not been withdrawn, pursuant to
Section 4.10.

      "Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-48866) as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.

      "Remaining Net Positive Adjustments" means as of the end of any taxable
period, (i) with respect to the Unitholders holding Common Units or Subordinated
Units, the excess of (a) the Net Positive Adjustments of the Unitholders holding
Common Units or Subordinated Units as of the end of such period over (b) the sum
of those Partners' Share of Additional Book Basis Derivative Items for each
prior taxable period, (ii) with respect to the General Partner (as holder of the
General Partner Interest), the excess of (a) the Net Positive Adjustments of the
General Partner as of the end of such period over (b) the sum of the General
Partner's Share of Additional Book Basis Derivative Items with respect to the
General Partner Interest for each prior taxable period, and (iii) with respect
to the holders of Incentive Distribution Rights, the excess of (a) the Net
Positive Adjustments of the holders of Incentive Distribution Rights as of the
end of such period over (b) the sum of the Share of Additional Book Basis
Derivative Items of the holders of the Incentive Distribution Rights for each
prior taxable period.


                                      -20-
<PAGE>

      "Required Allocations" means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or 6.1(c)(ii) and
(b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).

      "Residual Gain" or "Residual Loss" means any item of gain or loss; as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.

      "Restricted Business" has the meaning assigned to such term in the Omnibus
Agreement.

      "Second Liquidation Target Amount" has the meaning assigned to such term
in Section 6.1(c)(i)(E).

      "Second Target Distribution" means $0.65625 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on March 31,
2001, it means the product of $0.65625 multiplied by a fraction of which the
numerator is equal to the number of days in such period and of which the
denominator is 90), subject to adjustment in accordance with Sections 6.6 and
6.9.

      "Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.

      "Services Agreement" means that Operating Services Agreement, dated as of
_________________ among The Williams Companies, Inc., the General Partner, and
various of their Affiliates, as such agreement may be amended, supplemented or
restated from time to time.

      "Share of Additional Book Basis Derivative Items" means in connection with
any allocation of Additional Book Basis Derivative Items for any taxable period,
(i) with respect to the Unitholders holding Common Units or Subordinated Units,
the amount that bears the same ratio to such Additional Book Basis Derivative
Items as the Unitholders' Remaining Net Positive Adjustments as of the end of
such period bears to the Aggregate Remaining Net Positive Adjustments as of that
time, (ii) with respect to the General Partner (as holder of the General Partner
Interest), the amount that bears the same ratio to such additional Book Basis
Derivative Items as the General Partner's Remaining Net Positive Adjustments as
of the end of such period bears to the Aggregate Remaining Net Positive
Adjustment as of that time, and (iii) with respect to the Partners holding
Incentive Distribution Rights, the amount that bears the same ratio to such
Additional Book Basis Derivative Items as the Remaining Net Positive Adjustments
of the Partners holding the Incentive Distribution Rights as of the end of such
period bears to the Aggregate Remaining Net Positive Adjustments as of that
time.

      "Special Approval" means approval by a majority of the members of the
Conflicts Committee.

      "Subordinated Unit" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees (other than of
holders of the Incentive


                                      -21-
<PAGE>

Distribution Rights) and having the rights and obligations specified with
respect to Subordinated Units in this Agreement. The term "Subordinated Unit" as
used herein does not include a Common Unit or Parity Unit. A Subordinated Unit
that is convertible into a Common Unit or a Parity Unit shall not constitute a
Common Unit or Parity Unit until such conversion occurs.

      "Subordination Period" means the period commencing on the Closing Date and
ending on the first to occur of the following dates:

            (a) the first day of any Quarter beginning after December 31, 2005
      in respect of which (i) (A) distributions of Available Cash from Operating
      Surplus on each of the Outstanding Common Units and Subordinated Units
      with respect to each of the three consecutive, non-overlapping
      four-Quarter periods immediately preceding such date equaled or exceeded
      the sum of the Minimum Quarterly Distribution (or portion thereof for the
      first fiscal quarter after the Closing Date) on all Outstanding Common
      Units and Subordinated Units during such periods and (B) the Adjusted
      Operating Surplus generated during each of the three consecutive,
      non-overlapping four-Quarter periods immediately preceding such date
      equaled or exceeded the sum of the Minimum Quarterly Distribution on all
      of the Common Units and Subordinated Units that were Outstanding during
      such periods on a fully diluted basis (i.e., taking into account for
      purposes of such determination all Outstanding Common Units, all
      Outstanding Subordinated Units, all Common Units and Subordinated Units
      issuable upon exercise of employee options that have, as of the date of
      determination, already vested or are scheduled to vest prior to the end of
      the Quarter immediately following the Quarter with respect to which such
      determination is made, and all Common Units and Subordinated Units that
      have as of the date of determination, been earned by but not yet issued to
      management of the Partnership in respect of incentive compensation), plus
      the related distribution on the General Partner Interest in the
      Partnership during such periods and (ii) there are no Cumulative Common
      Unit Arrearages; and

            (b) the date on which the General Partner is removed as general
      partner of the Partnership upon the requisite vote by holders of
      Outstanding Units under circumstances where Cause does not exist and Units
      held by the General Partner and its Affiliates are not voted in favor of
      such removal.

      Notwithstanding any of the provisions of clause (a) of this definition, no
Class B Common Unit shall be deemed Outstanding in any Quarter if (1) such Class
B Common Unit was issued after the end of such Quarter or (2) such Class B
Common Unit has been redeemed by the Partnership prior to the Record Date for
the determination of any distributions of Available Cash from Operating Surplus
on the Class B Common Units for such Quarter.

      "Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership


                                      -22-
<PAGE>

(considering all of the partnership interests of the partnership as a single
class) is owned, directly or indirectly, at the date of determination, by such
Person, by one or more Subsidiaries of such Person, or a combination thereof, or
(c) any other Person (other than a corporation or a partnership) in which such
Person, one or more Subsidiaries of such Person, or a combination thereof,
directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of
a majority of the directors or other governing body of such-Person.

      "Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.

      "Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).

      "Third Target Distribution" means $0.7875 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on March 31,
2001, it means the product of $0.7875 multiplied by a fraction of which the
numerator is equal to the number of days in such period and of which the
denominator is 90), subject to adjustment in accordance with Sections 6.6 and
6.9.

      "Third Target Liquidation Amount" has the meaning assigned to such term in
Section 6.1(c)(i)(F).

      "Trading Day" has the meaning assigned to such term in Section 15.1(a).

      "Transfer" has the meaning assigned to such term in Section 4.4(a).

      "Transfer Agent" means such bank, trust company or other Person (including
the General Partner or one of its Affiliates) as shall be appointed from time to
time by the Partnership to act as registrar and transfer agent for the Common
Units; provided that if no Transfer Agent is specifically designated for any
other Partnership Securities, the General Partner shall act in such capacity.

      "Transfer Application" means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.

      "Underwriter" means each Person named as an underwriter in Schedule I to
the Underwriting Agreement who purchases Common Units pursuant thereto.

      "Underwriting Agreement" means the Underwriting Agreement dated
February 5, 2001 among the Underwriters, the Partnership and certain other
parties, providing for the purchase of Common Units by such Underwriters.

      "Unit" means a Partnership Security that is designated as a "Unit" and
shall include Common Units and Subordinated Units but shall not include (i) a
General Partner Interest or (ii) Incentive Distribution Rights.


                                      -23-
<PAGE>

      "Unitholders" means the holders of Common Units and Subordinated Units.

      "Unit Majority" means, during the Subordination Period, at least a
majority of the Outstanding Common Units, excluding Common Units held by the
General Partner and any Affiliates of the General Partner, voting as a class and
at least a majority of the Outstanding Subordinated Units voting as a class, and
thereafter, at least a majority of the Outstanding Common Units.

      "Unpaid MQD" has the meaning assigned to such term in Section
6.1(c)(i)(B).

      "Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).

      "Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).

      "Unrecovered Capital" means at any time, with respect to a Unit, the
Initial Unit Price less the sum of all distributions constituting Capital
Surplus theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the General Partner
determines to be appropriate to give effect to any distribution, subdivision or
combination of such Units.

      "US GAAP" means United States Generally Accepted Accounting Principles
consistently applied.

      "Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 11.1(b).

      "Working Capital Borrowings" means borrowings exclusively for working
capital purposes made pursuant to a credit facility or other arrangement
requiring all such borrowings thereunder to be reduced to a relatively small
amount each year (or for the year in which the Initial Offering is consummated,
the 12-month period beginning on the Closing Date) for an economically
meaningful period of time.

Section 1.2. Construction.

      Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
includes, without limitation, and "including" means including, without
limitation.


                                      -24-
<PAGE>

                                   ARTICLE II.
                                  ORGANIZATION

Section 2.1. Formation.

      The General Partner and the Organizational Limited Partner have previously
formed the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act. This amendment and restatement shall become effective on the
date of this Agreement. Except as expressly provided to the contrary in this
Agreement, the rights, duties (including fiduciary duties), liabilities and
obligations of the Partners and the administration, dissolution and termination
of the Partnership shall be governed by the Delaware Act, All Partnership
Interests shall constitute personal property of the owner thereof for all
purposes and a Partner has no interest in specific Partnership property.

Section 2.2. Name.

      The name of the Partnership shall be "Williams Energy Partners L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner in its sole discretion,
including the name of the General Partner. The words "Limited Partnership,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purpose of complying with the laws of any jurisdiction
that so requires. The General Partner in its discretion may change the name of
the Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.

Section 2.3. Registered Office; Registered Agent; Principal Office; Other
Offices.

      Unless and until changed by the General Partner, the registered office of
the Partnership in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware 19801, and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office shall be The
Corporation Trust Company. The principal office of the Partnership shall be
located at One Williams Center, Tulsa, Oklahoma 74172 or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate. The address of the General Partner shall be One Williams Center,
Tulsa Oklahoma 74172 or such other place as the General Partner may from time to
time designate by notice to the Limited Partners.

Section 2.4. Purpose and Business.

      The purpose and nature of the business to be conducted by the Partnership
shall be to (a) serve as a Partner of the Operating Partnership and, in
connection therewith, to exercise all the rights and powers conferred upon, the
Partnership as a partner of the Operating Partnership pursuant to the Operating
Partnership Agreement or otherwise, (b) serve as the sole stockholder of the
Operating General Partner and, in connection therewith, to exercise on behalf of
the Partnership all the rights and powers held by the Partnership as the sole
stockholder of the Operating General Partner, (c) engage directly in, or enter
into or form any corporation, partnership, joint venture, limited liability
company or other arrangement to engage indirectly in,


                                      -25-
<PAGE>

any business activity that the Operating Partnership is permitted to engage in
by the Operating Partnership Agreement and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership pursuant to the
agreements relating to such business activity, (d) engage directly in, or enter
into or form any corporation, partnership, joint venture, limited liability
company or other entity or arrangement to engage indirectly in, any business
activity that the General Partner approves and which lawfully may be conducted
by a limited partnership organized pursuant to the Delaware Act and, in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity
and (e) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member; provided, however,
that the General Partner shall not cause the Partnership to engage, directly or
indirectly, in any business activity that the General Partner reasonably
determines would cause the Partnership to be treated as an association taxable
as a corporation or otherwise taxable as an entity for federal income tax
purposes. The General Partner has no obligation or duty to the Partnership, the
Limited Partners or the Assignees to propose or approve, and in its discretion
may decline to propose or approve, the conduct by the Partnership of any
business.

Section 2.5. Powers.

      The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.

Section 2.6. Power of Attorney.

      (a) Each Limited Partner and each Assignee hereby constitutes and appoints
the General Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3, the Liquidator, (and any successor to the Liquidator by merger,
transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, as the case may be, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:

            (i) execute, swear to, acknowledge, deliver, file and record in the
      appropriate public offices (A) all certificates, documents and other
      instruments (including this Agreement and the Certificate of Limited
      Partnership and all amendments or restatements hereof or thereof) that the
      General Partner or the Liquidator deems necessary or appropriate to form,
      qualify or continue the existence or qualification of the Partnership as a
      limited partnership (or a partnership in which the limited partners have
      limited liability) in the State of Delaware and in all other jurisdictions
      in which the Partnership may conduct business or own property; (B) all
      certificates, documents and other instruments that the General Partner or
      the Liquidator deems necessary or appropriate to reflect, in accordance
      with its terms, any amendment, change, modification or restatement of this
      Agreement; (C) all certificates, documents and other instruments
      (including conveyances and a certificate of cancellation) that the General
      Partner or the Liquidator deems necessary or appropriate to reflect the
      dissolution and liquidation of the Partnership pursuant to the terms of
      this Agreement; (D) all certificates, documents and


                                      -26-
<PAGE>

      other instruments relating to the admission, withdrawal, removal or
      substitution of any Partner pursuant to, or other events described in,
      Article IV, X, XI or XII; (E) all certificates, documents and other
      instruments relating to the determination of the rights, preferences and
      privileges of any class or series of Partnership Securities issued
      pursuant to Section 5.6; and (F) all certificates, documents and other
      instruments (including agreements and a certificate of merger) relating to
      a merger or consolidation of the Partnership pursuant to Article XIV; and

            (ii) execute, swear to, acknowledge, deliver, file and record all
      ballots, consents, approvals, waivers, certificates, documents and other
      instruments necessary or appropriate, in the discretion of the General
      Partner or the Liquidator, to make, evidence, give, confirm or ratify any
      vote, consent, approval, agreement or other action that is made or given
      by the Partners hereunder or is consistent with the terms of this
      Agreement or is necessary or appropriate, in the discretion of the General
      Partner or the Liquidator, to effectuate the terms or intent of this
      Agreement; provided, that when required by Section 13.3 or any other
      provision of this Agreement that establishes a percentage of the Limited
      Partners or of the Limited Partners of any class or series required to
      take any action, the General Partner and the Liquidator may exercise the
      power of attorney made in this Section 2.6(a)(ii) only after the necessary
      vote, consent or approval of the Limited Partners or of the Limited
      Partners of such class or series, as applicable.

      Nothing contained in this Section 2.6(a) shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.

            (b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator deems necessary to effectuate this
Agreement and the purposes of the Partnership.

Section 2.7. Term.

      The term of the Partnership commenced upon the filing of the Certificate
of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the dissolution of the Partnership in accordance with the
provisions of Article XII. The existence of


                                      -27-
<PAGE>

the Partnership as a separate legal entity shall continue until the cancellation
of the Certificate of Limited Partnership as provided in the Delaware Act.

Section 2.8. Title to Partnership Assets.

      Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, one or more of its Affiliates or one or more nominees, as
the General Partner may determine. The General Partner hereby declares and
warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more of its Affiliates or one or more nominees
shall be held by the General Partner or such Affiliate or nominee for the use
and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the General Partner. All Partnership assets shall be recorded as the property of
the Partnership in its books and records, irrespective of the name in which
record title to such Partnership assets is held.

Section 2.9. Certain Undertakings Relating to the Separateness of the
Partnership.

            (a) Separate Records. The Partnership shall maintain (i) its books
      and records, (ii) its accounts, and (iii) its financial statements,
      separate from those of any other Person, except its consolidated
      Subsidiaries.

            (b) Separate Assets. The Partnership shall not commingle or pool its
      funds or other assets with those of any other Person, except its
      consolidated Subsidiaries, and shall maintain its assets in a manner that
      is not costly or difficult to segregate, ascertain or otherwise identify
      as separate from those of any other Person.

            (c) Separate Name. The Partnership shall (i) conduct its business in
      its own name, (ii) use separate stationery, invoices, and checks, (iii)
      correct any known misunderstanding regarding its separate identity, and
      (iv) generally hold itself out as a separate entity.

            (d) Separate Credit. The Partnership shall not (i) pay its own
      liabilities from a source other than its own funds, (ii) guarantee or
      become obligated for the debts of any other Person, except its
      Subsidiaries, (iii) hold out its credit as being available to satisfy the
      obligations of any other Person, except its Subsidiaries, (iv) acquire
      obligations or debt securities of The Williams Companies Inc., a Delaware
      corporation and its Subsidiaries and Affiliates (other than the
      Partnership or its Subsidiaries), or (v) pledge


                                      -28-
<PAGE>

      its assets for the benefit of any Person or make loans or advances to any
      Person, except its Subsidiaries; provided that the Partnership may engage
      in any transaction described in clauses (ii)-(v) of this Section 2.9(d) if
      prior Special Approval has been obtained for such transaction and either
      (A) the Conflicts Committee has determined, or has obtained reasonable
      written assurance from a nationally recognized firm of independent public
      accountants or a nationally recognized investment banking or valuation
      firm, that the borrower or recipient of the credit extension is not then
      insolvent and will not be rendered insolvent as a result of such
      transaction or (B) in the case of transactions described in clause (iv),
      such transaction is completed through a public auction or a National
      Securities Exchange.

            (e) Separate Formalities. The Partnership shall (i) observe all
      partnership formalities and other formalities required by its
      organizational documents, the laws of the jurisdiction of its formation,
      or other laws, rules, regulations and orders of governmental authorities
      exercising jurisdiction over it, (ii) engage in transactions with the
      General Partner and its Affiliates (other than another Group Member) in
      conformity with the requirements of Section 7.9, and (iii) subject to the
      terms of the Omnibus Agreement and the Operating Services Agreement,
      promptly pay, from its own funds, and on a current basis, its allocable
      share of general and administrative expenses, capital expenditures, and
      costs for shared services performed by Affiliates of the General Partner
      (other than another Group Member). Each material contract between the
      Partnership or another Group Member, on the one hand, and the Affiliates
      of the General Partner (other than a Group Member), on the other hand,
      shall be in writing.

                                  ARTICLE III.
                           RIGHTS OF LIMITED PARTNERS

Section 3.1. Limitation of Liability.

      The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.

Section 3.2. Management of Business.

      No Limited Partner or Assignee, in its capacity as such, shall participate
in the operation, management or control (within the meaning of the Delaware Act)
of the Partnership's business, transact any business in the Partnership's name
or have the power to sign documents for or otherwise bind the Partnership. Any
action taken by any Affiliate of the General Partner or any officer, director,
employee, manager, member, general partner, agent or trustee of the General
Partner or any of its Affiliates, or any officer, director, employee, manager,
member, general partner, agent or trustee of a Group Member, in its capacity as
such, shall not be deemed to be participation in the control of the business of
the Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners or Assignees under this
Agreement.


                                      -29-
<PAGE>

Section 3.3. Outside Activities of the Limited Partners.

      Subject to the provisions of Section 7.5 and the Omnibus Agreement, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities in direct competition with the
Partnership Group. Neither the Partnership nor any of the other Partners or
Assignees shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.

Section 3.4. Rights of Limited Partners.

      (a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:

            (i) to obtain true and full information regarding the status of the
      business and financial condition of the Partnership;

            (ii) promptly after becoming available, to obtain a copy of the
      Partnership's federal, state and local income tax returns for each year;

            (iii) to have furnished to him a current list of the name and last
      known business, residence or mailing address of each Partner;

            (iv) to have furnished to him a copy of this Agreement and the
      Certificate of Limited Partnership and all amendments thereto, together
      with a copy of the executed copies of all powers of attorney pursuant to
      which this Agreement, the Certificate of Limited Partnership and all
      amendments thereto have been executed;

            (v) to obtain true and full information regarding the amount of cash
      and a description and statement of the Net Agreed Value of any other
      Capital Contribution by each Partner and which each Partner has agreed to
      contribute in the future, and the date on which each became a Partner; and

            (vi) to obtain such other information regarding the affairs of the
      Partnership as is just and reasonable.

            (b) The General Partner may keep confidential from the Limited
Partners and Assignees, for such period of time as the General Partner deems
reasonable, (i) any information that the General Partner reasonably believes to
be in the nature of trade secrets or (ii) other information the disclosure of
which the General Partner in good faith believes (A) is not in the best
interests of the Partnership Group, (B) could damage the Partnership Group or
(C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).


                                      -30-
<PAGE>

                                   ARTICLE IV.
        CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
                       REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1. Certificates.

      Upon the Partnership's issuance of Common Units or Subordinated Units to
any Person, the Partnership shall issue one or more Certificates in the name of
such Person evidencing the number of such Units being so issued. In addition,
(a) upon the General Partner's request, the Partnership shall issue to it one or
more Certificates in the name of the General Partner evidencing its interests in
the Partnership and (b) upon the request of any Person owning Incentive
Distribution Rights or any other Partnership Securities other than Common Units
or Subordinated Units, the Partnership shall issue to such Person one or more
certificates evidencing such Incentive Distribution Rights or other Partnership
Securities other than Common Units or Subordinated Units. Certificates shall be
executed on behalf of the Partnership by the Chairman of the Board, President or
any Vice President and the Secretary or any Assistant Secretary of the General
Partner. No Common Unit Certificate shall be valid for any purpose until it has
been countersigned by the Transfer Agent; provided, however, that if the General
Partner elects to issue Common Units in global form, the Common Unit
Certificates shall be valid upon receipt of a certificate from the Transfer
Agent certifying that the Common Units have been duly registered in accordance
with the directions of the Partnership and the Underwriters. Subject to the
requirements of Section 6.7(b), the Partners holding Certificates evidencing
Subordinated Units may exchange such Certificates for Certificates evidencing
Common Units on or after the date on which such Subordinated Units are converted
into Common Units pursuant to the terms of Section 5.8.

Section 4.2. Mutilated, Destroyed, Lost or Stolen Certificates.

            (a) If any mutilated Certificate is surrendered to the Transfer
Agent, the appropriate officers of the General Partner on behalf of the
Partnership shall execute, and the Transfer Agent shall countersign and deliver
in exchange therefor, a new Certificate evidencing the same number and type of
Partnership Securities as the Certificate so surrendered.

            (b) The appropriate officers of the General Partner on behalf of the
Partnership shall execute and deliver, and the Transfer Agent shall countersign
a new Certificate in place of any Certificate previously issued if the Record
Holder of the Certificate:

            (i) makes proof by affidavit, in form and substance satisfactory to
      the Partnership, that a previously issued Certificate has been lost,
      destroyed or stolen;

            (ii) requests the issuance of a new Certificate before the
      Partnership has notice that the Certificate has been acquired by a
      purchaser for value in good faith and without notice of an adverse claim;

            (iii) if requested by the Partnership, delivers to the Partnership a
      bond, in form and substance satisfactory to the Partnership, with surety
      or sureties and with fixed or open penalty as the Partnership may
      reasonably direct, in its sole discretion, to indemnify the Partnership,
      the Partners, the General Partner and the Transfer Agent against any


                                      -31-
<PAGE>

      claim that may be made on account of the alleged loss, destruction or
      theft of the Certificate; and

            (iv) satisfies any other reasonable requirements imposed by the
      Partnership.

      If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Limited Partner Interests represented by the
Certificate is registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner or Assignee shall
be precluded from making any claim against the Partnership, the General Partner
or the Transfer Agent for such transfer or for a new Certificate.

            (c) As a condition to the issuance of any new Certificate under this
Section 4.2, the Partnership 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 Transfer
Agent) reasonably connected therewith.

Section 4.3. Record Holders.

      The Partnership shall be entitled to recognize the Record Holder as the
Partner or Assignee with respect to any Partnership Interest and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Partnership Interest on the part of any other Person, regardless of whether
the Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which such Partnership Interests are listed
for trading. Without limiting the foregoing, when a Person (such as a broker,
dealer, bank, trust company or clearing corporation or an agent of any of the
foregoing) is acting as nominee, agent or in some other representative capacity
for another Person in acquiring and/or holding Partnership Interests, as between
the Partnership on the one hand, and such other Persons on the other, such
representative Person (a) shall be the Partner or Assignee (as the case may be)
of record and beneficially, (b) must execute and deliver a Transfer Application
and (c) shall be bound by this Agreement and shall have the rights and
obligations of a Partner or Assignee (as the case may be) hereunder and as, and
to the extent, provided for herein.

Section 4.4. Transfer Generally.

            (a) The term "transfer," when used in this Agreement with respect to
a Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner, by which the holder of a Limited Partner Interest
assigns such Limited Partner Interest to another Person who is or becomes a
Limited Partner or an Assignee, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise.

            (b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IV. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IV shall be null and void.


                                      -32-
<PAGE>

            (c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any member of the General Partner of any or all of the
issued and outstanding membership interests of the General Partner.

Section 4.5. Registration and Transfer of Limited Partner Interests.

            (a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Limited Partner Interests. The
Transfer Agent is hereby appointed registrar and transfer agent for the purpose
of registering Common Units and transfers of such Common Units as herein
provided. The Partnership shall not recognize transfers of Certificates
evidencing Limited Partner Interests unless such transfers are effected in the
manner described in this Section 4.5. Upon surrender of a Certificate for
registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate
officers of the General Partner on behalf of the Partnership shall execute and
deliver, and in the case of Common Units, the Transfer Agent shall countersign
and deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or more new
Certificates evidencing the same aggregate number and type of Limited Partner
Interests as was evidenced by the Certificate so surrendered.

            (b) Except as otherwise provided in Section 4.9, the Partnership
shall not recognize any transfer of Limited Partner Interests until the
Certificates evidencing such Limited Partner Interests are surrendered for
registration of transfer and such Certificates are accompanied by a Transfer
Application duly executed by the transferee (or the transferee's
attorney-in-fact duly authorized in writing). No charge shall be imposed by the
Partnership for such transfer; provided, that as a condition to the issuance of
any new Certificate under this Section 4.5, the Partnership may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.

            (c) Limited Partner Interests may be transferred only in the manner
described in this Section 4.5. The transfer of any Limited Partner Interests and
the admission of any new Limited Partner shall not constitute an amendment to
this Agreement.

            (d) Until admitted as a Substituted Limited Partner pursuant to
Section 10.2, the Record Holder of a Limited Partner Interest shall be an
Assignee in respect of such Limited Partner Interest. Limited Partners may
include custodians, nominees or any other individual or entity in its own or any
representative capacity.

            (e) A transferee of a Limited Partner Interest who has completed and
delivered a Transfer Application shall be deemed to have (i) requested admission
as a Substituted Limited Partner, (ii) agreed to comply with and be bound by and
to have executed this Agreement, (iii) represented and warranted that such
transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (iv) granted the powers of attorney set
forth in this Agreement and (v) given the consents and approvals and made the
waivers contained in this Agreement.


                                      -33-
<PAGE>

            (f) The General Partner and its Affiliates shall have the right at
any time to transfer their Subordinated Units and Common Units (whether issued
upon conversion of the Subordinated Units or otherwise) to one or more Persons.

Section 4.6. Transfer of the General Partner's General Partner Interest.

            (a) Subject to Section 4.6(c) below, prior to March 31, 2011, the
General Partner shall not transfer all or any part of its General Partner
Interest to a Person unless such transfer (i) has been approved by the prior
written consent or vote of the holders of at least a majority of the Outstanding
Common Units (excluding Common Units held by the General Partner and its
Affiliates) or (ii) is of all, but not less than all, of its General Partner
Interest to (A) an Affiliate of the General Partner or (B) another Person in
connection with the merger or consolidation of the General Partner with or into
another Person or the transfer by the General Partner of all or substantially
all of its assets to another Person.

            (b) Subject to Section 4.6(c) below, on or after March 31, 2011, the
General Partner may transfer all or any of its General Partner Interest without
Unitholder approval.

            (c) Notwithstanding anything herein to the contrary, no transfer by
the General Partner of all or any part of its General Partner Interest to
another Person shall be permitted unless (i) the transferee agrees to assume the
rights and duties of the General Partner under this Agreement and to be bound by
the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of
any Limited Partner or of any limited partner of the Operating Partnership or
cause the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not already so treated or taxed),
(iii) such transferee also agrees to purchase all (or the appropriate portion
thereof, if applicable) of the partnership or membership interest of the General
Partner as the general partner or managing member of each other Group Member;
and (iv) the organizational documents of the owner(s) of all the General Partner
Interest, together, provide for the establishment of a "Conflicts Committee" to
approve certain matters with respect to the General Partner and the Partnership,
the selection of "Independent Directors" as members of such Conflicts Committee,
and the submission of certain matters to the vote of such Conflicts Committee
upon similar terms and conditions as set forth in the limited liability company
agreement of the General Partner, as the same exists as of the date of this
Agreement so as to provide the Limited Partners and the General Partner with the
same rights and obligations as are herein contained. In the case of a transfer
pursuant to and in compliance with this Section 4.6, the transferee or successor
(as the case may be) shall, subject to compliance with the terms of Section
10.3, be admitted to the Partnership as a General Partner immediately prior to
the transfer of the Partnership Interest, and the business of the Partnership
shall continue without dissolution.

Section 4.7. Transfer of Incentive Distribution Rights.

      Prior to March 31, 2011, a holder of Incentive Distribution Rights may
transfer any or all of the Incentive Distribution Rights held by such holder
without any consent of the Unitholders (a) to an Affiliate or (b) to another
Person in connection with (i) the merger or consolidation of


                                      -34-
<PAGE>

such holder of Incentive Distribution Rights with or into such other Person or
(ii) the transfer by such holder of all or substantially all of its assets to
such other Person. Any other transfer of the Incentive Distribution Rights prior
to March 31, 2011, shall require the prior approval of holders at least a
majority of the Outstanding Common Units (excluding Common Units held by the
General Partner and its Affiliates). On or after March 31, 2011, the General
Partner or any other holder of Incentive Distribution Rights may transfer any or
all of its Incentive Distribution Rights without Unitholder approval.
Notwithstanding anything herein to the contrary, no transfer of Incentive
Distribution Rights to another Person shall be permitted unless the transferee
agrees to be bound by the provisions of this Agreement. The General Partner
shall have the authority (but shall not be required) to adopt such reasonable
restrictions on the transfer of Incentive Distribution Rights and requirements
for registering the transfer of Incentive Distribution Rights as the General
Partner, in its sole discretion, shall determine are necessary or appropriate.

Section 4.8. Restrictions on Transfers.

            (a) Except as provided in Section 4.8(d) below, but notwithstanding
the other provisions of this Article IV, no transfer of any Partnership
Interests shall be made if such transfer would (i) violate the then applicable
federal or state securities laws or rules and regulations of the Commission, any
state securities commission or any other governmental authority with
jurisdiction over such transfer, (ii) terminate the existence or qualification
of the Partnership under the laws of the jurisdiction of its formation, or (iii)
cause the Partnership or Operating Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal
income tax purposes (to the extent not already so treated or taxed).

            (b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership
becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be
necessary or appropriate to impose such restrictions; provided, however, that
any amendment that the General Partner believes, in the exercise of its
reasonable discretion, could result in the delisting or suspension of trading of
any class of Limited Partner Interests on the principal National Securities
Exchange on which such class of Limited Partner Interests is then traded must be
approved, prior to such amendment being effected, by the holders of at least a
majority of the Outstanding Limited Partner Interests of such class.

            (c) The transfer of a Subordinated Unit that has converted into a
Common Unit shall be subject to the restrictions imposed by Section 6.7(b).

            (d) Nothing contained in this Article IV, or elsewhere in this
Agreement, shall preclude the settlement of any transactions involving
Partnership Interests entered into through the facilities of any National
Securities Exchange on which such Partnership Interests are listed for trading.


                                      -35-
<PAGE>

Section 4.9. Citizenship Certificates; Non-citizen Assignees.

            (a) If any Group Member is or becomes subject to any federal, state
or local law or regulation that, in the reasonable determination of the General
Partner, creates a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the
General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship
or other related status of such Person) as the General Partner may request. If a
Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with the advice of
counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership Interests owned by such Limited Partner or Assignee shall be subject
to redemption in accordance with the provisions of Section 4.10. In addition,
the General Partner may require that the status of any such Partner or Assignee
be changed to that of a Non-citizen Assignee and, thereupon, the General Partner
shall be substituted for such Non-citizen Assignee as the Limited Partner in
respect of his Limited Partner Interests.

            (b) The General Partner shall, in exercising voting rights in
respect of Limited Partner Interests held by it on behalf of Non-citizen
Assignees, distribute the votes in the same ratios as the votes of Partners
(including without limitation the General Partner) in respect of Limited Partner
Interests other than those of Non-citizen Assignees are cast, either for,
against or abstaining as to the matter.

            (c) Upon dissolution of the Partnership, a Non-citizen Assignee
shall have no right to receive a distribution in kind pursuant to Section 12.4
but shall be entitled to the cash equivalent thereof, and the Partnership shall
provide cash in exchange for an assignment of the Non-citizen Assignee's share
of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen
Assignee of his Limited Partner Interest (representing his right to receive his
share of such distribution in kind).

            (d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to
Section 4.10, and upon his admission pursuant to Section 10.2, the General
Partner shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Limited Partner Interests.

Section 4.10. Redemption of Partnership Interests of Non-citizen Assignees.

            (a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 4.9(a), or if upon receipt of such Citizenship
Certification or other information the General Partner


                                      -36-
<PAGE>

determines, with the advice of counsel, that a Limited Partner or Assignee is
not an Eligible Citizen, the Partnership may, unless the Limited Partner or
Assignee establishes to the satisfaction of the General Partner that such
Limited Partner or Assignee is an Eligible Citizen or has transferred his
Partnership Interests to a Person who is an Eligible Citizen and who furnishes a
Citizenship Certification to the General Partner prior to the date fixed for
redemption as provided below, redeem the Partnership Interest of such Limited
Partner or Assignee as follows:

            (i) The General Partner shall, not later than the 30th day before
      the date fixed for redemption, give notice of redemption to the Limited
      Partner or Assignee, at his last address designated on the records of the
      Partnership or the Transfer Agent, by registered or certified mail,
      postage prepaid. The notice shall be deemed to have been given when so
      mailed. The notice shall specify the Redeemable Interests, the date fixed
      for redemption, the place of payment, that payment of the redemption price
      will be made upon surrender of the Certificate evidencing the Redeemable
      Interests and that on and after the date fixed for redemption no further
      allocations or distributions to which the Limited Partner or Assignee
      would otherwise be entitled in respect of the Redeemable Interests will
      accrue or be made.

            (ii) The aggregate redemption price for Redeemable Interests shall
      be an amount equal to the Current Market Price (the date of determination
      of which shall be the date fixed for redemption) of Limited Partner
      Interests of the class to be so redeemed multiplied by the number of
      Limited Partner Interests of each such class included among the Redeemable
      Interests. The redemption price shall be paid, in the discretion of the
      General Partner, in cash or by delivery of a promissory note of the
      Partnership in the principal amount of the redemption price, bearing
      interest at the rate of 10% annually and payable in three equal annual
      installments of principal together with accrued interest, commencing one
      year after the redemption date.

            (iii) Upon surrender by or on behalf of the Limited Partner or
      Assignee, at the place specified in the notice of redemption, of the
      Certificate evidencing the Redeemable Interests, duly endorsed in blank or
      accompanied by an assignment duly executed in blank, the Limited Partner
      or Assignee or his duly authorized representative shall be entitled to
      receive the payment therefor.

            (iv) After the redemption date, Redeemable Interests shall no longer
      constitute issued and Outstanding Limited Partner Interests.

            (b) The provisions of this Section 4.10 shall also be applicable to
Limited Partner Interests held by a Limited Partner or Assignee as nominee of a
Person determined to be other than an Eligible Citizen.

            (c) Nothing in this Section 4.10 shall prevent the recipient of a
notice of redemption from transferring his Limited Partner Interest before the
redemption date if such transfer is otherwise permitted under this Agreement.
Upon receipt of notice of such a transfer, the General Partner shall withdraw
the notice of redemption, provided the transferee of such Limited Partner
Interest certifies to the satisfaction of the General Partner in a Citizenship
Certification delivered in connection with the Transfer Application that he is
an Eligible Citizen.


                                      -37-
<PAGE>

If the transferee fails to make such certification, such redemption shall be
effected from the transferee on the original redemption date.

                                   ARTICLE V.
           CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1. Organizational Contributions.

      In connection with the formation of the Partnership under the Delaware
Act, the General Partner made an initial Capital Contribution to the Partnership
in the amount of $10.00 for an interest in the Partnership and was admitted as
the General Partner of the Partnership, and the Organizational Limited Partner
made an initial Capital Contribution to the Partnership in the amount of $990.00
for an interest in the Partnership and was admitted as a Limited Partner of the
Partnership. As of the Closing Date, the interest of the Organizational Limited
Partner was redeemed as provided in the Contribution and Conveyance Agreement;
the initial Capital Contributions of each Partner were refunded; and the
Organizational Limited Partner ceased to be a Limited Partner of the
Partnership. Ninety-nine percent of any interest or other profit that may have
resulted from the investment or other use of such initial Capital Contributions
was allocated and distributed to the Organizational Limited Partner, and the
balance thereof was allocated and distributed to the General Partner.

Section 5.2. Contributions by the General Partner and its Affiliates.

            (a) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, (i) the General Partner contributed to the Partnership, as
a Capital Contribution, all of its interest in Williams Ammonia Pipeline, L.P.,
a Delaware limited partnership, and all of its interest in Williams Terminals
Holdings, L.P., a Delaware limited partnership, in exchange for (A) the
continuation of its General Partner Interest, subject to all of the rights,
privileges and duties of the General Partner under this Agreement, and (B) the
Incentive Distribution Rights, (ii) Williams Natural Gas Liquids, Inc.,
contributed to the Partnership, as a Capital Contribution, all of its limited
partner interest in the Operating Partnership in exchange for 322,501 Common
Units and 1,090,501 Subordinated Units and (iii) Williams Energy Services, LLC
contributed to the Partnership, as a Capital Contribution, all of its limited
partner interest in the Operating Partnership in exchange for 1,357,193 Common
Units and 4,589,193 Subordinated Units.

            (b) Upon the issuance of any additional Limited Partner Interests by
the Partnership (other than the issuance of the Common Units issued in the
Initial Offering or pursuant to the Over-Allotment Option), the General Partner
shall be required to make additional Capital Contributions equal to 2/98ths of
any amount contributed to the Partnership by the Limited Partners in exchange
for such additional Limited Partner Interests, but only to the extent necessary
such that the General Partner's Capital Account is equal to 2% of the total of
all Capital Accounts following such issuance. Except as set forth in the
immediately preceding sentence and Article XII, the General Partner shall not be
obligated to make any additional Capital Contributions to the Partnership.


                                      -38-
<PAGE>

Section 5.3. Contributions by Initial Limited Partners and Reimbursement of the
General Partner.

            (a) On the Closing Date and pursuant to the Underwriting Agreement,
each Underwriter contributed to the Partnership cash in an amount equal to the
Issue Price per Initial Common Unit multiplied by the number of Common Units
specified in the Underwriting Agreement to be purchased by such Underwriter at
the Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership issued Common Units to each Underwriter on whose
behalf such Capital Contribution was made in an amount equal to the quotient
obtained by dividing (i) the cash contribution to the Partnership by or on
behalf of such Underwriter by (ii) the Issue Price per Initial Common Unit.

            (b) Upon the exercise of the Over-Allotment Option, each Underwriter
contributed to the Partnership cash in an amount equal to the Issue Price per
Initial Common Unit, multiplied by the number of Common Units specified in the
Underwriting Agreement to be purchased by such Underwriter at the Option Closing
Date. In exchange for such Capital Contributions by the Underwriters, the
Partnership issued Common Units to each Underwriter on whose behalf such Capital
Contribution is made in an amount equal to the quotient obtained by dividing (i)
the cash contributions to the Partnership by or on behalf of such Underwriter by
(ii) the Issue Price per Initial Common Unit. Upon receipt by the Partnership of
the Capital Contributions from the Underwriters as provided in this Section
5.3(b), the Partnership used such cash to redeem from Williams Energy Services,
LLC that number of Common Units held by Williams Energy Services, LLC equal to
the number of Common Units issued to the Underwriters as provided in this
Section 5.3(b).

            (c) No Limited Partner Interests were issued as of or at the Closing
Date other than (i) the Common Units issuable pursuant to subparagraph (a)
hereof in aggregate number equal to 4,000,000 Units, (ii) the "Option Units" as
such term is used in the Underwriting Agreement issuable upon exercise of the
Over-Allotment Option pursuant to subparagraph (b) hereof in an aggregate number
of up to 600,000 Units, (iii) the 5,679,694 Subordinated Units issuable to the
General Partner or its Affiliates pursuant to Section 5.2 hereof, and (iv) the
Incentive Distribution Rights.

Section 5.4. Interest and Withdrawal.

      No interest on Capital Contributions shall be paid by the Partnership. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
17-502(b) of the Delaware Act.


                                      -39-
<PAGE>

Section 5.5. Capital Accounts.

            (a) The Partnership shall maintain for each Partner (or a beneficial
owner of Partnership Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion) owning a Partnership Interest a
separate Capital Account with respect to such Partnership Interest in accordance
with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital
Account shall be increased by (i) the amount of all Capital Contributions made
to the Partnership with respect to such Partnership Interest pursuant to this
Agreement and (ii) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in accordance with Section
5.5(b) and allocated with respect to such Partnership Interest pursuant to
Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all
actual and deemed distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1.

            (b) For purposes of computing the amount of any item of income,
gain, loss or deduction which is to be allocated pursuant to Article VI and is
to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:

            (i) Solely for purposes of this Section 5.5, the Partnership shall
      be treated as owning directly its proportionate share (as determined by
      the General Partner based upon the provisions of the Operating Partnership
      Agreement) of all property owned by the Operating Partnership or any other
      Subsidiary that is classified as a partnership for federal income tax
      purposes.

            (ii) All fees and other expenses incurred by the Partnership to
      promote the sale of (or to sell) a Partnership Interest that can neither
      be deducted nor amortized under Section 709 of the Code, if any, shall,
      for purposes of Capital Account maintenance, be treated as an item of
      deduction at the time such fees and other expenses are incurred and shall
      be allocated among the Partners pursuant to Section 6.1.

            (iii) Except as otherwise provided in Treasury Regulation Section
      1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
      and deduction shall be made without regard to any election under Section
      754 of the Code which may be made by the Partnership and, as to those
      items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
      without regard to the fact that such items are not includable in gross
      income or are neither currently deductible nor capitalized for federal
      income tax purposes. To the extent an adjustment to the adjusted tax basis
      of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code
      is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
      to be taken into account in determining Capital


                                      -40-
<PAGE>

      Accounts, the amount of such adjustment in the Capital Accounts shall be
      treated as an item of gain or loss.

            (iv) Any income, gain or loss attributable to the taxable
      disposition of any Partnership property shall be determined as if the
      adjusted basis of such property as of such date of disposition were equal
      in amount to the Partnership's Carrying Value with respect to such
      property as of such date.

            (v) In accordance with the requirements of Section 704(b) of the
      Code, any deductions for depreciation, cost recovery or amortization
      attributable to any Contributed Property shall be determined as if the
      adjusted basis of such property on the date it was acquired by the
      Partnership were equal to the Agreed Value of such property. Upon an
      adjustment pursuant to Section 5.5(d) to the Carrying Value of any
      Partnership property subject to depreciation, cost recovery or
      amortization, any further deductions for such depreciation, cost recovery
      or amortization attributable to such property shall be determined (A) as
      if the adjusted basis of such property were equal to the Carrying Value of
      such property immediately following such adjustment and (B) using a rate
      of depreciation, cost recovery or amortization derived from the same.
      method and useful life (or, if applicable, the remaining useful life) as
      is applied for federal income tax purposes; provided, however, that, if
      the asset has a zero adjusted basis for federal income tax purposes,
      depreciation, cost recovery or amortization deductions shall be determined
      using any reasonable method that the General Partner may adopt.

            (vi) If the Partnership's adjusted basis in a depreciable or cost
      recovery property is reduced for federal income tax purposes pursuant to
      Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
      shall, solely for purposes hereof, be deemed to be an additional
      depreciation or cost recovery deduction in the year such property is
      placed in service and shall be allocated among the Partners pursuant to
      Section 6.1. Any restoration of such basis pursuant to Section 48(q)(2) of
      the Code shall, to the extent possible, be allocated in the same manner to
      the Partners to whom such deemed deduction was allocated.

            (c) (i) A transferee of a Partnership Interest shall succeed to a
pro rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.

            (ii) Immediately prior to the transfer of a Subordinated Unit or of
      a Subordinated Unit that has converted into a Common Unit pursuant to
      Section 5.8 by a holder thereof (other than a transfer to an Affiliate
      unless, the General Partner elects to have this subparagraph 5.5(c)(ii)
      apply), the Capital Account maintained for such Person with respect to its
      Subordinated Units or converted Subordinated Units will (A) first, be
      allocated to the Subordinated Units or converted Subordinated Units to be
      transferred in an amount equal to the product of (x) the number of such
      Subordinated Units or converted Subordinated Units to be transferred and
      (y) the Per Unit Capital Amount for a Common Unit, and (B) second, any
      remaining balance in such Capital Account will be retained by the
      transferor, regardless of whether it has retained any Subordinated Units
      or converted Subordinated Units. Following any such allocation, the
      transferor's Capital Account, if any, maintained with respect to the
      retained Subordinated Units or converted


                                      -41-
<PAGE>

      Subordinated Units, if any, will have a balance equal to the amount
      allocated under clause (B) above, and the transferee's Capital Account
      established with respect to the transferred Subordinated Units or
      converted Subordinated Units will have a balance equal to the amount
      allocated under clause (A) above.

            (d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for
cash or Contributed Property or the conversion of the General Partner's Combined
Interest to Common Units pursuant to Section 11.3(b), the Capital Account of all
Partners and the Carrying Value of each Partnership property immediately prior
to such issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 6.1(c) in the same manner as any item
of gain or loss actually recognized during such period would have been
allocated. In determining such Unrealized Gain or Unrealized Loss, the aggregate
cash amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the General Partner
using such reasonable method of valuation as it may adopt; provided, however,
that the General Partner, in arriving at such valuation, must take fully into
account the fair market value of the Partnership Interests of all Partners at
such time. The General Partner shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its discretion to
be reasonable) to arrive at a fair market value for individual properties.

            (ii) In accordance with Treasury Regulation Section
      1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
      distribution to a Partner of any Partnership property (other than a
      distribution of cash that is not in redemption or retirement of a
      Partnership Interest), the Capital Accounts of all Partners and the
      Carrying Value of all Partnership property shall be adjusted upward or
      downward to reflect any Unrealized Gain or Unrealized Loss attributable to
      such Partnership property, as if such Unrealized Gain or Unrealized Loss
      had been recognized in a sale of such property immediately prior to such
      distribution for an amount equal to its fair market value, and had been
      allocated to the Partners, at such time, pursuant to Section 6.1(c) in the
      same manner as any item of gain or loss actually recognized during such
      period would have been allocated. In determining such Unrealized Gain or
      Unrealized Loss the aggregate cash amount and fair market value of all
      Partnership assets (including, without limitation, cash or cash
      equivalents) immediately prior to a distribution shall (A) in the case of
      an actual distribution which is not made pursuant to Section 12.4 or in
      the case of a deemed contribution and/or distribution, be determined and
      allocated in the same manner as that provided in Section 5.5(d)(i) or (B)
      in the case of a liquidating distribution pursuant to Section 12.4, be
      determined and allocated by the Liquidator using such reasonable method of
      valuation as it may adopt.

Section 5.6. Issuances of Additional Partnership Securities.

            (a) Subject to Section 5.7, the Partnership may issue additional
Partnership Securities and options, rights, warrants and appreciation rights
relating to the Partnership


                                      -42-
<PAGE>

Securities for any Partnership purpose at any time and from time to time to such
Persons for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole discretion, all without the
approval of any Limited Partners.

            (b) Each additional Partnership Security authorized to be issued by
the Partnership pursuant to Section 5.6(a) may be issued in one or more classes,
or one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner in the
exercise of its sole discretion, including (i) the right to share Partnership
profits and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the
Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and
conditions upon which each Partnership Security will be issued, evidenced by
certificates and assigned or transferred; and (vii) the right, if any, of each
such Partnership Security to vote on Partnership matters, including matters
relating to the relative designations, preferences, rights, powers and duties of
such Partnership Security.

            (c) The General Partner is hereby authorized and directed to take
all actions that it deems necessary or appropriate in connection with (i) each
issuance of Partnership Securities and options, rights, warrants and
appreciation rights relating to Partnership Securities pursuant to this Section
5.6, (ii) the conversion of the General Partner Interest and Incentive
Distribution Rights into Units pursuant to the terms of this Agreement, (iii)
the admission of Additional Limited Partners and (iv) all additional issuances
of Partnership Securities. The General Partner is further authorized and
directed to specify the relative rights, powers and duties of the holders of the
Units or other Partnership Securities being so issued. The General Partner shall
do all things necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in connection
with any future issuance of Partnership Securities or in connection with the
conversion of the General Partner Interest and Incentive Distribution Rights
into Units pursuant to the terms of this Agreement, including compliance with
any statute, rule, regulation or guideline of any federal, state or other
governmental agency or any, National Securities Exchange on which the Units or
other Partnership Securities are listed for trading.

Section 5.7. Limitations on Issuance of Additional Partnership Securities.

      The issuance of Partnership Securities pursuant to Section 5.6 shall be
subject to the following restrictions and limitations:

            (a) During the Subordination Period, the Partnership shall not issue
(and shall not issue any options, rights, warrants or appreciation rights
relating to) an aggregate of more than 2,839,847 additional Parity Units without
the prior approval of the holders of a Unit Majority. In applying this
limitation, there shall be excluded Common Units and other Parity Units issued
(A) in connection with the exercise of the Over-Allotment Option pursuant to
Section 5.3(b), (B) in accordance with Section 5.7(b), (C) upon conversion of
Subordinated Units pursuant to Section 5.8, (D) upon conversion of the General
Partner Interest and Incentive Distribution Rights


                                      -43-
<PAGE>

pursuant to Section 11.3(b), (E) pursuant to the employee benefit plans of the
General Partner, the Partnership or any other Group Member and (F) in the event
of a combination or subdivision of Common Units.

            (b) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the prior
approval of the Unitholders, if such issuance occurs (i) in connection with an
Acquisition or a Capital Improvement or (ii) within 365 days of, and the net
proceeds from such issuance are used to repay debt incurred in connection with,
an Acquisition or a Capital Improvement, in each case where such Acquisition or
Capital Improvement involves assets that, if acquired by the Partnership as of
the date that is one year prior to the first day of the Quarter in which such
Acquisition is to be consummated or such Capital Improvement is to be completed,
would have resulted, on a pro forma basis, in an increase in:

            (A)   the amount of Adjusted Operating Surplus generated by the
                  Partnership on a per-Unit basis (for all Outstanding Units)
                  with respect to each of the four most recently completed
                  Quarters (on a pro forma basis as described below) as compared
                  to

            (B)   the actual amount of Adjusted Operating Surplus generated by
                  the Partnership on a per-Unit basis (for all Outstanding
                  Units) (excluding Adjusted Operating Surplus attributable to
                  the Acquisition or Capital Improvement) with respect to each
                  of such four most recently completed Quarters.

      If the issuance of Parity Units with respect to an Acquisition or Capital
Improvement occurs within the first four full Quarters after the Closing Date,
then Adjusted Operating Surplus as used in clauses (A) (subject to the
succeeding sentence) and (B) above shall be calculated (i) for each Quarter, if
any, that commenced after the Closing Date for which actual results of
operations are available, based on the actual Adjusted Operating Surplus of the
Partnership generated with respect to such Quarter, and (ii) for each other
Quarter, on a pro forma basis consistent with the procedures, as applicable, set
forth in Appendix D to the Registration Statement. Furthermore, the amount in
clause (A) shall be determined on a pro forma basis assuming that (1) all of the
Parity Units to be issued in connection with or within 365 days of such
Acquisition or Capital Improvement had been issued and outstanding, (2) all
indebtedness for borrowed money to be incurred or assumed in connection with
such Acquisition or Capital Improvement (other than any such indebtedness that
is to be repaid with the proceeds of such issuance of Parity Units) had been
incurred or assumed, in each case as of the commencement of such four-Quarter
period, (3) the personnel expenses that would have been incurred by the
Partnership in the operation of the acquired assets are the personnel expenses
for employees to be retained by the Partnership in the operation of the acquired
assets, and (4) the non-personnel costs and expenses are computed on the same
basis as those incurred by the Partnership in the operation of the Partnership's
business at similarly situated Partnership facilities. For the purposes of this
Section 5.7(b), the term "debt" shall be deemed to include indebtedness used to
extend, refinance, renew, replace or defease debt originally incurred in
connection with an Acquisition or Capital Improvement; provided, that, the
amount of such extended, refinanced,


                                      -44-
<PAGE>

renewed, replaced or defeased indebtedness does not exceed the principal sum of,
plus accrued interest on, the indebtedness so extended, refinanced, renewed,
replaced or defeased.

            (c) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the approval of
the Unitholders, if the proceeds from such issuance are used exclusively to
repay up to $40.0 million of indebtedness of a Group Member where the aggregate
amount of distributions that would have been paid with respect to such newly
issued Units or Partnership Securities, plus the related distributions on the
General Partner Interest in the Partnership and the Operating Partnership in
respect of the four-Quarter period ending prior to the first day of the Quarter
in which the issuance is to be consummated (assuming such additional Units or
Partnership Securities had been Outstanding throughout such period and that
distributions equal to the distributions that were actually paid on the
Outstanding Units during the period were paid on such additional Units or
Partnership Securities) did not exceed the interest costs actually incurred
during such period on the indebtedness that is to be repaid (or, if such
indebtedness was not outstanding throughout the entire period, would have been
incurred had such indebtedness been outstanding for the entire period). In the
event that the Partnership is required to pay a prepayment penalty in connection
with the repayment of such indebtedness, for purposes of the foregoing test the
number of Parity Units issued to repay such indebtedness shall be deemed
increased by the number of Parity Units that would need to be issued to pay such
penalty.

            (d) During the Subordination Period, the Partnership shall not issue
(and shall not issue any options, rights, warrants or appreciation rights
relating to) additional Partnership Securities having rights to distributions or
in liquidation ranking prior or senior to the Common Units, without the prior
approval of the holders of a Unit Majority.

            (e) No fractional Units shall be issued by the Partnership.

Section 5.8. Conversion of Subordinated Units.

            (a) A total of 1,419,923 of the outstanding Subordinated Units will
convert into Common Units on a one-for-one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or after
December 31, 2003, in respect of which:

            (i) distributions under Section 6.4 in respect of all Outstanding
      Common Units and Subordinated Units with respect to each of the three
      consecutive, non-overlapping four-Quarter periods immediately preceding
      such date equaled or exceeded the sum of the Minimum Quarterly
      Distribution on all of the Outstanding Common Units and Subordinated Units
      during such periods;

            (ii) the Adjusted Operating Surplus generated during each of the
      three consecutive, non-overlapping four-Quarter periods immediately
      preceding such date equaled or exceeded the sum of the Minimum Quarterly
      Distribution on all of the Common Units and Subordinated Units that were
      Outstanding during such periods on a fully-diluted basis (i.e. taking into
      account for purposes of such determination all Outstanding Common Units,
      all Outstanding Subordinated Units, all Common Units and Subordinated
      Units issuable upon exercise of employee options that have, as of the date


                                      -45-
<PAGE>

      of determination, already vested or are scheduled to vest prior to the end
      of the Quarter immediately following the Quarter with respect to which
      such determination is made, and all Common Units and Subordinated Units
      that have, as of the date of determination, been earned by but not yet
      issued to management of the Partnership in respect of incentive
      compensation), plus the related distribution on the General Partner
      Interest in the Partnership during such periods; and

            (iii) the Cumulative Common Unit Arrearage on all of the Common
      Units is zero.

            (b) An additional 1,419,923 of the Outstanding Subordinated Units
will convert into Common Units on a one-for-one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or after
December 31, 2004, in respect of which:

            (i) distributions under Section 6.4 in respect of all Outstanding
      Common Units and Subordinated Units with respect to each of the three
      consecutive, non-overlapping four-Quarter periods immediately preceding
      such date equaled or exceeded the sum of the Minimum Quarterly
      Distribution on all of the Outstanding Common Units and Subordinated Units
      during such periods;

            (ii) the Adjusted Operating Surplus generated during each of the
      three consecutive, non-overlapping four-Quarter periods immediately
      preceding such date equaled or exceeded the sum of the Minimum Quarterly
      Distribution on all of the Common Units and Subordinated Units that were
      Outstanding during such periods on a fully-diluted basis (i.e. taking into
      account for purposes of such determination all Outstanding Common Units,
      all Outstanding Subordinated Units, all Common Units and Subordinated
      Units issuable upon exercise of employee options that have, as of the date
      of determination, already vested or are scheduled to vest prior to the end
      of the Quarter immediately following the Quarter with respect to which
      such determination is made, and all Common Units and Subordinated Units
      that have, as of the date of determination, been earned by but not yet
      issued to management of the Partnership in respect of incentive
      compensation), plus the related distribution on the General Partner
      Interest in the Partnership during such periods; and

            (iii) the Cumulative Common Unit Arrearage on all of the Common
      Units is zero;

provided, however, that the conversion of Subordinated Units pursuant to this
Section 5.8(b) may not occur until at least one year following the conversion of
Subordinated Units pursuant to Section 5.8(a).

            (c) In the event that less than all of the Outstanding Subordinated
Units shall convert into Common Units pursuant to Section 5.8(a) or 5.8(b) at a
time when there shall be more than one holder of Subordinated Units, then,
unless all of the holders of Subordinated Units shall agree to a different
allocation, the Subordinated Units that are to be converted into Common Units
shall be allocated among the holders of Subordinated Units pro rata based on the
number of Subordinated Units held by each such holder.


                                      -46-
<PAGE>

            (d) Any Subordinated Units that are not converted into Common Units
pursuant to Sections 5.8(a) and (b) shall convert into Common Units on a
one-for-one basis on the first day following the Record Date for distributions
in respect of the final Quarter of the Subordination Period.

            (e) Notwithstanding any other provision of this Agreement, all the
then Outstanding Subordinated Units will automatically convert into Common Units
on a one-for-one basis as set forth in, and pursuant to the terms of, Section
11.4.

            (f) A Subordinated Unit that has converted into a Common Unit shall
be subject to the provisions of Section 6.7(b).

Section 5.9. Limited Preemptive Right.

            Except as provided in this Section 5.9 and in Section 5.2, no Person
shall have any preemptive, preferential or other similar right with respect to
the issuance of any Partnership Security, whether unissued, held in the treasury
or hereafter created. The General Partner shall have the right, which it may
from time to time assign in whole or in part to any of its Affiliates, to
purchase Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons other than
the General Partner and its Affiliates, to the extent necessary to maintain the
Percentage Interests of the General Partner and its Affiliates equal to that
which existed immediately prior to the issuance of such Partnership Securities.

Section 5.10. Splits and Combination.

            (a) Subject to Sections 5.10(d), 6.6 and 6.9 (dealing with
adjustments of distribution levels), the Partnership may make a Pro Rata
distribution of Partnership Securities to all Record Holders or may effect a
subdivision or combination of Partnership Securities so long as, after any such
event, each Partner shall have the same Percentage Interest in the Partnership
as before such event, and any amounts calculated on a per Unit basis (including
any Common Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a
number of Units (including the number of Subordinated Units that may convert
prior to the end of the Subordination Period and the number of additional Parity
Units that may be issued pursuant to Section 5.7 without a Unitholder vote) are
proportionately adjusted retroactive to the beginning of the Partnership.

            (b) Whenever such a distribution, subdivision or combination of
Partnership Securities is declared, the General Partner shall select a Record
Date as of which the distribution, subdivision or combination shall be effective
and shall send notice thereof at least 20 days prior to such Record Date to each
Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to
be held by each Record Holder after giving effect to such distribution,
subdivision or combination. The General Partner shall be entitled to rely on any
certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.


                                      -47-
<PAGE>

            (c) Promptly following any such distribution, subdivision or
combination, the Partnership may issue Certificates to the Record Holders of
Partnership Securities as of the applicable Record Date representing the new
number of Partnership Securities held by such Record Holders, or the General
Partner may adopt such other procedures as it may deem appropriate to reflect
such changes. If any such combination results in a smaller total number of
Partnership Securities Outstanding, the Partnership shall require, as a
condition to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately prior to
such Record Date.

            (d) The Partnership shall not issue fractional Units upon any
distribution, subdivision or combination of Units. If a distribution,
subdivision or combination of Units would result in the issuance of fractional
Units but for the provisions of Section 5.7(e) and this Section 5.10(d), each
fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall
be rounded to the next higher Unit).

Section 5.11. Fully Paid and Non-Assessable Nature of Limited Partner Interests.

      All Limited Partner Interests issued pursuant to, and in accordance with
the requirements of, this Article V shall be fully paid and non-assessable
Limited Partner Interests in the Partnership, except as such non assessability
may be affected by Section 17-607 of the Delaware Act.

Section 5.12. Establishment of Class B Common Units.

            (a) The General Partner hereby designates and creates a series of
Units to be designated as "Class B Common Units" and consisting of a total of
7,830,924 Class B Common Units, and fixes the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
holders of the Class B Units as set forth in this Section 5.12.

            (b) Each Class B Common Unit shall be convertible from time to time,
in whole or in part, at the option of the holders thereof, into one Common Unit
from and after such date as the Partnership has been advised by the New York
Stock Exchange that the Common Units issuable upon any such conversion are
eligible for listing on the New York Stock Exchange. The General Partner will
promptly notify the holders of the Class B Common Units upon receipt of such
advice. Upon written notice to the General Partner from the holders of at least
a majority of the Outstanding Class B Common Units (a "Notice of Intent to
Convert") given not earlier than one year after the date of this Amendment, the
General Partner will use its reasonable best efforts to cause the Partnership to
meet any unfulfilled requirements of the New York Stock Exchange for such
listing, including obtaining such approval of the Unitholders as may be required
by the New York Stock Exchange for the issuance of the Common Units, issuable
upon conversion of the Class B Common Units. If, 120 days after the date of the
Notice of Intent to Convert, the Common Units issuable upon such conversion have
not been approved for listing on the New York Stock Exchange, then the terms of
the Class B Common Units will be changed so that each Class B Common Unit will
become entitled to receive quarterly cash distributions in an amount equal to
115% of the quarterly cash distribution amount payable with respect to each
Common Unit. The Class B Common Units will not have the privilege of conversion
except as provided in this Section 5.12.


                                      -48-
<PAGE>

            (c) After the repayment in full of the Bank Loan, the Partnership
may redeem the Class B Common Units for cash at any time by giving notice in
writing to the holders of the Class B Common Units (a "Mandatory Redemption
Notice") of the Partnership's intent to redeem the Class B Common Units. Any
Outstanding Class B Common Units to be redeemed shall be redeemed as of the 30th
day following date of such Mandatory Redemption Notice unless such day is not a
Business Day in which case all such Outstanding Class B Common Units shall be
redeemed on the next Business Day following such 30th day.

            (d) Upon any request by the General Partner or any of its Affiliates
to register all or any part of the Class B Common Units pursuant to Section
7.12, the Class B Common Units for which registration is so requested may be
redeemed by the Partnership at its election. The Partnership shall exercise its
option to redeem the Class B Common Units under this Section 5.12(d) by mailing
written notice thereof to the holders of the Class B Common Units for which
registration is so requested. Such notice shall be given not later than 15 days
after the receipt by the General Partner of such registration request and shall
fix a date for redemption of such Class B Common Units not less than 30 nor more
than 60 days after the date of such notice.

            (e) Any redemption under Section 5.12(c) or Section 5.12(d) shall be
for a cash redemption price equal to the Current Market Price per Common Unit as
of the date fixed for redemption.

            (f) Before any holder of Class B Common Units shall be entitled to
receive any redemption payment or to convert such holder's Class B Common Units
into Common Units, as the case may be, the holder shall surrender the
Certificates evidencing the Class B Common Units, duly endorsed, at the office
of the General Partner or of any transfer agent for the Class B Common Units. In
the case of any such conversion, the Partnership shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Class B Common
Units one or more Certificates evidencing Common Units, registered in the name
of such holder, for the number of Common Units to which the holder shall be
entitled. Such conversion shall be deemed to have been made as of the date of
the surrender of the Class B Common Units to be converted, and the person
entitled to receive the Common Units issuable upon such conversion shall be
treated for all purposes as the record holder of such Common Units on said date.

            (g) From and after a redemption date (unless default shall be made
by the Partnership in providing money for the payment of the redemption price),
the Class B Common Units redeemed shall no longer be deemed Outstanding, and all
rights of the holders thereof as Partners in the Partnership (except the right
to receive from the Partnership the redemption price) shall cease. Class B
Common Units redeemed pursuant to Section 5.12(c) or 5.12(d) shall be restored
to the status of authorized but unissued Units, without designation as to class.

            (h) Except as otherwise provided in this Agreement, each Class B
Common Unit shall be identical to a Common Unit, and the holder of a Class B
Common Unit shall have the rights of a holder of a Common Unit with respect to,
without limitation, Partnership distributions, voting and allocations of income,
gain, loss or deductions; provided, however, that during the period in which any
portion of the Bank Loan is outstanding, the Class B Common Units will not be
paid a distribution of any kind. Upon the repayment in full of the Bank Loan,
the holders of the Outstanding Class B Common Units will be entitled to receive
a distribution of Available Cash equal to the distributions of


                                      -49-
<PAGE>

Available Cash that were paid on or declared payable to the Common Units during
the term of the Bank Loan. Except as otherwise provided in this Agreement, all
Units shall vote or consent together as a single class on all matters submitted
for a vote or consent of the Outstanding Units.

            (i) The Class B Common Units will have voting rights that are
identical to the voting rights of the Common Units and will vote with the Common
Units as a single class, so that each Class B Common Unit will be entitled to
one vote on each matter with respect to which each Common Unit is entitled to
vote; provided, however, that the Class B Common Units shall not be entitled to
vote and shall not be deemed outstanding for purposes of determining a quorum,
with respect to matters in which the requisite vote is determined by New York
Stock Exchange rules or New York Stock Exchange staff interpretations of such
rules for listing of the Common Units; each reference in the Partnership
Agreement to a vote of holders of Common Units shall be deemed to be a reference
to the holders of Common Units and Class B Common Units.

            (j) The Certificates evidencing Class B Common Units shall be
separately identified and shall not bear the same CUSIP number as the
Certificates evidencing Common Units.

                                   ARTICLE VI.
                          ALLOCATIONS AND DISTRIBUTIONS

Section 6.1. Allocations for Capital Account Purposes.

      For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.

            (a) Net Income. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable year shall be allocated as follows:

            (i) First, 100% to the General Partner in an amount equal to the
      aggregate Net Losses allocated to the General Partner pursuant to Section
      6.1(b)(iii) for all previous taxable years until the aggregate Net Income
      allocated to the General Partner pursuant to this Section 6.1(a)(i) for
      the current taxable year and all previous taxable years is equal to the
      aggregate Net Losses allocated to the General Partner pursuant to Section
      6.1(b)(iii) for all previous taxable years;

            (ii) Second, 2% to the General Partner in an amount equal to the
      aggregate Net Losses allocated to the General Partner pursuant to Section
      6.1(b)(ii) for all previous taxable years and 98% to the Unitholders, in
      accordance with their respective Percentage Interests, until the aggregate
      Net Income allocated to such Partners pursuant to this Section 6.1(a)(ii)
      for the current taxable year and all previous taxable years is equal to
      the aggregate Net Losses allocated to such Partners pursuant to Section
      6.1(b)(ii) for all previous taxable years; and


                                      -50-
<PAGE>

            (iii) Third, the balance, if any, 2% to the General Partner and 98%
      to the Unitholders, in accordance with their respective Percentage
      Interests.

            (b) Net Losses. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:

            (i) First, 2% to the General Partner and 98% to the Unitholders, in
      accordance with their respective Percentage Interests, until the aggregate
      Net Losses allocated pursuant to this Section 6.1(b)(i) for the current
      taxable year and all previous taxable years is equal to the aggregate Net
      Income allocated to such Partners pursuant to Section 6.1(a)(iii) for all
      previous taxable years, provided that the Net Losses shall not be
      allocated pursuant to this Section 6.1(b)(i) to the extent that such
      allocation would cause any Unitholder to have a deficit balance in its
      Adjusted Capital Account at the end of such taxable year (or increase any
      existing deficit balance in its Adjusted Capital Account);

            (ii) Second, 2% to the General Partner and 98% to the Unitholders in
      accordance with their respective Percentage Interests; provided, that Net
      Losses shall not be allocated pursuant to this Section 6.1(b)(ii) to the
      extent that such allocation would cause any Unitholder to have a deficit
      balance in its Adjusted Capital Account at the end of such taxable year
      (or increase any existing deficit balance in its Adjusted Capital
      Account);

            (iii) Third, the balance, if any, 100% to the General Partner.

            (c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income, gain, loss
and deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of this
Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.

            (i) If a Net Termination Gain is recognized (or deemed recognized
      pursuant to Section 5.5(d)), such Net Termination Gain shall be allocated
      between the General Partner and the Limited Partners in the following
      manner (and the Capital Accounts of the Partners shall be increased by the
      amount so allocated in each of the following subclauses, in the order
      listed, before an allocation is made pursuant to the next succeeding
      subclause):

                  (A) First, to each Partner having a deficit balance in its
            Capital Account, in the proportion that such deficit balance bears
            to the total deficit balances in the Capital Accounts of all
            Partners, until each such Partner has been


                                      -51-
<PAGE>

            allocated Net Termination Gain equal to any such deficit balance in
            its Capital Account;

                  (B) Second, 100% to the General Partner and to all Limited
            Partners, in accordance with their respective Percentage Interests,
            until the Capital Account in respect of each Common Unit then
            Outstanding is equal to the sum of (1) its Unrecovered Capital plus
            (2) the Minimum Quarterly Distribution for the Quarter during which
            the Liquidation Date occurs, reduced by any distribution pursuant to
            Section 6.4(a)(i) or (b)(i) with respect to such Common Unit for
            such Quarter (the amount determined pursuant to this clause (2) is
            hereinafter defined as the "Unpaid MQD") plus (3) any then existing
            Cumulative Common Unit Arrearage;

                  (C) Third, if such Net Termination Gain is recognized (or is
            deemed to be recognized) prior to the expiration of the
            Subordination Period, 100% to the General Partner and to all Limited
            Partners, in accordance with their respective Percentage Interests
            until the Capital Account in respect of each Subordinated Unit then
            Outstanding equals the sum of (1) its Unrecovered Capital,
            determined for the taxable year (or portion thereof) to which this
            allocation of gain relates, plus (2) the Minimum Quarterly
            Distribution for the Quarter during which the Liquidation Date
            occurs, reduced by any distribution pursuant to Section 6.4(a)(iii)
            with respect to such Subordinated Unit for such Quarter;

                  (D) Fourth, 100% to the General Partner and to all Limited
            Partners in accordance with their respective Percentage Interests
            until the Capital Account in respect of each Common Unit then
            Outstanding is equal to the sum of (1) its Unrecovered Capital, plus
            (2) the Unpaid MQD, plus (3) any then existing Cumulative Common
            Unit Arrearage, plus (4) the excess of (aa) the First Target
            Distribution less the Minimum Quarterly Distribution for each
            Quarter of the Partnership's existence over (bb) the cumulative per
            Unit amount of any distributions of Operating Surplus that was
            distributed pursuant to Sections 6.4(a)(iv) and 6.4(b)(ii) (the sum
            of (1) plus (2) plus (3) plus (4) is hereinafter defined as the
            "First Liquidation Target Amount");

                  (E) Fifth, 85% to all Unitholders, Pro Rata, 13% to the
            holders of the Incentive Distribution Rights, Pro Rata, and 2% to
            the General Partner until the Capital Account in respect of each
            Common Unit then Outstanding is equal to the sum of (1) the First
            Liquidation Target Amount, plus (2) the excess of (aa) the Second
            Target Distribution less the First Target Distribution for each
            Quarter of the Partnership's existence over (bb) the cumulative per
            Unit amount of any distributions of Operating Surplus that was
            distributed pursuant to Sections 6.4(a)(v) and 6.4(b)(iii) (the sum
            of (1) plus (2) is hereinafter defined as the "Second Liquidation
            Target Amount");

                  (F) Sixth, 75% to all Unitholders, Pro Rata, 23% to the
            holders of the Incentive Distribution Rights, Pro Rata, and 2% to
            the General Partner until the Capital Account in respect of each
            Common Unit then Outstanding is equal to the sum of (1) the Second
            Liquidation Target Amount, plus (2) the excess of (aa) the


                                      -52-
<PAGE>

            Third Target Distribution less the Second Target Distribution for
            each Quarter of the Partnership's existence over (bb) the cumulative
            per Unit amount of any distributions of Operating Surplus that was
            distributed pursuant to Sections 6.4(a)(vi) and 6.4(b)(iv) (the sum
            of (1) plus (2) is hereinafter defined as the "Third Liquidation
            Target Amount"); and

                  (G) Finally, any remaining amount 50% to all Unitholders, Pro
            Rata, 48% to the holders of the Incentive Distribution Rights, Pro
            Rata, and 2% to the General Partner.

            (ii) If a Net Termination Loss is recognized (or deemed recognized
      pursuant to Section 5.5(d)), such Net Termination Loss shall be allocated
      among the Partners in the following manner:

            (A)   First, if such Net Termination Loss is recognized (or is
                  deemed to be recognized) prior to the conversion of the last
                  Outstanding Subordinated Unit, 98% to the Unitholders holding
                  Subordinated Units, Pro Rata, and 2% to the General Partner
                  until the Capital Account in respect of each Subordinated Unit
                  then Outstanding has been reduced to zero;

            (B)   Second, 98% to all Unitholders holding Common Units, Pro Rata,
                  and 2% to the General Partner until the Capital Account in
                  respect of each Common Unit then Outstanding has been reduced
                  to zero; and

            (C)   Third, the balance, if any, 100% to the General Partner.

            (d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:

            (i) Partnership Minimum Gain Chargeback. Notwithstanding any other
      provision of this Section 6.1, if there is a net decrease in Partnership
      Minimum Gain during any Partnership taxable period, each Partner shall be
      allocated items of Partnership income and gain for such period (and, if
      necessary, subsequent periods) in the manner and amounts provided in
      Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
      1.704-20)(2)(i), or any successor provision. For purposes of this Section
      6.1(d), each Partner's Adjusted Capital Account balance shall be
      determined, and the allocation of income or gain required hereunder shall
      be effected, prior to the application of any other allocations pursuant to
      this Section 6.1(d) with respect to such taxable period (other than an
      allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section
      6.1(d)(i) is intended to comply with the Partnership Minimum Gain
      chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
      be interpreted consistently therewith.

            (ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
      Notwithstanding the other provisions of this Section 6.1 (other than
      Section 6.1(d)(i)), except as provided in Treasury Regulation Section
      1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
      Minimum Gain during any Partnership taxable period, any Partner with a
      share of Partner Nonrecourse Debt Minimum Gain at the beginning of


                                      -53-
<PAGE>

      such taxable period shall be allocated items of Partnership income and
      gain for such period (and, if necessary, subsequent periods) in the manner
      and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
      1.704-20)(2)(ii), or any successor provisions. For purposes of this
      Section 6.1(d), each Partner's Adjusted Capital Account balance shall be
      determined, and the allocation of income or gain required hereunder shall
      be effected, prior to the application of any other allocations pursuant to
      this Section 6.1(d), other than Section 6.1(d)(i) and other than an
      allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with respect
      to such taxable period. This Section 6.1(d)(ii) is intended to comply with
      the chargeback of items of income and gain requirement in Treasury
      Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
      therewith.

            (iii) Priority Allocations.

            (A)   If the amount of cash or the Net Agreed Value of any property
                  distributed (except cash or property distributed pursuant to
                  Section 12.4) to any Unitholder with respect to its Units for
                  a taxable year is greater (on a per Unit basis) than the
                  amount of cash or the Net Agreed Value of property distributed
                  to the other Unitholders with respect to their Units (on a per
                  Unit basis), then (1) each Unitholder receiving such greater
                  cash or property distribution shall be allocated gross income
                  in an amount equal to the product of (aa) the amount by which
                  the distribution (on a per Unit basis) to such Unitholder
                  exceeds the distribution (on a per Unit basis) to the
                  Unitholders receiving the smallest distribution and (bb) the
                  number of Units owned by the Unitholder receiving the greater
                  distribution; and (2) the General Partner shall be allocated
                  gross income in an aggregate amount equal to 1/99th of the sum
                  of the amounts allocated in clause (1) above.

            (B)   After the application of Section 6.1(d)(iii)(A), all or any
                  portion of the remaining items of Partnership gross income or
                  gain for the taxable period, if any, shall be allocated 100%
                  to the holders of Incentive Distribution Rights, Pro Rata,
                  until the aggregate amount of such items allocated to the
                  holders of Incentive Distribution Rights pursuant to this
                  paragraph 6.1(d)(iii)(B) for the current taxable year and all
                  previous taxable years is equal to the cumulative amount of
                  all Incentive Distributions made to the holders of Incentive
                  Distribution Rights from the Closing Date to a date 45 days
                  after the end of the current taxable year.

            (iv) Qualified Income Offset. In the event any Partner unexpectedly
      receives any adjustments, allocations or distributions described in
      Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
      1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership
      income and gain shall be specially allocated to such Partner in an amount
      and manner sufficient to eliminate, to the extent required by the Treasury
      Regulations promulgated under Section 704(b) of the Code, the deficit
      balance, if any, in its Adjusted Capital Account created by such
      adjustments, allocations or distributions as quickly as


                                      -54-
<PAGE>

      possible unless such deficit balance is otherwise eliminated pursuant to
      Section 6.1(d)(i) or (ii).

            (v) Gross Income Allocations. In the event any Partner has a deficit
      balance in its Capital Account at the end of any Partnership taxable
      period in excess of the sum of (A) the amount such Partner is required to
      restore pursuant to the provisions of this Agreement and (B) the amount
      such Partner is deemed obligated to restore pursuant to Treasury
      Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be
      specially allocated items of Partnership gross income and gain in the
      amount of such excess as quickly as possible; provided, that an allocation
      pursuant to this Section 6.1(d)(v) shall be made only if and to the extent
      that such Partner would have a deficit balance in its Capital Account as
      adjusted after all other allocations provided for in this Section 6.1 have
      been tentatively made as if this Section 6.1(d)(v) were not in this
      Agreement.

            (vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
      period shall be allocated to the Partners in accordance with their
      respective Percentage Interests. If the General Partner determines in its
      good faith discretion that the Partnership's Nonrecourse Deductions must
      be allocated in a different ratio to satisfy the safe harbor requirements
      of the Treasury Regulations promulgated under Section 704(b) of the Code,
      the General Partner is authorized, upon notice to the other Partners, to
      revise the prescribed ratio to the numerically closest ratio that does
      satisfy such requirements.

            (vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
      for any taxable period shall be allocated 100% to the Partner that bears
      the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
      which such Partner Nonrecourse Deductions are attributable in accordance
      with Treasury Regulation Section 1.704-2(i). If more than one Partner
      bears the Economic Risk of Loss with respect to a Partner Nonrecourse
      Debt, such Partner Nonrecourse Deductions attributable thereto shall be
      allocated between or among such Partners in accordance with the ratios in
      which they share such Economic Risk of Loss.

            (viii) Nonrecourse Liabilities. For purposes of Treasury Regulation
      Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
      the Partnership in excess of the sum of (A) the amount of Partnership
      Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall
      be allocated among the Partners in accordance with their respective
      Percentage Interests.

            (ix) Code Section 754 Adjustments. To the extent an adjustment to
      the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
      or 743(c) of the Code is required, pursuant to Treasury Regulation Section
      1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
      Accounts, the amount of such adjustment to the Capital Accounts shall be
      treated as an item of gain (if the adjustment increases the basis of the
      asset) or loss (if the adjustment decreases such basis), and such item of
      gain or loss shall be specially allocated to the Partners in a manner
      consistent with the manner in which their Capital Accounts are required to
      be adjusted pursuant to such Section of the Treasury Regulations.


                                      -55-
<PAGE>

            (x) Economic Uniformity. At the election of the General Partner with
      respect to any taxable period ending upon, or after, the termination of
      the Subordination Period, all or a portion of the remaining items of
      Partnership gross income or gain for such taxable period, after taking
      into account allocations pursuant to Section 6.1(d)(iii), shall be
      allocated 100% to each Partner holding Subordinated Units that are
      Outstanding as of the termination of the Subordination Period ("Final
      Subordinated Units") in the proportion of the number of Final Subordinated
      Units held by such Partner to the total number of Final Subordinated Units
      then Outstanding, until each such Partner has been allocated an amount of
      gross income or gain which increases the Capital Account maintained with
      respect to such Final Subordinated Units to an amount equal to the product
      of (A) the number of Final Subordinated Units held by such Partner and (B)
      the Per Unit Capital Amount for a Common Unit. The purpose of this
      allocation is to establish uniformity between the Capital Accounts
      underlying Final Subordinated Units and the Capital Accounts underlying
      Common Units held by Persons other than the General Partner and its
      Affiliates immediately prior to the conversion of such Final Subordinated
      Units into Common Units. This allocation method for establishing such
      economic uniformity will only be available to the General Partner if the
      method for allocating the Capital Account maintained with respect to the
      Subordinated Units between the transferred and retained Subordinated Units
      pursuant to Section 5.5(c)(ii) does not otherwise provide such economic
      uniformity to the Final Subordinated Units.

            (xi) Curative Allocation.

            (A)   Notwithstanding any other provision of this Section 6.1, other
                  than the Required Allocations, the Required Allocations shall
                  be taken into account in making the Agreed Allocations so
                  that, to the extent possible, the net amount of items of
                  income, gain, loss and deduction allocated to each Partner
                  pursuant to the Required Allocations and the Agreed
                  Allocations, together, shall be equal to the net amount of
                  such items that would have been allocated to each such Partner
                  under the Agreed Allocations had the Required Allocations and
                  the related Curative Allocation not otherwise been provided in
                  this Section 6.1. Notwithstanding the preceding sentence,
                  Required Allocations relating to (1) Nonrecourse Deductions
                  shall not be taken into account except to the extent that
                  there has been a decrease in Partnership Minimum Gain and (2)
                  Partner Nonrecourse Deductions shall not be taken into account
                  except to the extent that there has been a decrease in Partner
                  Nonrecourse Debt Minimum Gain. Allocations pursuant to this
                  Section 6.1(d)(xi)(A) shall only be made with respect to
                  Required Allocations to the extent the General Partner
                  reasonably determines that such allocations will otherwise be
                  inconsistent with the economic agreement among the Partners.
                  Further, allocations pursuant to this Section 6.1(d)(xi)(A)
                  shall be deferred with respect to allocations pursuant to
                  clauses (1) and (2) hereof to the extent the General Partner
                  reasonably determines that such allocations are likely to be
                  offset by subsequent Required Allocations.


                                      -56-
<PAGE>

            (B)   The General Partner shall have reasonable discretion, with
                  respect to each taxable period, to (1) apply the provisions of
                  Section 6.1(d)(xi)(A) in whatever order is most likely to
                  minimize the economic distortions that might otherwise result
                  from the Required Allocations, and (2) divide all allocations
                  pursuant to Section 6.1(d)(xi)(A) among the Partners in a
                  manner that is likely to minimize such economic distortions.

            (xii) Corrective Allocations. In the event of any allocation of
      Additional Book Basis Derivative Items or any Book-Down Event or any
      recognition of a Net Termination Loss, the following rules shall apply:

            (A)   In the case of any allocation of Additional Book Basis
                  Derivative Items (other than an allocation of Unrealized Gain
                  or Unrealized Loss under Section 5.5(d) hereof), the General
                  Partner shall allocate additional items of gross income and
                  gain away from the holders of Incentive Distribution Rights to
                  the Unitholders and the General Partner, or additional items
                  of deduction and loss away from the Unitholders and the
                  General Partner to the holders of Incentive Distribution
                  Rights, to the extent that the Additional Book Basis
                  Derivative Items allocated to the Unitholders or the General
                  Partner exceed their Share of Additional Book Basis Derivative
                  Items. For this purpose, the Unitholders and the General
                  Partner shall be treated as being allocated Additional Book
                  Basis Derivative Items to the extent that such Additional Book
                  Basis Derivative Items have reduced the amount of income that
                  would otherwise have been allocated to the Unitholders or the
                  General Partner under the Partnership Agreement (e.g.,
                  Additional Book Basis Derivative Items taken into account in
                  computing cost of goods sold would reduce the amount of book
                  income otherwise available for allocation among the Partners).
                  Any allocation made pursuant to this Section 6.1(d)(xii)(A)
                  shall be made after all of the other Agreed Allocations have
                  been made as if this Section 6.1(d)(xii) were not in this
                  Agreement and, to the extent necessary, shall require the
                  reallocation of items that have been allocated pursuant to
                  such other Agreed Allocations.

            (B)   In the case of any negative adjustments to the Capital
                  Accounts of the Partners resulting from a Book-Down Event or
                  from the recognition of a Net Termination Loss, such negative
                  adjustment (1) shall first be allocated, to the extent of the
                  Aggregate Remaining Net Positive Adjustments, in such a
                  manner, as reasonably determined by the General Partner, that
                  to the extent possible the aggregate Capital Accounts of the
                  Partners will equal the amount which would have been the
                  Capital Account balance of the Partners if no prior Book-Up
                  Events had occurred, and (2) any negative adjustment in excess
                  of the Aggregate Remaining Net Positive Adjustments shall be
                  allocated pursuant to Section 6.1(c) hereof.


                                      -57-
<PAGE>

            (C)   In making the allocations required under this Section
                  6.1(d)(xii), the General Partner, in its sole discretion, may
                  apply whatever conventions or other methodology it deems
                  reasonable to satisfy the purpose of this Section 6.1(d)(xii).

Section 6.2. Allocations for Tax Purposes.

            (a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6. 1.

            (b) In an attempt to eliminate Book-Tax Disparities attributable to
a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:

            (i) (A) In the case of a Contributed Property, such items
      attributable thereto shall be allocated among the Partners in the manner
      provided under Section 704(c) of the Code that takes into account the
      variation between the Agreed Value of such property and its adjusted basis
      at the time of contribution; and (B) any item of Residual Gain or Residual
      Loss attributable to a Contributed Property shall be allocated among the
      Partners in the same manner as its correlative item of "book" gain or loss
      is allocated pursuant to Section 6.1.

            (ii) (A) In the case of an Adjusted Property, such items shall (1)
      first, be allocated among the Partners in a manner consistent with the
      principles of Section 704(c) of the Code to take into account the
      Unrealized Gain or Unrealized Loss attributable to such property and the
      allocations thereof pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2)
      second, in the event such property was originally a Contributed Property,
      be allocated among the Partners in a manner consistent with Section
      6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
      attributable to an Adjusted Property shall be allocated among the Partners
      in the same manner as its correlative item of "book" gain or loss is
      allocated pursuant to Section 6.1.

            (iii) The General Partner shall apply the principles of Treasury
      Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.

            (c) For the proper administration of the Partnership and for the
preservation of uniformity of the Limited Partner Interests (or any class or
classes thereof), the General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of the Limited Partner Interests (or any class
or classes thereof). The General Partner may adopt such


                                      -58-
<PAGE>

conventions, make such allocations and make such amendments to this Agreement as
provided in this Section 6.2(c) only if such conventions, allocations or
amendments would not have a material adverse effect on the Partners, the holders
of any class or classes of Limited Partner Interests issued and Outstanding or
the Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.

            (d) The General Partner in its discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Treasury Regulation Section 1.167(c)-1(a)(6) or any successor
regulations thereto. If the General Partner determines that such reporting
position cannot reasonably be taken, the General Partner may adopt depreciation
and amortization conventions under which all purchasers acquiring Limited
Partner Interests in the same month would receive depreciation and amortization
deductions, based upon the same applicable rate as if they had purchased a
direct interest in the Partnership's property. If the General Partner chooses
not to utilize such aggregate method, the General Partner may use any other
reasonable depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any Limited Partner Interests that would
not have a material adverse effect on the Limited Partners or the Record Holders
of any class or classes of Limited Partner Interests.

            (e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to this
Section 6.2, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.

            (f) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be determined without regard to
any election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.

            (g) Each item of Partnership income, gain, loss and deduction, shall
for federal income tax purposes, be determined on an annual basis and prorated
on a monthly basis and shall be allocated to the Partners as of the opening of
the New York Stock Exchange on the first Business Day of each month; provided,
however, that (i) such items for the period beginning on the Closing Date and
ending on the last day of the month in which the Option Closing Date or the
expiration of the Over-allotment Option occurs shall be allocated to the
Partners as of the opening of the New York Stock Exchange on the first Business
Day of the next succeeding month; and provided, further, that gain or loss on a
sale or other disposition of any assets of the Partnership or any other
extraordinary item of income or loss realized and recognized other than in the
ordinary course of business, as determined by the General Partner in its sole
discretion, shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first


                                      -59-
<PAGE>

Business Day of the month in which such gain or loss is recognized for federal
income tax purposes. The General Partner may revise, alter or otherwise modify
such methods of allocation as it determines necessary or appropriate in its sole
discretion, to the extent permitted or required by Section 706 of the Code and
the regulations or rulings promulgated thereunder.

            (h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article VI shall instead be made to the beneficial
owner of Limited Partner Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion.

Section 6.3. Requirement and Characterization of Distributions; Distributions to
             Record Holders.

            (a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on March 31, 2001, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 17-607 of the Delaware
Act, be distributed in accordance with this Article VI by the Partnership to the
Partners as of the Record Date selected by the General Partner in its reasonable
discretion. All amounts of Available Cash distributed by the Partnership on any
date from any source shall be deemed to be Operating Surplus until the sum of
all amounts of Available Cash theretofore distributed by the Partnership to the
Partners pursuant to Section 6.4 equals the Operating Surplus from the Closing
Date through the close of the immediately preceding Quarter. Any remaining
amounts of Available Cash distributed by the Partnership on such date shall,
except as otherwise provided in Section 6.5, be deemed to be "Capital Surplus."
All distributions required to be made under this Agreement shall be made subject
to Section 17-607 of the Delaware Act.

            (b) Notwithstanding Section 6.3(a), in the event of the dissolution
and liquidation of the Partnership, all receipts received during or after the
Quarter in which the Liquidation Date occurs, other than from borrowings
described in (a)(ii) of the definition of Available Cash, shall be applied and
distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.

            (c) The General Partner shall have the discretion to treat taxes
paid by the Partnership on behalf of, or amounts withheld with respect to, all
or less than all of the Partners, as a distribution of Available Cash to such
Partners.

            (d) Each distribution in respect of a Partnership Interest shall be
paid by the Partnership, directly or through the Transfer Agent or through any
other Person or agent, only to the Record Holder of such Partnership Interest as
of the Record Date set for such distribution. Such payment shall constitute full
payment and satisfaction of the Partnership's liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.

Section 6.4. Distributions of Available Cash from Operating Surplus.

            (a) During Subordination Period. Available Cash with respect to any
Quarter within the Subordination Period that is deemed to be Operating Surplus
pursuant to the


                                      -60-
<PAGE>

provisions of Section 6.3 or 6.5 shall, subject to Section 17-607 of the
Delaware Act, be distributed as follows, except as otherwise required by Section
5.12 with respect to the Class B Common Units or Section 5.6(b) in respect of
additional Partnership Securities issued pursuant thereto:

            (i) First, 98% to the Unitholders holding Common Units, Pro Rata,
      and 2% to the General Partner until there has been distributed in respect
      of each Common Unit then Outstanding an amount equal to the Minimum
      Quarterly Distribution for such Quarter;

            (ii) Second, 98% to the Unitholders holding Common Units, Pro Rata,
      and 2% to the General Partner until there has been distributed in respect
      of each Common Unit then Outstanding an amount equal to the Cumulative
      Common Unit Arrearage existing with respect to such Quarter;

            (iii) Third, 98% to the Unitholders holding Subordinated Units, Pro
      Rata, and 2% to the General Partner until there has been distributed in
      respect of each Subordinated Unit then Outstanding an amount equal to the
      Minimum Quarterly Distribution for such Quarter;

            (iv) Fourth, 98% to all Unitholders, Pro Rata, and 2% to the General
      Partner until there has been distributed in respect of each Unit then
      Outstanding an amount equal to the excess of the First Target Distribution
      over the Minimum Quarterly Distribution for such Quarter;

            (v) Fifth, 85% to all Unitholders, Pro Rata, 13% to the holders of
      the Incentive Distribution Rights, Pro Rata, and 2% to the General Partner
      until there has been distributed in respect of each Unit then Outstanding
      an amount equal to the excess of the Second Target Distribution over the
      First Target Distribution for such Quarter;

            (vi) Sixth, 75% to all Unitholders, Pro Rata, 23% to the holders of
      the Incentive Distribution Rights, Pro Rata, and 2% to the General Partner
      until there has been distributed in respect of each Unit then Outstanding
      an amount equal to the excess of the Third Target Distribution over the
      Second Target Distribution for such Quarter; and

            (vii) Thereafter, 50% to all Unitholders, Pro Rata, 48% to the
      holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
      General Partner;

provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).

            (b) After Subordination Period. Available Cash with respect to any
Quarter after the Subordination Period that is deemed to be Operating Surplus
pursuant to the provisions of Section 6.3 or 6.5, subject to Section 17-607 of
the Delaware Act, shall be distributed as follows,


                                      -61-
<PAGE>

except as otherwise required by Section 5.12 with respect to the Class B Common
Units or Section 5.6(b) in respect of additional Partnership Securities issued
pursuant thereto:

            (i) First, 98% to all Unitholders, Pro Rata, and 2% to the General
      Partner until there has been distributed in respect of each Unit then
      Outstanding an amount equal to the Minimum Quarterly Distribution for such
      Quarter;

            (ii) Second, 98% to all Unitholders, Pro Rata, and 2% to the General
      Partner until there has been distributed in respect of each Unit then
      Outstanding an amount equal to the excess of the First Target Distribution
      over the Minimum Quarterly Distribution for such Quarter;

            (iii) Third, 85% to all Unitholders, Pro Rata, and 13% to the
      holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
      General Partner until there has been distributed in respect of each Unit
      then Outstanding an amount equal to the excess of the Second Target
      Distribution over the First Target Distribution for such Quarter;

            (iv) Fourth, 75% to all Unitholders, Pro Rata, and 23% to the
      holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
      General Partner until there has been distributed in respect of each Unit
      then Outstanding an amount equal to the excess of the Third Target
      Distribution over the Second Target Distribution for such Quarter; and

            (v) Thereafter, 50% to all Unitholders, Pro Rata, and 48% to the
      holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
      General Partner;

provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Section 6.4(b)(v).

Section 6.5. Distributions of Available Cash from Capital Surplus.

      Available Cash that is deemed to be Capital Surplus pursuant to the
provisions of Section 6.3(a) shall, subject to Section 17-607 of the Delaware
Act, be distributed, unless the provisions of Section 6.3 require otherwise, 98%
to all Unitholders, Pro Rata, and 2% to the General Partner until a hypothetical
holder of a Common Unit acquired on the Closing Date has received with respect
to such Common Unit, during the period since the Closing Date through such date,
distributions of Available Cash that are deemed to be Capital Surplus in an
aggregate amount equal to the Initial Unit Price. Available Cash that is deemed
to be Capital Surplus shall then be distributed 98% to all Unitholders holding
Common Units, Pro Rata, and 2% to the General Partner until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage. Thereafter, all Available Cash shall be
distributed as if it were Operating Surplus and shall be distributed in
accordance with Section 6.4.


                                      -62-
<PAGE>

Section 6.6. Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels.

            (a) The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, Third Target Distribution Common Unit Arrearages and
Cumulative Common Unit Arrearages shall be proportionately adjusted in the event
of any distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 5.10. In the event of a distribution of
Available Cash that is deemed to be from Capital Surplus, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted proportionately
downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, as the case may be, by a fraction of
which the numerator is the Unrecovered Capital of the Common Units immediately
after giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving effect to
such distribution.

            (b) The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution and Third Target Distribution shall also be subject
to adjustment pursuant to Section 6.9.

Section 6.7. Special Provisions Relating to the Holders of Subordinated Units.

            (a) Except with respect to the right to vote on or approve matters
requiring the vote or approval of a percentage of the holders of Outstanding
Common Units and the right to participate in allocations of income, gain, loss
and deduction and distributions made with respect to Common Units, the holder of
a Subordinated Unit shall have all of the rights and obligations of a Unitholder
holding Common Units hereunder; provided, however, that immediately upon the
conversion of Subordinated Units into Common Units pursuant to Section 5.8, the
Unitholder holding a Subordinated Unit shall possess all of the rights and
obligations of a Unitholder holding Common Units hereunder, including the right
to vote as a Common Unitholder and the right to participate in allocations of
income, gain, loss and deduction and distributions made with respect to Common
Units; provided, however, that such converted Subordinated Units shall remain
subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b).

            (b) The Unitholder holding a Subordinated Unit which has converted
into a Common Unit pursuant to Section 5.8 shall not be issued a Common Unit
Certificate pursuant to Section 4.1, and shall not be permitted to transfer its
converted Subordinated Units to a Person which is not an Affiliate of the holder
until such time as the General Partner determines, based on advice of counsel,
that a converted Subordinated Unit should have, as a substantive matter, like
intrinsic economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax characteristics of an
Initial Common Unit. In connection with the condition imposed by this Section
6.7(b), the General Partner may take whatever reasonable steps are required to
provide economic uniformity to the converted Subordinated Units in preparation
for a transfer of such converted Subordinated Units, including the application
of Sections 5.5 (c)(ii) and 6.1(d)(x); provided, however, that no such steps may
be taken that would have a material adverse effect on the Unitholders holding
Common Units represented by Common Unit Certificates.


                                      -63-
<PAGE>

Section 6.8. Special Provisions Relating to the Holders of Incentive
             Distribution Rights.

      Notwithstanding anything to the contrary set forth in this Agreement, the
holders of the Incentive Distribution Rights (a) shall (i) possess the rights,
and obligations provided in this Agreement with respect to a Limited Partner
pursuant to Articles III and VII and (ii) have a Capital Account as a Partner
pursuant to Section 5.5 and all other provisions related thereto and (b) shall
not (i) be entitled to vote on any matters requiring the approval or vote of the
holders of Outstanding Units, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(v), (vi) and (vii), 6.4(b)(iii), (iv) and (v),
and 12.4 or (iii) be allocated items of income, gain, loss or deduction other
than as specified in this Article VI.

Section 6.9. Entity-Level Taxation.

      If legislation is enacted or the interpretation of existing language is
modified by the relevant governmental authority which causes the Partnership or
the Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or the Operating Partnership
to entity-level taxation for federal income tax purposes, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted to equal the
product obtained by multiplying (a) the amount thereof by (b) one minus the sum
of (i) the highest marginal federal corporate (or other entity, as applicable)
income tax rate of the Partnership or such Operating Partnership for the taxable
year of the Partnership or the Operating Partnership in which such Quarter
occurs (expressed as a percentage) plus (ii) the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
or the Operating Partnership for the calendar year next preceding the calendar
year in which such Quarter occurs (after taking into account the benefit of any
deduction allowable for federal income tax purposes with respect to the payment
of state and local income taxes), but only to the extent of the increase in such
rates resulting from such legislation or interpretation. Such effective overall
state and local income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership or the Operating
Partnership is taxable for federal income tax purposes as an association taxable
as a corporation or is otherwise subject to entity-level taxation by determining
such rate as if the Partnership or the Operating Partnership had been subject to
such state and local taxes during such preceding taxable year.

                                  ARTICLE VII.
                      MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1. Management.

            (a) The General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 7.3, shall have full power and authority to
do all things and on such terms as it, in its sole discretion, may deem


                                      -64-
<PAGE>

necessary or appropriate to conduct the business of the Partnership, to exercise
all powers set forth in Section 2.5 and to effectuate the purposes set forth in
Section 2.4, including the following:

            (i) the making of any expenditures, the lending or borrowing of
      money, the assumption or guarantee of, or other contracting for,
      indebtedness and other liabilities, the issuance of evidences of
      indebtedness, including indebtedness that is convertible into Partnership
      Securities, and the incurring of any other obligations;

            (ii) the making of tax, regulatory and other filings, or rendering
      of periodic or other reports to governmental or other agencies having
      jurisdiction over the business or assets of the Partnership;

            (iii) the acquisition, disposition, mortgage, pledge, encumbrance,
      hypothecation or exchange of any or all of the assets of the Partnership
      or the merger or other combination of the Partnership with or into another
      Person (the matters described in this clause (iii) being subject, however,
      to any prior approval that may be required by Section 7.3);

            (iv) the use of the assets of the Partnership (including cash on
      hand) for any purpose consistent with the terms of this Agreement,
      including the financing of the conduct of the operations of the
      Partnership Group; subject to Section 7.6(a), the lending of funds to
      other Persons (including the Operating Partnership); the repayment of
      obligations of the Partnership Group and the making of capital
      contributions to any member of the Partnership Group;

            (v) the negotiation, execution and performance of any contracts,
      conveyances or other instruments (including instruments that limit the
      liability of the Partnership under contractual arrangements to all or
      particular assets of the Partnership, with the other party to the contract
      to have no recourse against the General Partner or its assets other than
      its interest in the Partnership, even if same results in the terms of the
      transaction being less favorable to the Partnership than would otherwise
      be the case);

            (vi) the distribution of Partnership cash;

            (vii) the selection and dismissal of employees (including employees
      having titles such as "president," "vice president," "secretary" and
      "treasurer") and agents, outside attorneys, accountants, consultants and
      contractors and the determination of their compensation and other terms of
      employment or hiring;

            (viii) the maintenance of such insurance for the benefit of the
      Partnership Group and the Partners as it deems necessary or appropriate;

            (ix) the formation of, or acquisition of an interest in, and the
      contribution of property and the making of loans to, any further limited
      or general partnerships, joint ventures, limited liability companies,
      corporations or other relationships (including the acquisition of
      interests in, and the contributions of property to, the Operating
      Partnership from time to time) subject to the restrictions set forth in
      Section 2.4;


                                      -65-
<PAGE>

            (x) the control of any matters affecting the rights and obligations
      of the Partnership, including the bringing and defending of actions at law
      or in equity and otherwise engaging in the conduct of litigation and the
      incurring of legal expense and the settlement of claims and litigation;

            (xi) the indemnification of any Person against liabilities and
      contingencies to the extent permitted by law;

            (xii) the entering into of listing agreements with any National
      Securities Exchange and the delisting of some or all of the Limited
      Partner Interests from, or requesting that trading be suspended on, any
      such exchange (subject to any prior approval that may be required under
      Section 4.8);

            (xiii) unless restricted or prohibited by Section 5.7, the purchase,
      sale or other acquisition or disposition of Partnership Securities, or the
      issuance of additional options, rights, warrants and appreciation rights
      relating to Partnership Securities; and

            (xiv) the undertaking of any action in connection with the
      Partnership's ownership or operation of any Group Member, including
      exercising, on behalf and for the benefit of the Partnership, the
      Partnership's rights as the sole stockholder of the Operating General
      Partner.

            (b) Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and the Assignees and each other Person who may
acquire an interest in Partnership Securities hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties thereto of the
Operating Partnership Agreement, the Underwriting Agreement, the Omnibus
Agreement, the Contribution and Conveyance Agreement, and the other agreements
and other described in or filed as exhibits to the Registration Statement that
are related to the transactions contemplated by the Registration Statement; (ii)
agrees that the General Partner (on its own or through any officer of the
Partnership) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in Partnership Securities; and (iii) agrees that the execution,
delivery or performance by the General Partner, any Group Member or any
Affiliate of any of them, of this Agreement or any agreement authorized or
permitted under this Agreement (including the exercise by the General Partner or
any Affiliate of the General Partner of the rights accorded pursuant to Article
XV), shall not constitute a breach by the General Partner of any duty that the
General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement (or any other agreements) or of any duty stated or
implied by law or equity.

Section 7.2. Certificate of Limited Partnership.

      The General Partner has caused the Certificate of Limited Partnership to
be filed with the Secretary of State of the State of Delaware as required by the
Delaware Act and shall use all


                                      -66-
<PAGE>

reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner.

Section 7.3. Restrictions on General Partner's Authority.

            (a) The General Partner may not, without written approval of the
specific act by holders of all of the Outstanding Limited Partner Interests or
by other written instrument executed and delivered by holders of all of the
Outstanding Limited Partner Interests subsequent to the date of this Agreement,
take any action in contravention of this Agreement, including, except as
otherwise provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner; or (v) transferring its interest as
general partner of the Partnership.

            (b) Except as provided in Articles XII and XIV, the General Partner
may not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Operating Partnership, without obtaining
both the approval of holders of a Unit Majority and Special Approval; provided
however that this provision shall not preclude or limit the General Partner's
ability to mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership or Operating Partnership and
shall not apply to any forced sale of any or all of the assets of the
Partnership or Operating Partnership pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval of holders of a
Unit Majority, the General Partner shall not, on behalf of the Partnership, (i)
consent to any amendment to the Operating Partnership Agreement or, except as
expressly permitted by Section 7.9(d), take any action permitted to be taken by
a partner of the Operating Partnership, in either case, that would have a
material adverse effect on the Partnership as a partner of the Operating
Partnership or (ii) except as permitted under Sections 4.6, 11.1 and 11.2, elect
or cause the Partnership to elect a successor general partner.


                                      -67-
<PAGE>

Section 7.4. Reimbursement of the General Partner.

            (a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the Operating Partnership Agreement, the General Partner shall
not be compensated for its services as General Partner.

            (b) The General Partner shall be reimbursed on a monthly basis, or
such other reasonable basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including payments made for the benefit of
the Partnership to or on behalf of the Operating General Partner and including
salary, bonus, incentive compensation and other amounts paid to any Person
including Affiliates of the General Partner to perform services for the
Partnership, any Group Member or for the General Partner in the discharge of its
duties to the Partnership), and (ii) all other necessary or appropriate expenses
allocable to the Partnership or otherwise reasonably incurred by the General
Partner in connection with operating the Partnership's business (including
expenses allocated to the General Partner by its Affiliates). The General
Partner shall determine the expenses that are allocable to the Partnership in
any reasonable manner determined by the General Partner in its sole discretion.
Reimbursements pursuant to this Section 7.4 shall be in addition to any
reimbursement to the General Partner as a result of indemnification pursuant to
Section 7.7.

            (c) Subject to Section 5.7, the General Partner, in its sole
discretion and without the approval of the Limited Partners (who shall have no
right to vote in respect thereof), may propose and adopt on behalf of the
Partnership employee benefit plans, employee programs and employee practices
(including plans, programs and practices involving the issuance of Partnership
Securities or options to purchase Partnership Securities), or cause the
Partnership to issue Partnership Securities in connection with, or pursuant to,
any employee benefit plan, employee program or employee practice maintained or
sponsored by the General Partner or any of its Affiliates, in each case for the
benefit of employees of the General Partner, any Group Member or any Affiliate,
or any of them, in respect of services performed, directly or indirectly, for
the benefit of the Partnership Group. The Partnership agrees to issue and sell
to the General Partner or any of its Affiliates any Partnership Securities that
the General Partner or such Affiliate is obligated to provide to any employees
pursuant to any such employee benefit plans, employee programs or employee
practices. Expenses incurred by the General Partner in connection with any such
plans, programs and practices (including the net cost to the General Partner or
such Affiliate of Partnership Securities purchased by the General Partner or
such Affiliate from the Partnership to fulfill options or awards under such
plans, programs and practices) shall be reimbursed in accordance with Section
7.4(b). Any and all obligations of the General Partner under any employee
benefit plans, employee programs or employee practices adopted by the General
Partner as permitted by this Section 7.4(c) shall constitute obligations of the
General Partner hereunder and shall be assumed by any successor General Partner
approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to
all of the General Partner's General Partner Interest pursuant to Section 4.6.


                                      -68-
<PAGE>

Section 7.5. Outside Activities.

            (a) After the Closing Date, the General Partner, for so long as it
is the General Partner of the Partnership (i) agrees that its sole business will
be to act as the general partner or managing member of the Partnership and any
other partnership or limited liability company of which the Partnership is,
directly or indirectly, a partner or member and to undertake activities that are
ancillary or related thereto (including being a limited partner in the
Partnership), (ii) shall not engage in any business or activity or incur any
debts or liabilities except in connection with or incidental to (A) its
performance as general partner or managing member of one or more Group Members
or as described in or contemplated by the Registration Statement or (B) the
acquiring, owning or disposing of debt or equity securities in any Group Member
and (iii) except to the extent permitted in the Omnibus Agreement, shall not,
and shall cause its Affiliates not to, engage in any Restricted Business.

            (b) The Williams Companies, Inc. and certain of its Affiliates have
entered into the Omnibus Agreement with the Partnership and the Operating
Partnership, which agreement sets forth certain restrictions on the ability of
The Williams Companies, Inc. and its Affiliates to engage in Restricted
Businesses.

            (c) Except as specifically restricted by Section 7.5(a) and the
Omnibus Agreement, each Indemnitee (other than the General Partner) shall have
the right to engage in businesses of every type and description and other
activities for profit and to engage in and possess an interest in other business
ventures of any and every type or description, whether in businesses engaged in
or anticipated to be engaged in by any Group Member, independently or with
others, including business interests and activities in direct competition with
the business and activities of any Group Member, and none of the same shall
constitute a breach of this Agreement or any duty express or implied by law to
any Group Member or any Partner or Assignee. Neither any Group Member, any
Limited Partner nor any other Person shall have any rights by virtue of this
Agreement, the Operating Partnership Agreement or the partnership relationship
established hereby or thereby in any business ventures of any Indemnitee.

            (d) Subject to the terms of Section 7.5(a), Section 7.5(b), Section
7.5(c) and the Omnibus Agreement, but otherwise notwithstanding anything to the
contrary in this Agreement, (i) the engaging in competitive activities by any
Indemnitees (other than the General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii)
it shall be deemed not to be a breach of the General Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner for the
Indemnitees (other than the General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the Partnership
and (iii) the General Partner and the Indemnities shall have no obligation to
present business opportunities to the Partnership.

            (e) The General Partner and any of its Affiliates may acquire Units
or other Partnership Securities in addition to those acquired on the Closing
Date and, except as otherwise provided in this Agreement, shall be entitled to
exercise all rights of the General Partner or Limited Partner, as applicable,
relating to such Units or Partnership Securities.


                                      -69-
<PAGE>

            (f) The term "Affiliates" when used in Section 7.5(a) and Section
7.5(e) with respect to the General Partner shall not include any Group Member or
any Subsidiary of the Group Member.

            (g) Anything in this Agreement to the contrary notwithstanding, to
the extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of
this Agreement purport or are interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other
applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners
to any such restriction, such provisions shall be inapplicable and have no
effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section
7.5.

Section 7.6. Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.

            (a) The General Partner or its Affiliates may lend to any Group
Member, and any Group Member may borrow from the General Partner or any of its
Affiliates, funds needed or desired by the Group Member for such periods of time
and in such amounts as the General Partner may determine; provided, however,
that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing
party or impose terms less favorable to the borrowing party than would be
charged or imposed on the borrowing party by unrelated lenders on comparable
loans made on an arm's-length basis (without reference to the lending party's
financial abilities or guarantees). The borrowing party shall reimburse the
lending party for any costs (other than any additional interest costs) incurred
by the lending party in connection with the borrowing of such funds. For
purposes of this Section 7.6(a) and Section 7.6(b), the term "Group Member"
shall include any Affiliate of a Group Member that is controlled by the Group
Member. No Group Member may lend funds to the General Partner or any of its
Affiliates (other than another Group Member).

            (b) The Partnership may lend or contribute to any Group Member, and
any Group Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit. in
favor of any Group Member or any other Person.

            (c) The General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services to a Group Member or to the
General Partner in the discharge of its duties as general partner of the
Partnership. Any services rendered to a Group Member by the General Partner or
any of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this Section 7.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the
totality


                                      -70-
<PAGE>

of the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership Group), is
equitable to the Partnership Group. The provisions of Section 7.4 shall apply to
the rendering of services described in this Section 7.6(c).

            (d) The Partnership Group may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.

            (e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2 and 5.3, the Contribution and
Conveyance Agreement and any other transactions described in or contemplated by
the Registration Statement, (ii) any transaction approved by Special Approval,
(iii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties, or (iv) any transaction that, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership. With respect to any contribution of assets to the
Partnership in exchange for Partnership Securities, the Conflicts Committee, in
determining whether the appropriate number of Partnership Securities are being
issued, may take into account, among other things, the fair market value of the
assets, the liquidated and contingent liabilities assumed, the tax basis in the
assets, the extent to which tax-only allocations to the transferor will protect
the existing partners of the Partnership against a low tax basis, and such other
factors as the Conflicts Committee deems relevant under the circumstances.

            (f) The General Partner and its Affiliates will have no obligation
to permit any Group Member to use any facilities or assets of the General
Partner and its Affiliates, except as may be provided in contracts entered into
from time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.

            (g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.

Section 7.7. Indemnification.

            (a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is


                                      -71-
<PAGE>

threatened to be involved, as a party or otherwise, by reason of its status as
an Indemnitee; provided, that in each case the Indemnitee acted in good faith
and in a manner that such Indemnitee reasonably believed to be in, or (in the
case of a Person other than the General Partner) not opposed to, the best
interests of the Partnership and, with respect to any criminal proceeding, had
no reasonable cause to believe its conduct was unlawful; provided, further, no
indemnification pursuant to this Section 7.7 shall be available to the General
Partner with respect to its obligations incurred pursuant to the Underwriting
Agreement or the Contribution and Conveyance Agreement (other than obligations
incurred by the General Partner on behalf of the Partnership or the Operating
Partnership). The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the Indemnitee acted in a manner
contrary to that specified above. Any indemnification pursuant to this Section
7.7 shall be made only out of the assets of the Partnership, it being agreed
that the General Partner shall not be personally liable for such indemnification
and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.

            (b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 7.7(a) in defending any claim, demand, action; suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of any undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.

            (c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the holders of Outstanding Limited Partner
Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee's capacity as an Indemnitee and as to actions in any other capacity
(including any capacity under the Underwriting Agreement), and shall continue as
to an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.

            (d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partner, its Affiliates and such other Persons as the General Partner
shall determine, against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities or such Person's activities on behalf of the Partnership, regardless
of whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.

            (e) For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by the Indemnitee with respect to any employee benefit plan in the
performance of its duties for a purpose reasonably


                                      -72-
<PAGE>

believed by it to be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is in, or not opposed to, the
best interests of the Partnership.

            (f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.

            (g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

            (h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

            (i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or-in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

Section 7.8. Liability of Indemnitees.

            (a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted
in good faith.

            (b) Subject to its obligations and duties as General Partner set
forth in Section 7.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.

            (c) To the extent that, at law or in equity, an Indemnitee has
duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to the Partners, the General Partner and any other Indemnitee
acting in connection with the Partnership's business or affairs shall not be
liable to the Partnership or to any Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict or otherwise modify the duties and liabilities of an
Indemnitee otherwise existing at law or in equity, are agreed by the Partners to
replace such other duties and liabilities of such Indemnitee.

            (d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partner, and the General Partner's and any


                                      -73-
<PAGE>

Group Member's directors, officers and employees under this Section 7.8 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.

Section 7.9. Resolution of Conflicts of Interest.

            (a) Unless otherwise expressly provided in this Agreement or the
Operating Partnership Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, the Operating Partnership, any Partner or any
Assignee, on the other, any resolution or course of action by the General
Partner or its Affiliates in respect of such conflict of interest shall be
permitted and deemed approved by all Partners, and shall not constitute a breach
of this Agreement, of the Operating Partnership Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or
equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized, but not required in connection with its resolution
of such conflict of interest, to seek Special Approval of such resolution;
provided, however, that, without obtaining Special Approval, no Group Member
shall acquire any assets or business from the General Partner or any of its
Affiliates (other than another Group Member) the purchase price of which will
exceed greater than 5% of the gross (undepreciated) book value of property,
plant and equipment as reflected on the Partnership's consolidated balance sheet
as of the end of the calendar three-month or annual period next preceding the
date of any such acquisition. Any conflict of interest and any resolution of
such conflict of interest shall be conclusively deemed fair and reasonable to
the Partnership if such conflict of interest or resolution is (i) approved by
Special Approval (as long as the material facts known to the General Partner or
any of its Affiliates regarding any proposed transaction were disclosed to the
Conflicts Committee at the time it gave its approval), (ii) on terms no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties or (iii) fair to the Partnership, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the Conflicts Committee in connection with any Special Approval) shall be
authorized in connection with its determination of what is "fair and reasonable"
to the Partnership and in connection with its resolution of any conflict of
interest to consider (A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
such interest; (B) any customary or accepted industry practices and any
customary or historical dealings with a particular Person; (C) any applicable
generally accepted accounting practices or principles; and (D) such additional
factors as the General Partner (including the Conflicts Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is intended to nor
shall it be construed to require the General Partner (including the Conflicts
Committee) to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other agreement
contemplated herein or a breach of any standard of care or duty imposed herein
or


                                      -74-
<PAGE>

therein or, to the extent permitted by law, under the Delaware Act or any other
law, rule or regulation.

            (b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion,"
that it deems "necessary or appropriate" or "necessary or advisable" or under a
grant of similar authority or latitude, except as otherwise provided herein, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, the
Operating Partnership, any Limited Partner or any Assignee, (ii) it may make
such decision in its sole discretion (regardless of whether there is a reference
to "sole discretion" or "discretion") unless another express standard is
provided for, or (iii) in "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, the Operating Partnership Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the General Partner or such Affiliate consistent
with the standards of "reasonable discretion" set forth in the definitions of
Available Cash or Operating Surplus shall not constitute a breach of any duty of
the General Partner to the Partnership or the Limited Partners. The General
Partner shall have no duty, express or implied, to sell or otherwise dispose of
any asset of the Partnership Group other than in the ordinary course of
business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable distributions to the General Partner or its Affiliates (including in
their capacities as Limited Partners) to exceed 2% of the total amount
distributed to all partners or (B) hasten the expiration of the Subordination
Period or the conversion of any Subordinated Units into Common Units.

            (c) Whenever a particular transaction, arrangement or resolution of
a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.

            (d) The Unitholders hereby authorize the General Partner, on behalf
of the Partnership as a partner or member of a Group Member, to approve of
actions by the general partner or managing member of such Group Member similar
to those actions permitted to be taken by the General Partner pursuant to this
Section 7.9.

Section 7.10. Other Matters Concerning the General Partner.

            (a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.


                                      -75-
<PAGE>

            (b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.

            (c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.

            (d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited to the extent permitted by law, as required to permit the
General Partner to act under this Agreement or any other agreement contemplated
by this Agreement and to make any decision pursuant to the authority prescribed
in this Agreement, so long as such action is reasonably believed by the General
Partner to be in, or not inconsistent with, the best interests of the
Partnership.

Section 7.11. Purchase or Sale of Partnership Securities.

      The General Partner may cause the Partnership to purchase or otherwise
acquire Partnership Securities; provided that, except as permitted pursuant to
Section 4.10, the General Partner may not cause any Group Member to purchase
Subordinated Units during the Subordination Period. As long as Partnership
Securities are held by any Group Member, such Partnership Securities shall not
be considered Outstanding for any purpose, except as otherwise provided herein.
The General Partner or any Affiliate of the General Partner may also purchase or
otherwise acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Articles IV and X.

Section 7.12. Registration Rights of the General Partner and its Affiliates.

            (a) If (i) the General Partner or any Affiliate of the General
Partner (including for purposes of this Section 7.12, any Person that is an
Affiliate of the General Partner at the date of this Agreement notwithstanding
that it may later cease to be an Affiliate of the General Partner) holds
Partnership Securities that it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another
exemption from registration is not available to enable such holder of
Partnership Securities (the "Holder") to dispose of the number of Partnership
Securities it desires to sell at the time it desires to do so without
registration under the Securities Act, then upon the request of the General
Partner or any of its Affiliates, the Partnership shall file with the Commission
as promptly as practicable after receiving such request, and use all reasonable
efforts to cause to become effective and remain effective for a period of not
less than six months following its effective date or such shorter period as
shall terminate when all Partnership Securities covered by such registration
statement have been sold, a registration statement under the Securities Act
registering the offering and sale of the number of Partnership Securities
specified by the Holder; provided, however, that the Partnership shall not be
required to effect more than three registrations pursuant to this Section
7.12(a); and


                                      -76-
<PAGE>

provided further, that if the Conflicts Committee determines in its good faith
judgment that a postponement of the requested registration for up to six months
would be in the best interests of the Partnership and its Partners due to a
pending transaction, investigation or other event, the filing of such
registration statement or the effectiveness thereof may be deferred for up to
six months, but not thereafter. In connection with any registration pursuant to
the immediately preceding sentence, the Partnership shall promptly prepare and
file (x) such documents as may be necessary to register or qualify the
securities subject to such registration under the securities laws of such states
as the Holder shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Partnership would become subject to general service of process or to
taxation or qualification to do business as a foreign corporation or partnership
doing business in such jurisdiction solely as a result of such registration, and
(y) such documents as may be necessary to apply for listing or to list the
Partnership Securities subject to such registration on such National Securities
Exchange as the Holder shall reasonably request, and do any and all other acts
and things that may reasonably be necessary or advisable to enable the Holder to
consummate a public sale of such Partnership Securities in such states. Except
as set forth in Section 7.12(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.

            (b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of equity
securities of the Partnership for cash (other than an offering relating solely
to an employee benefit plan), the Partnership shall use all reasonable efforts
to include such number or amount of securities held by the Holder in such
registration statement as the Holder shall request. If the proposed offering
pursuant to this Section 7.12(b) shall be an underwritten offering, then, in the
event that the managing underwriter or managing underwriters of such offering
advise the Partnership and the Holder in writing that in their opinion the
inclusion of all or some of the Holder's Partnership Securities would adversely
and materially affect the success of the offering, the Partnership shall include
in such offering only that number or amount, if any, of securities held by the
Holder which, in the opinion of the managing underwriter or managing
underwriters, will not so adversely and materially affect the offering. Except
as set forth in Section 7.12(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.

            (c) If underwriters are engaged in connection with any registration
referred to in this Section 7.12, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
7.7, the Partnership shall, to the fullest extent, permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, "Indemnified Persons") against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or incurred by
the Indemnified Persons, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 7.12(c) as a "claim" and in
the plural as "claims") based upon, arising out of or resulting from any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement


                                      -77-
<PAGE>

under which any Partnership Securities were registered under the Securities Act
or any state securities or Blue Sky laws, in any preliminary prospectus (if used
prior to the effective date of such registration statement), or in any summary
or final prospectus or in any amendment or supplement thereto (if used during
the period the Partnership is required to keep the registration statement
current), or arising out of, based upon or resulting from the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein not misleading; provided,
however, that the Partnership shall not be liable to any Indemnified Person to
the extent that any such claim arises out of, is based upon or results from an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, such preliminary, summary or final
prospectus or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.

            (d) The provisions of Section 7.12(a) and 7.12(b) shall continue to
be applicable with respect to the General Partner (and any of the General
Partner's Affiliates) after it ceases to be a Partner of the Partnership, during
a period of two years subsequent to the effective date of such cessation and for
so long thereafter as is required for the Holder to sell all of the Partnership
Securities with respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a registration
statement be filed; provided, however, that the Partnership shall not be
required to file successive registration statements covering the same
Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(c) shall continue in effect thereafter.

            (e) Any request to register Partnership Securities pursuant to this
Section 7.12 shall (i) specify the Partnership Securities intended to be offered
and sold by the Person making the request, (ii) express such Person's present
intent to offer such shares for distribution, (iii) describe the nature or
method of the proposed offer and sale of Partnership Securities, and (iv)
contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the
Partnership to comply with all applicable requirements in connection with the
registration of such Partnership Securities.

Section 7.13. Reliance by Third Parties.

            Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of the Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or
other


                                      -78-
<PAGE>

instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.

                                  ARTICLE VIII.
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1. Records and Accounting.

      The General Partner shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders
and Assignees of Units or other Partnership Securities, books of account and
records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.

Section 8.2. Fiscal Year.

      The fiscal year of the Partnership shall be a fiscal year ending December
31.

Section 8.3. Reports.

            (a) As soon as practicable, but in no event later than 120 days
after the close of each fiscal year of the Partnership, the General Partner
shall cause to be mailed or furnished to each Record Holder of a Unit as of a
date selected by the General Partner in its discretion, an annual report
containing financial statements of the Partnership for such fiscal year of the
Partnership, presented in accordance with U.S. GAAP, including a balance sheet
and statements of operations, Partnership equity and cash flows, such statements
to be audited by a firm of independent public accountants selected by the
General Partner.

            (b) As soon as practicable, but in no event later than 90 days after
the close of each Quarter except the last Quarter of each fiscal year, the
General Partner shall cause to be mailed or furnished to each Record Holder of a
Unit, as of a date selected by the General Partner in its discretion, a report
containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed for trading, or as
the General Partner determines to be necessary or appropriate.


                                      -79-
<PAGE>

                                   ARTICLE IX.
                                   TAX MATTERS

Section 9.1. Tax Returns and Information.

      The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by Record Holders for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.

Section 9.2. Tax Elections.

            (a) The Partnership shall make the election under Section 754 of the
Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the General
Partner's determination that such revocation is in the best interests of the
Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the
General Partner shall be authorized (but not required) to adopt a convention
whereby the price paid by a transferee of a Limited Partner Interest will be
deemed to be the lowest quoted closing price of the Limited Partner Interests on
any National Securities Exchange on which such Limited Partner Interests are
traded during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(g) without regard to the actual price paid by such
transferee.

            (b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.

            (c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.

Section 9.3. Tax Controversies.

      Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.

Section 9.4. Withholding.

      Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take any action that it determines in its discretion to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442,


                                      -80-
<PAGE>

1445 and 1446 of the Code. To the extent that the Partnership is required or
elects to withhold and pay over to any taxing authority any amount resulting
from the allocation or distribution of income to any Partner or Assignee
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld may at the discretion of the General Partner be treated by the
Partnership as a distribution of cash pursuant to Section 6.3 in the amount of
such withholding from such Partner.

                                   ARTICLE X.
                              ADMISSION OF PARTNERS

Section 10.1. Admission of Initial Limited Partners.

      Upon the issuance by the Partnership of Common Units, Subordinated Units
and Incentive Distribution Rights to Williams Natural Gas Liquids, Inc.,
Williams Energy Services and the Underwriters as described in Section 5.3 in
connection with the Initial Offering and the execution by each party of a
Transfer Application, the General Partner shall admit such parties to the
Partnership as Initial Limited Partners in respect of the Common Units purchased
by them.

Section 10.2. Admission of Substituted Limited Partner.

      By transfer of a Limited Partner Interest in accordance with Article IV,
the transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Certificate
representing a Limited Partner Interest shall, however, only have the authority
to convey to a purchaser or other transferee who does not execute and deliver a
Transfer Application (a) the right to negotiate such Certificate to a purchaser
or other transferee and (b) the right to transfer the right to request admission
as a Substituted Limited Partner to such purchaser or other transferee in
respect of the transferred Limited Partner Interests. Each transferee of a
Limited Partner Interest (including any nominee holder or an agent acquiring
such Limited Partner Interest for the account of another Person) who executes
and delivers a Transfer Application shall, by virtue of such execution and
delivery, be an Assignee and be deemed to have applied to become a Substituted
Limited Partner with respect to the Limited Partner Interests so transferred to
such Person. Such Assignee shall become a Substituted Limited Partner (x) at
such time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's discretion, and (y) when any such admission is
shown on the books and records of the Partnership. If such consent is withheld,
such transferee shall be an Assignee. An Assignee shall have an interest in the
Partnership equivalent to that of a Limited Partner with respect to allocations
and distributions, including liquidating distributions, of the Partnership. With
respect to voting rights attributable to Limited Partner Interests that are held
by Assignees, the General Partner shall be deemed to be the Limited Partner with
respect thereto and shall, in exercising the voting rights in respect of such
Limited Partner Interests on any matter, vote such Limited Partner Interests at
the written direction of the Assignee who is the Record Holder of such Limited
Partner Interests. If no such written direction is received, such Limited
Partner Interests will not be voted. An Assignee shall have no other rights of a
Limited Partner.


                                      -81-
<PAGE>

Section 10.3. Admission of Successor General Partner.

      A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner Interest pursuant
to Section 4.6 who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest pursuant to Section 4.6; provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.6 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the members of the Partnership Group without dissolution.

Section 10.4. Admission of Additional Limited Partners.

            (a) A Person (other than the General Partner, an Initial Limited
Partner or a Substituted Limited Partner) who makes a Capital Contribution to
the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.

            (b) Notwithstanding anything to the contrary in this Section 10.4,
no Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General. Partner to such admission.

Section 10.5. Amendment of Agreement and Certificate of Limited Partnership.

      To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Delaware Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.

                                   ARTICLE XI.
                        WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1. Withdrawal of the General Partner.

            (a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");


                                      -82-
<PAGE>

            (i) The General Partner voluntarily withdraws from the Partnership
      by giving written notice to the other Partners;

            (ii) The General Partner transfers all of its rights as General
      Partner pursuant to Section 4.6;

            (iii) The General Partner is removed pursuant to Section 11.2;

            (iv) The General Partner (A) makes a general assignment for the
      benefit of creditors; (B) files a voluntary bankruptcy petition for relief
      under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
      or answer seeking for itself a liquidation, dissolution or similar relief
      (but not a reorganization) under any law; (D) files an answer or other
      pleading admitting or failing to contest the material allegations of a
      petition filed against the General Partner in a proceeding of the type
      described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
      consents to or acquiesces in the appointment of a trustee (but not a
      debtor-in-possession), receiver or liquidator of the General Partner or of
      all or any substantial part of its properties;

            (v) A final and non-appealable order of relief under Chapter 7 of
      the United States Bankruptcy Code is entered by a court with appropriate
      jurisdiction pursuant to a voluntary or involuntary petition by or against
      the General Partner; or

            (vi) (A) in the event the General Partner is a corporation, a
      certificate of dissolution or its equivalent is filed for the General
      Partner, or 90 days expire after the date of notice to the General Partner
      of revocation of its charter without a reinstatement of its charter, under
      the laws of its state of incorporation; (B) in the event the General
      Partner is a partnership or a limited liability company, the dissolution
      and commencement of winding up of the General Partner; (C) in the event
      the General Partner is acting in such capacity by virtue of being a
      trustee of a trust, the termination of the trust; (D) in the event the
      General Partner is a natural person, his death or adjudication of
      incompetency; and (E) otherwise in the event of the termination of the
      General Partner.

      If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or
(vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give
notice to the Limited Partners within 30 days after such occurrence. The
Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the
Partnership.

            (b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on the Closing Date and ending at 12:00 midnight, Eastern Standard
Time, on December 31, 2010, the General Partner voluntarily withdraws by giving
at least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided that prior to the effective date of such withdrawal, the
withdrawal is approved by Unitholders holding at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion
of Counsel ("Withdrawal Opinion of Counsel") that such withdrawal


                                      -83-
<PAGE>

(following the selection of the successor General Partner) would not result in
the loss of the limited liability of any Limited Partner or of a limited partner
of the Operating Partnership or cause the Partnership or the Operating
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the
extent not previously treated as such); (ii) at any time after 12:00 midnight,
Eastern Standard Time, on December 31, 2010, the General Partner voluntarily
withdraws by giving at least 90 days' advance notice to the Unitholders, such
withdrawal to take effect on the date specified in such notice; (iii) at any
time that the General Partner ceases to be the General Partner pursuant to
Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General
Partner voluntarily withdraws by giving at least 90 days' advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on
the date specified in the notice, if at the time such notice is given one Person
and its Affiliates (other than the General Partner and its Affiliates) own
beneficially or of record or control at least 50% of the Outstanding Units. The
withdrawal of the General Partner from the Partnership upon the occurrence of an
Event of Withdrawal shall also constitute the withdrawal of the General Partner
as general partner or managing member, as the case may be, of the other Group
Members. If the General Partner gives a notice of withdrawal pursuant to Section
11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of
such withdrawal, elect a successor General Partner. The Person so elected as
successor General Partner shall automatically become the successor general
partner or managing member, as the case may be, of the other Group Members of
which the General Partner is a general partner or a managing member. If, prior
to the effective date of the General Partner's withdrawal, a successor is not
selected by the Unitholders as provided herein or the Partnership does not
receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with Section 12.1. Any successor General Partner elected in
accordance with the terms of this Section 11.1 shall be subject to the
provisions of Section 10.3.

Section 11.2. Removal of the General Partner.

      The General Partner may be removed if such removal is approved by the
Unitholders holding at least 66 2/3% of the Outstanding Units (including Units
held by the General Partner and its Affiliates). Any such action by such holders
for removal of the General Partner must also provide for the election of a
successor General Partner by the Unitholders holding a Unit Majority (including
Units held by the General Partner and its Affiliates). Such removal shall be
effective immediately following the admission of a successor General Partner
pursuant to Section 10.3. The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general partner
or managing member, as the case may be, of the other Group Members of which the
General Partner is a general partner or a managing member. If a Person is
elected as a successor General Partner in accordance with the terms of this
Section 11.2, such Person shall, upon admission pursuant to Section 10.3,
automatically become a successor general partner or managing member, as the case
may be, of the other Group Members of which the General Partner is a general
partner or a managing member. The right of the holders of Outstanding Units to
remove the General Partner shall not exist or be exercised unless the
Partnership has received an opinion opining as to the matters covered by a
Withdrawal Opinion of Counsel. Any successor General Partner elected in
accordance with the terms of this Section 11.2 shall be subject to the
provisions of Section 10.3.


                                      -84-
<PAGE>

Section 11.3. Interest of Departing Partner and Successor General Partner.

            (a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the General Partner by the holders of Outstanding Units under
circumstances where Cause does not exist, if a successor General Partner is
elected in accordance with the terms of Section 11.1 or 11.2, the Departing
Partner shall have the option exercisable prior to the effective date of the
departure of such Departing Partner to require its successor to purchase its
General Partner Interest and its general partner interest (or equivalent
interest) in the other Group Members and all of its Incentive Distribution
Rights (collectively, the "Combined Interest") in exchange for an amount in cash
equal to the fair market value of such Combined Interest, such amount to be
determined and payable as of the effective date of its departure. If the General
Partner is removed by the Unitholders under circumstances where Cause exists or
if the General Partner withdraws under circumstances where such withdrawal
violates this Agreement and if a successor General Partner is elected in
accordance with the terms of Section 11.1 or 11.2, such successor shall have the
option, exercisable prior to the effective date of the departure of such
Departing Partner, to purchase the Combined Interest for such fair market value
of such Combined Interest. In either event, the Departing Partner shall be
entitled to receive all reimbursements due such Departing Partner pursuant to
Section 7.4, including any employee-related liabilities (including severance
liabilities), incurred in connection with the termination of any employees
employed by the General Partner for the benefit of the Partnership or the other
Group Members.

      For purposes of this Section 11.3(a), the fair market value of the
Combined Interest shall be determined by agreement between the Departing Partner
and its successor or, failing agreement within 30 days after the effective date
of such Departing Partner's departure, by an independent investment banking firm
or other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts, and the determination of which shall
be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days
after the effective date of such departure, then the Departing Partner shall
designate an independent investment banking firm or other independent expert,
the Departing Partner's successor shall designate an independent investment
banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent
expert, which third independent investment banking firm or other independent
expert shall determine the fair market value of the Combined Interest. In making
its determination, such third independent investment banking firm or other
independent expert may consider the then current trading price of Units on any
National Securities Exchange on which Units are then listed, the value of the
Partnership's assets, the rights and obligations of the Departing Partner and
other factors it may deem relevant.

            (b) If the Combined Interest is not purchased in the manner set
forth in Section 11.3(a), the Departing Partner (or its transferee) shall become
a Limited Partner and its Combined Interest shall be converted into Common Units
pursuant to a valuation made by an investment banking firm or other independent
expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor General Partner shall indemnify the
Departing Partner (or its transferee) as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing Partner (or its
transferee) becomes a Limited Partner. For purposes


                                      -85-
<PAGE>

of this Agreement, conversion of the Combined Interest to Common Units will be
characterized as if the General Partner (or its transferee) contributed its
Combined Interest to the Partnership in exchange for the newly issued Common
Units.

            (c) If a successor General Partner is elected in accordance with the
terms of Section 11.1 or 11.2 and the option described in Section 11.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
Partnership cash in the amount equal to 2/98ths of the Net Agreed Value of the
Partnership's assets on such date. In such event, such successor General Partner
shall, subject to the following sentence, be entitled to 2% of all Partnership
allocations and distributions. The successor General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of such
successor General Partner's admission, the successor General Partner's interest
in all Partnership distributions and allocations shall be 2%.

Section 11.4. Termination of Subordination Period, Conversion of Subordinated
Units and Extinguishment of Cumulative Common Unit Arrearages.

      Notwithstanding any provision of this Agreement, if the General Partner is
removed as general partner of the Partnership under circumstances where Cause
does not exist and Units held by the General Partner and its Affiliates are not
voted in favor of such removal, (i) the Subordination Period will end and all
Outstanding Subordinated Units will immediately and automatically convert into
Common Units on a one-for-one basis and (ii) all Cumulative Common Unit
Arrearages on the Common Units will be extinguished.

Section 11.5. Withdrawal of Limited Partners.

      No Limited Partner shall have any right to withdraw from the Partnership;
provided, however, that when a transferee of a Limited Partner's Limited Partner
Interest becomes a Record Holder of the Limited Partner Interest so transferred,
such transferring Limited Partner shall cease to be a Limited Partner with
respect to the Limited Partner Interest so transferred.

                                  ARTICLE XII.
                           DISSOLUTION AND LIQUIDATION

Section 12.1. Dissolution.

      The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:

            (a) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected
and an Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and
such successor is admitted to the Partnership pursuant to Section 10.3;


                                      -86-
<PAGE>

            (b) an election to dissolve the Partnership by the General Partner
that is approved by the holders of a Unit Majority and, if the General Partner
is then an Affiliate of The Williams Companies, Inc., a Delaware corporation,
after obtaining Special Approval;

            (c) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or

            (d) the sale of all or substantially all of the assets and
properties of the Partnership Group.

Section 12.2. Continuation of the Business of the Partnership After Dissolution.

      Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or
(vi), then, to the maximum extent permitted by law, within 180 days thereafter,
the holders of a Unit Majority may elect to reconstitute the Partnership and
continue its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as the successor general partner a Person
approved by the holders of a Unit Majority. Unless such an election is made
within the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an election is
so made, then:

            (i) the reconstituted Partnership shall continue unless earlier
      dissolved in accordance with this Article XII;

            (ii) if the successor General Partner is not the former General
      Partner, then the interest of the former General Partner shall be treated
      in the manner provided in Section 11.3; and

            (iii) all necessary steps shall be taken to cancel this Agreement
      and the Certificate of Limited Partnership and to enter into and, as
      necessary, to file a new partnership agreement and certificate of limited
      partnership, and the successor general partner may for this purpose
      exercise the powers of attorney granted the General Partner pursuant to
      Section 2.6; provided, that the right of the holders of a Unit Majority to
      approve a successor General Partner and to reconstitute and to continue
      the business of the Partnership shall not exist and may not be exercised
      unless the Partnership has received an Opinion of Counsel that (x) the
      exercise of the right would not result in the loss of limited liability of
      any Limited Partner and (y) neither the Partnership, the reconstituted
      limited partnership nor the Operating Partnership would be treated as an
      association taxable as a corporation or otherwise be taxable as an entity
      for federal income tax purposes upon the exercise of such right to
      continue.


                                      -87-
<PAGE>

Section 12.3. Liquidator.

      Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by holders of
at least a majority of the Outstanding Common Units and Subordinated Units
voting as a single class. The Liquidator (if other than the General Partner)
shall agree not to resign at any time without 15 days' prior notice and may be
removed at any time, with or without cause, by notice of removal approved by
holders of at least a majority of the Outstanding Common Units and Subordinated
Units voting as a single class. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to
all rights, powers and duties of the original Liquidator) shall within 30 days
thereafter be approved by holders of at least a majority of the Outstanding
Common Units and Subordinated Units voting as a single class. The right to
approve a successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article XII,
the Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the General Partner under the terms of this
Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation on sale
set forth in Section 7.3(b)) to the extent necessary or desirable in the good
faith judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the winding up
and liquidation of the Partnership as provided for herein.

Section 12.4. Liquidation.

      The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:

            (a) Disposition of Assets. The assets may be disposed of by public
or private sale or by distribution in kind to one or more Partners on such terms
as the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale or distribution of all or some of
the Partnership's assets would be impractical or would cause undue loss to the
Partners. The Liquidator may, in its absolute discretion, distribute the
Partnership's assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Partners.

            (b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to the Liquidator as compensation for serving in such capacity
(subject to the terms of


                                      -88-
<PAGE>

Section 12.3) and amounts to Partners otherwise than in respect of their
distribution rights under Article VI. With respect to any liability that is
contingent, conditional or unmatured or is otherwise not yet due and payable,
the Liquidator shall either settle such claim for such amount as it thinks
appropriate or establish a reserve of cash or other assets to provide for its
payment. When paid, any unused portion of the reserve shall be distributed as
additional liquidation proceeds.

                  (c) Liquidation Distributions. All property and all cash in
excess of that required to discharge liabilities as provided in Section 12.4(b)
shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).

Section 12.5. Cancellation of Certificate of Limited Partnership.

      Upon the completion of the distribution of Partnership cash and property
as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.

Section 12.6. Return of Contributions.

      The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners or Unitholders, or any portion thereof, it being expressly understood
that any such return shall be made solely from Partnership assets.

Section 12.7. Waiver of Partition.

      To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.

Section 12.8. Capital Account Restoration.

      No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.

Section 12.9 Certain Prohibited Acts


                                      -89-
<PAGE>

      Without obtaining Special Approval, the General Partner shall not take any
action to cause the Partnership to (i) make or consent to a general assignment
for the benefit of the Partnership's creditors; (ii) file or consent to the
filing of any bankruptcy, insolvency or reorganization petition for relief under
the United States Bankruptcy Code naming the Partnership or otherwise seek, with
respect to the Partnership, relief from debts or protection from creditors
generally; (iii) file or consent to the filing of a petition or answer seeking
for the Partnership a liquidation, dissolution, arrangement or similar relief
under any law; (iv) file an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Partnership in
a proceeding of the type described in clauses (i) - (iii) of this Section 12.9;
(v) seek, consent to or acquiesce in the appointment of a receiver, liquidator,
conservator, assignee, trustee, sequestrator, custodian or any similar official
for the Partnership or for all or any substantial portion of its properties;
(vi) sell all or substantially all of its assets, except in accordance with
Section 7.3(b); (vii) dissolve or liquidate, except in accordance with Article
XII; or (viii) merge or consolidate, except in accordance with Article XIV.

                                  ARTICLE XIII.
            AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.1. Amendment to be Adopted Solely by the General Partner.

      Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:

            (a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;

            (b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;

            (c) a change that, in the sole discretion of the General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
the Partnership and the Operating Partnership will not be treated as an
association taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes;

            (d) a change that, in the discretion of the General Partner, (i)
does not adversely affect the Limited Partners (including any particular class
of Partnership Interests as compared to other classes of Partnership Interests)
in any material respect, (ii) is necessary or advisable to (A) satisfy any
requirements, conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or judicial authority
or contained in any federal or state statute (including the Delaware Act) or (B)
facilitate the trading of the Limited Partner Interests (including the division
of any class or classes of Outstanding Limited Partner Interests into different
classes to facilitate uniformity of tax consequences within such classes of
Limited Partner Interests) or comply with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited Partner
Interests are or will be listed for trading,


                                      -90-
<PAGE>

compliance with any of which the General Partner determines in its discretion to
be in the best interests of the Partnership and the Limited Partners, (iii) is
necessary or advisable in connection with action taken by the General Partner
pursuant to Section 5.10 or (iv) is required to effect the intent expressed in
the Registration Statement or the intent of the provisions of this Agreement or
is otherwise contemplated by this Agreement;

            (e) a change in the fiscal year or taxable year of the Partnership
and any changes that, in the discretion of the General Partner, are necessary or
advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;

            (f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partner or its directors, officers,
trustees or agents from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;

            (g) subject to the terms of Section 5.7, an amendment that, in the
discretion of the General Partner, is necessary or advisable in connection with
the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.6;

            (h) any amendment expressly permitted in this Agreement to be made
by the General Partner acting alone;

            (i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;

            (j) an amendment that, in the discretion of the General Partner, is
necessary or advisable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;

            (k) a merger or conveyance pursuant to Section 14.3(d); or

            (l) any other amendments substantially similar to the foregoing.

Section 13.2. Amendment Procedures.

      Except as provided in Sections 13.1 and 13.3, all amendments to this
Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by or with the consent of the
General Partner which consent may be given or withheld in its sole discretion. A
proposed amendment shall be effective upon its approval by the holders of a Unit
Majority, unless a greater or different percentage is required under this
Agreement or by Delaware law. Each proposed amendment that requires the approval
of the


                                      -91-
<PAGE>

holders of a specified percentage of Outstanding Units shall be set forth in a
writing that contains the text of the proposed amendment. If such an amendment
is proposed, the General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of the Unitholders
to consider and vote on such proposed amendment. The General Partner shall
notify all Record Holders upon final adoption of any such proposed amendments.

Section 13.3. Amendment Requirements.

            (a) Notwithstanding the provisions of Sections 13.1 and 13.2, no
provision of this Agreement that establishes a percentage of Outstanding Units
(including Units deemed owned by the General Partner) required to take any
action shall be amended, altered, changed, repealed or rescinded in any respect
that would have the effect of reducing such voting percentage unless such
amendment is approved by the written consent or the affirmative vote of holders
of Outstanding Units whose aggregate Outstanding Units constitute not less than
the voting requirement sought to be reduced.

            (b) Notwithstanding the provisions of Sections 13.1 and 13.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without its consent, unless such shall be deemed to have occurred as a
result of an amendment approved pursuant to Section 13.3(c), (ii) enlarge the
obligations of, restrict in any way any action by or rights of, or reduce in any
way the amounts distributable, reimbursable or otherwise payable to, the General
Partner or any of its Affiliates without its consent, which consent may be given
or withheld in its sole discretion, (iii) change Section 12.1(b), or (iv) change
the term of the Partnership or, except as set forth in Section 12.1(b), give any
Person the right to dissolve the Partnership.

            (c) Except as provided in Section 14.3, and except as otherwise
provided, and without limitation of the General Partner's authority to adopt
amendments to this Agreement without the approval of any Partners or Assignees
as contemplated in Section 13.1, any amendment that would have a material
adverse effect on the rights or preferences of any class of Partnership
Interests in relation to other classes of Partnership Interests must be approved
by the holders of not less than a majority of the Outstanding Partnership
Interests of the class affected.

            (d) Notwithstanding any other provision of this Agreement, except
for amendments pursuant to Section 13.1 and except as otherwise provided by
Section 14.3(b), no amendments shall become effective without the approval of
the holders of at least 90% of the Outstanding Common Units and Subordinated
Units voting as a single class unless the Partnership obtains an Opinion of
Counsel to the effect that such amendment will not affect the limited liability
of any Limited Partner under applicable law.

            (e) Notwithstanding the provisions of Sections 13.1 and 13.2, no
amendment of (i) the definitions of "Conflicts Committee," (ii) Section 2.9,
(iii) Section 4.6, (iv) Section 7.3(b), (v) Section 7.9(a), (vi) Section
12.1(b); (vii) Section 12.9; (viii) Section 14.2, or (ix) any other provision of
this Agreement requiring that Special Approval be obtained as a condition to any
action, shall be effective without first obtaining Special Approval.


                                      -92-
<PAGE>

            (f) Except as provided in Section 13.1, this Section 13.3 shall be
amended only with the approval of the holders of at least 90% of the Outstanding
Units and, in the case of Section 13.3(e), only after obtaining Special
Approval.

Section 13.4. Special Meetings.

      All acts of Limited Partners to be taken pursuant to this Agreement shall
be taken in the manner provided in this Article XIII. Special meetings of the
Limited Partners may be called by the General Partner or by Limited Partners
owning 20% or more of the Outstanding Limited Partner Interests of the class or
classes for which a meeting is proposed. Limited Partners shall call a special
meeting by delivering to the General Partner one or more requests in writing
stating that the signing Limited Partners wish to call a special meeting and
indicating the general or specific purposes for which the special meeting is to
be called. Within 60 days after receipt of such a call from Limited Partners or
within such greater time as may be reasonably necessary for the Partnership to
comply with any statutes, rules, regulations, listing, agreements or similar
requirements governing the holding of a meeting or the solicitation of proxies
for use at such a meeting, the General Partner shall send a notice of the
meeting to the Limited Partners either directly or indirectly through the
Transfer Agent. A meeting shall be held at a time and place determined by the
General Partner on a date not less than 10 days nor more than 60 days after the
mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.

Section 13.5. Notice of a Meeting.

      Notice of a meeting called pursuant to Section 13.4 shall be given to the
Record Holders of the class or classes of Limited Partner Interests for which a
meeting is proposed in writing by mail or other means of written communication
in accordance with Section 16.1. The notice shall be deemed to have been given
at the time when deposited in the mail or sent by other means of written
communication.

Section 13.6. Record Date.

      For purposes of determining the Limited Partners entitled to notice of or
to vote at a meeting of the Limited Partners or to give approvals without a
meeting as provided in Section 13.11 the General Partner may set a Record Date,
which shall not be less than 10 nor more than 60 days before (a) the date of the
meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Limited Partner
Interests are listed for trading, in which case the rule, regulation, guideline
or requirement of such exchange shall govern) or (b) in the event that approvals
are sought without a meeting, the date by which Limited Partners are requested
in writing by the General Partner to give such approvals.

Section 13.7. Adjournment.

      When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Record Date need not be fixed, if the
time and place thereof are


                                      -93-
<PAGE>

announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the
Partnership may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 45 days or if a new Record
Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given in accordance with this Article XIII.

Section 13.8. Waiver of Notice; Approval of Meeting; Approval of Minutes.

      The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if it had occurred at a meeting
duly held after regular call and notice, if a quorum is present, either in
person or by proxy, and if, either before or after the meeting, Limited Partners
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Partnership records or made a part of the minutes of the
meeting. Attendance of a Limited Partner at a meeting shall constitute a waiver
of notice of the meeting, except when the Limited Partner does not approve, at
the beginning of the meeting, of the transaction of any business because the
meeting is not lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the consideration of matters
required to be included in the notice of the meeting, but not so included, if
the disapproval is expressly made at the meeting

Section 13.9. Quorum.

      The holders of a majority of the Outstanding Limited Partner Interests of
the class or classes for which a meeting has been called (including Limited
Partner Interests deemed owned by the General Partner) represented in person or
by proxy shall constitute a quorum at a meeting of Limited Partners of such
class or classes unless any such action by the Limited Partners requires
approval by holders of a greater percentage of such Limited Partner Interests,
in which case the quorum shall be such greater percentage. At any meeting of the
Limited Partners duly called and held in accordance with this Agreement at which
a quorum is present, the act of Limited Partners holding Outstanding Limited
Partner Interests that in the aggregate represent a majority of the Outstanding
Limited Partner Interests entitled to vote and be present in person or by proxy
at such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action
under the provisions of this Agreement, in which case the act of the Limited
Partners holding Outstanding Limited Partner Interests that in the aggregate
represent at least such greater or different percentage shall be required. The
Limited Partners present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage of
Outstanding Limited Partner Interests specified in this Agreement (including
Limited Partner Interests deemed owned by the General Partner). In the absence
of a quorum any meeting of Limited Partners may be adjourned from time to time
by the affirmative vote of holders of at least a majority of the Outstanding
Limited Partner Interests entitled to vote at such meeting (including Limited
Partner Interests deemed owned by the General Partner) represented either in
person or by proxy, but no other business may be transacted, except as provided
in Section 13.7.


                                      -94-
<PAGE>

Section 13.10. Conduct of a Meeting.

      The General Partner shall have full power and authority concerning the
manner of conducting any meeting of the Limited Partners or solicitation of
approvals in writing, including the determination of Persons entitled to vote,
the existence of a quorum, the satisfaction of the requirements of Section 13.4,
the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection
with or during the meeting or voting. The General Partner shall designate a
Person to serve as chairman of any meeting and shall further designate a Person
to take the minutes of any meeting. All minutes shall be kept with the records
of the Partnership maintained by the General Partner. The General Partner may
make such other regulations consistent with applicable law and this Agreement as
it may deem advisable concerning the conduct of any meeting of the Limited
Partners or solicitation of approvals in writing, including regulations in
regard to the appointment of proxies, the appointment and duties of inspectors
of votes and approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals in writing.

Section 13.11. Action Without a Meeting.

      If authorized by the General Partner, any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum percentage of the Outstanding Limited Partner
Interests (including Limited Partner Interests deemed owned by the General
Partner) that would be necessary to authorize or take such action at a meeting
at which all the Limited Partners were present and voted (unless such provision
conflicts with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Limited Partner Interests are listed for
trading, in which case the rule, regulation, guideline or requirement of such
exchange shall govern). Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners who have not approved in writing. The
General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Limited Partner Interests held by the
Limited Partners the Partnership shall be deemed to have failed to receive a
ballot for the Limited Partner Interests that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any Person other
than by or on behalf of the General Partner, the written approvals shall have no
force and effect unless and until (a) they are deposited with the Partnership in
care of the General Partner, (b) approvals sufficient to take the action
proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an Opinion of
Counsel is delivered to the General Partner to the effect that the exercise of
such right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the Partnership so as
to jeopardize the Limited Partners' limited liability, and (ii) are otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.


                                      -95-
<PAGE>

Section 13.12. Voting and Other Rights.

            (a) Only those Record Holders of the Limited Partner Interests on
the Record Date set pursuant to Section 13.6 (and also subject to the
limitations contained in the definition of "Outstanding") shall be entitled to
notice of, and to vote at, a meeting of Limited Partners or to act with respect
to matters as to which the holders of the Outstanding Limited Partner Interests
have the right to vote or to act. All references in this Agreement to votes of,
or other acts that may be taken by, the Outstanding Limited Partner Interests
shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Limited Partner Interests.

            (b) With respect to Limited Partner Interests that are held for a
Person's account by another Person (such as a broker, dealer, bank, trust
company or clearing corporation, or an agent of any of the foregoing), in whose
name such Limited Partner Interests are registered, such other Person shall, in
exercising the voting rights in respect of such Limited Partner Interests on any
matter, and unless the arrangement between such Persons provides otherwise, vote
such Limited Partner Interests in favor of, and at the direction of, the Person
who is the beneficial owner, and the Partnership shall be entitled to assume it
is so acting without further inquiry. The provisions of this Section 13.12(b)
(as well as all other provisions of this Agreement) are subject to the
provisions of Section 4.3.

                                  ARTICLE XIV.
                                     MERGER

Section 14.1. Authority.

      The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.

Section 14.2. Procedure for Merger or Consolidation.

      Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner, including Special Approval
from the Conflicts Committee. If the General Partner shall determine, in the
exercise of its discretion, to consent to the merger or consolidation and if
Special Approval has been obtained, the General Partner shall approve the Merger
Agreement, which shall set forth:

            (a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;

            (b) The name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");

            (c) The terms and conditions of the proposed merger or
consolidation;


                                      -96-
<PAGE>

            (d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;

            (e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership, operating agreement or other similar charter or
governing document) of the Surviving Business Entity to be effected by such
merger or consolidation;

            (f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and

            (g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.

Section 14.3. Approval by Limited Partners of Merger or Consolidation.

            (a) Except as provided in Section 14.3(d), the General Partner, upon
its approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
VII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.

            (b) Except as provided in Section 14.3(d), the Merger Agreement
shall be approved upon receiving the affirmative vote or consent of the holders
of a Unit Majority unless the Merger Agreement contains any provision that, if
contained in an amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require for its approval the vote or consent of a greater
percentage of the Outstanding Limited Partner Interests or of any class of
Limited Partners, in which case such greater percentage vote or consent shall be
required for approval of the Merger Agreement.


                                      -97-
<PAGE>

            (c) Except as provided in Section 14.3(d), after such approval by
vote or consent of the Limited Partners, and at any time prior to the filing of
the certificate of merger pursuant to Section 14.4, the merger or consolidation
may be abandoned pursuant to provisions therefor, if any, set forth in the
Merger Agreement.

            (d) Notwithstanding anything else contained in this Article XIV or
in this Agreement, the General Partner is permitted, in its discretion, without
Limited Partner approval, to merge the Partnership or any Group Member into, or
convey all of the Partnership's assets to, another limited liability entity
which shall be newly formed and shall have no assets, liabilities or operations
at the time of such Merger other than those it receives from the Partnership or
other Group Member if (i) the General Partner has received an Opinion of Counsel
that the merger or conveyance, as the case may be, would not result in the loss
of the limited liability of any Limited Partner or any partner in the Operating
Partnership or cause the Partnership or the Operating Partnership to be treated
as an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously treated as such),
(ii) the sole purpose of such merger or conveyance is to effect a mere change in
the legal form of the Partnership into another limited liability entity and
(iii) the governing instruments of the new entity provide the Limited Partners
and the General Partner with the same rights and obligations as are herein
contained.

Section 14.4. Certificate of Merger.

      Upon the required approval by the General Partner and the Unitholders of a
Merger Agreement, a certificate of merger shall be executed and filed with the
Secretary of State of the State of Delaware in conformity with the requirements
of the Delaware Act.

Section 14.5. Effect of Merger.

            (a) At the effective time of the certificate of merger:

            (i) all of the rights, privileges and powers of each of the business
      entities that has merged or consolidated, and all property, real, personal
      and mixed, and all debts due to any of those business entities and all
      other things and causes of action belonging to each of those business
      entities, shall be vested in the Surviving Business Entity and after the
      merger or consolidation shall be the property of the Surviving Business
      Entity to the extent they were of each constituent business entity;

            (ii) the title to any real property vested by deed or otherwise in
      any of those constituent business entities shall not revert and is not in
      any way impaired because of the merger or consolidation;

            (iii) all rights of creditors and all liens on or security interests
      in property of any of those constituent business entities shall be
      preserved unimpaired; and

            (iv) all debts, liabilities and duties of those constituent business
      entities shall attach to the Surviving Business Entity and may be enforced
      against it to the same extent as if the debts, liabilities and duties had
      been incurred or contracted by it.


                                      -98-
<PAGE>

            (b) A merger or consolidation effected pursuant to this Article
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another.

                                   ARTICLE XV.
                   RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1. Right to Acquire Limited Partner Interests.

            (a) Notwithstanding any other provision of this Agreement, if at any
time not more than 20% of the total Limited Partner Interests of any class then
Outstanding is held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right, which right it may
assign and transfer in whole or in part to the Partnership or any Affiliate of
the General Partner, exercisable in its sole discretion, to purchase all, but
not less than all, of such Limited Partner Interests of such class then
Outstanding held by Persons other than the General Partner and its Affiliates,
at the greater of (x) the Current Market Price as of the date three days prior
to the date that the notice described in Section 15 is mailed and (y) the
highest price paid by the General Partner or any of its Affiliates for any such
Limited Partner Interest of such class purchased during the 90-day period
preceding the date that the notice described in Section 15.1(b) is mailed. As
used in this Agreement, (i) "Current Market Price" as of any date of any class
of Limited Partner Interests listed or admitted to trading on any National
Securities Exchange means the average of the daily Closing Prices (as
hereinafter defined) per limited partner interest of such class for the 20
consecutive Trading Days (as hereinafter defined) immediately prior to such
date; (ii) "Closing Price" for any day means the last sale price on such day,
regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted for trading on the principal National
Securities Exchange on which such Limited Partner Interests of such class are
listed or admitted to trading or, if such Limited Partner Interests of such
class are not listed or admitted to trading on any National Securities Exchange,
the last quoted price on such day or, if not so quoted, the average of the high
bid and low asked prices on such day in the over-the-counter market, as reported
by the Nasdaq Stock Market or any other system then in use, or, if on any such
day such Limited Partner Interests of such class are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in such Limited Partner
Interests of such class selected by the General Partner, or if on any such day
no market maker is making a market in such Limited Partner Interests of such
class, the fair value of such Limited Partner Interests on such day as
determined reasonably and in good faith by the General Partner; and (iii)
"Trading Day" means a day on which the principal National Securities Exchange on
which such Limited Partner Interests of any class are listed or admitted to
trading is open for the transaction of business or, if Limited Partner Interests
of a class are not listed or admitted to trading on any National Securities
Exchange, a day on which banking institutions in New York City generally are
open.

            (b) If the General Partner, any Affiliate of the General Partner or
the Partnership elects to exercise the right to purchase Limited Partner
Interests granted pursuant to Section 15.1(a), the General Partner shall deliver
to the Transfer Agent notice of such election to purchase (the "Notice of
Election to Purchase") and shall cause the Transfer Agent to mail a


                                      -99-
<PAGE>

copy of such Notice of Election to Purchase to the Record Holders of Limited
Partner Interests of such class (as of a Record Date selected by the General
Partner) at least 10, but not more than 60, days prior to the Purchase Date.
Such Notice of Election to Purchase shall also be published for a period of at
least three consecutive days in at least two daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the price (determined in accordance with Section 15.1(a)) at
which Limited Partner Interests will be purchased and state that the General
Partner, its Affiliate or the Partnership, as the case may be, elects to
purchase such Limited Partner Interests, upon surrender of Certificates
representing such Limited Partner interests in exchange for payment, at such
office or offices of the Transfer Agent as the Transfer Agent may specify, or as
may be required by any National Securities Exchange on which such Limited
Partner Interests are listed or admitted to trading. Any such Notice of Election
to Purchase mailed to a Record Holder of Limited Partner Interests at his
address as reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given regardless of whether the owner receives such
notice. On or prior to the Purchase Date, the General Partner, its Affiliate or
the Partnership, as the case may be, shall deposit with the Transfer Agent cash
in an amount sufficient to pay the aggregate purchase price of all of such
Limited Partner Interests to be purchased in accordance with this Section 15.1.
If the Notice of Election to Purchase shall have been duly given as aforesaid at
least 10 days prior to the Purchase Date, and if on or prior to the Purchase
Date the deposit described in the preceding sentence has been made for the
benefit of the holders of Limited Partner Interests subject to purchase as
provided herein, then from and after the Purchase Date, notwithstanding that any
Certificate shall not have been surrendered for purchase, all rights of the
holders of such Limited Partner Interests (including any rights pursuant to
Articles IV, V, VI, and XII) shall thereupon cease, except the right to receive
the purchase price (determined in accordance with Section 15.1(a)) for Limited
Partner Interests therefor, without interest, upon surrender to the Transfer
Agent of the Certificates representing such Limited Partner Interests, and such
Limited Partner Interests shall thereupon be deemed to be transferred to the
General Partner, its Affiliate or the Partnership, as the case may be, on the
record books of the Transfer Agent and the Partnership, and the General Partner
or any Affiliate of the General Partner, or the Partnership, as the case may be,
shall be deemed to be the owner of all such Limited Partner Interests from and
after the Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited Partner
Interests pursuant to Articles IV, V, VI and XII).

            (c) At any time from and after the Purchase Date, a holder of an
Outstanding Limited Partner Interest subject to purchase as provided in this
Section 15.1 may surrender his Certificate evidencing such Limited Partner
Interest to the Transfer Agent in exchange for payment of the amount described
in Section 15.1(a), therefor, without interest thereon.

                                  ARTICLE XVI.
                               GENERAL PROVISIONS

Section 16.1. Addresses and Notices.

            Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other


                                     -100-
<PAGE>

means of written communication to the Partner or Assignee at the address
described below. Any notice, payment or report to be given or made to a Partner
or Assignee hereunder shall be deemed conclusively to have been given or made,
and the obligation to give such notice or report or to make such payment shall
be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership Securities at
his address as shown on the records of the Transfer Agent or as otherwise shown
on the records of the Partnership, regardless of any claim of any Person who may
have an interest in such Partnership Securities by reason of any assignment or
otherwise. An affidavit or certificate of making of any notice, payment or
report in accordance with the provisions of this Section 16.1 executed by the
General Partner, the Transfer Agent or the mailing organization shall be prima
facie evidence of the giving or making of such notice, payment or report. If any
notice, payment or report addressed to a Record Holder at the address of such
Record Holder appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Postal Service marked to indicate
that the United States Postal Service is unable to deliver it, such notice,
payment or report and any subsequent notices, payments and reports shall be
deemed to have been duly given or made without further mailing (until such time
as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 2.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.

Section 16.2. Further Action.

      The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

Section 16.3. Binding Effect.

      This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

Section 16.4. Integration.

      This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

Section 16.5. Creditors.

      None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.


                                     -101-
<PAGE>

Section 16.6. Waiver.

      No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.

Section 16.7. Counterparts.

      This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto or, in the case of a Person acquiring a Unit, upon
accepting the certificate evidencing such Unit or executing and delivering a
Transfer Application as herein described, independently of the signature of any
other party.

Section 16.8. Applicable Law.

      This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.

Section 16.9. Invalidity of Provisions.

      If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

Section 16.10. Consent of Partners.

      Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.

Section 16.11. Amendments to Reflect GP Reorganization Agreement.

      In addition to the amendments to this Agreement contained in the GP
Reorganization Agreement and notwithstanding any other provision of this
Agreement to the contrary, this Agreement shall be deemed to be further amended
and modified to the extent necessary, but only to the extent necessary, to carry
out the purposes and intent of the GP Reorganization Agreement.

                     [Rest of Page Intentionally Left Blank]


                                     -102-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above:

                                        GENERAL PARTNER:


                                        WILLIAMS GP LLC

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


                                        LIMITED PARTNERS:
                                        All Limited Partners now and hereafter
                                        admitted as Limited Partners of the
                                        Partnership, pursuant to powers of
                                        attorney now and hereafter executed in
                                        favor of, and granted and delivered to
                                        the General Partner.


                                        WILLIAMS GP LLC

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


                                     -103-
<PAGE>

                                    EXHIBIT A
                            TO THE SECOND AMENDED AND
                  RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
                          WILLIAMS ENERGY PARTNERS L.P.
                       CERTIFICATE EVIDENCING COMMON UNITS
                    REPRESENTING LIMITED PARTNER INTERESTS IN
                          WILLIAMS ENERGY PARTNERS L.P.

No. __________                                           __________ Common Units

      In accordance with Section 4.1 of the Second Amended and Restated
Agreement of Limited Partnership of Williams Energy Partners L.P., as amended,
supplemented or restated from time to time (the "Partnership Agreement"),
Williams Energy Partners L.P., a Delaware limited partnership (the
"Partnership"), hereby certifies that (the "Holder") is the registered owner of
Common Units representing limited partner interests in the Partnership (the
"Common Units") transferable on the books of the Partnership, in person or by
duly authorized attorney, upon surrender of this Certificate properly endorsed
and accompanied by a properly executed application for transfer of the Common
Units represented by this Certificate. The rights, preferences and limitations
of the Common Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Partnership Agreement. Copies of the Partnership
Agreement are on file at, and will be furnished without charge on delivery of
written request to the Partnership at, the principal office of the Partnership
located at One Williams Center, Tulsa, Oklahoma 74172. Capitalized terms used
herein but not defined shall have the meanings given them in the Partnership
Agreement.

      The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.

      This Certificate shall not be valid far any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.

Dated:_______________                   WILLIAMS ENERGY PARTNERS L.P.

Countersigned and Registered by:        By: Williams GP LLC, its General Partner


                                        By:
                                           -------------------------------------
as Transfer Agent and Registrar         Name:
                                             -----------------------------------


By:                                     By:
   -----------------------------           -------------------------------------
      Authorized Signature                         Secretary


                                     -104-
<PAGE>

                            [REVERSE OF CERTIFICATE]

                                  ABBREVIATIONS

      The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as follows according to applicable laws or
regulations:

TEN COM - as tenants in common               UNIF GIFT/TRANSFERS MIN ACT
TEN ENT - as tenants by the entireties       __________ Custodian _________
                                             (Cust)                (Minor)
JT TEN -  as joint tenants with right of     under Uniform Gifts/Transfers to CD
          survivorship and not as            Minors Act (State)
          tenants in common

      Additional abbreviations, though not in the above list, may also be used.

                           ASSIGNMENT OF COMMON UNITS
                                       IN
                          WILLIAMS ENERGY PARTNERS L.P.
              IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
           DUE TO TAX SHELTER STATUS OF WILLIAMS ENERGY PARTNERS L.P.

      You have acquired an interest in Williams Energy Partners L.P., One
Williams Center, Tulsa, Oklahoma 74172, whose taxpayer identification number is
73-1599053. The Internal Revenue Service has issued Williams Energy Partners
L.P. the following tax shelter registration number:

      YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE SERVICE
IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY
INCOME BY REASON OF YOUR INVESTMENT IN WILLIAMS ENERGY PARTNERS L.P.

      You must report the registration number as well as the name and taxpayer
identification number of Williams Energy Partners L.P. on Form 8271. FORM 8271
MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS, CREDIT OR
OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN WILLIAMS
ENERGY PARTNERS L.P.

      If you transfer your interest in Williams Energy Partners L.P. to another
person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Williams Energy Partners L.P. If you do not
want to keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and (2) give a
copy of this notice to the person to whom you transfer your interest. Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.


                                     -105-
<PAGE>

      ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT
OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE
INTERNAL REVENUE SERVICE.

      FOR VALUE RECEIVED, hereby assigns, conveys, sells and transfers unto


-------------------------------         -------------------------------------
(Please print or typewrite name         (Please insert Social Security or other
and address of Assignee)                identifying number of Assignee)

__________ Common Units representing limited partner interests evidenced by this
Certificate, subject to the Partnership Agreement, and does hereby irrevocably
constitute and appoint __________ as its attorney-in-fact with full power of
substitution to transfer the same on the books of Williams Energy Partners L.P.

Date:                                 NOTE:  The signature to any endorsement
                                             hereon must correspond with the
                                             name as written upon the face of
                                             this Certificate in every
                                             particular, without alteration,
                                             enlargement or change.


SIGNATURE(S) MUST BE                         (Signature)
GUARANTEED BY A MEMBER
FIRM OF THE NATIONAL
ASSOCIATION OF
SECURITIES DEALERS, INC.                     (Signature)
OR BY A COMMERCIAL BANK
OR TRUST COMPANY
SIGNATURE(S) GUARANTEED

      No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the Certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.


                                     -106-
<PAGE>

                    APPLICATION FOR TRANSFER OF COMMON UNITS

      The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Common Units evidenced hereby.

      The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Amended and
Restated Agreement of Limited Partnership of Williams Energy Partners L.P. (the
"Partnership"), as amended, supplemented or restated to the date hereof (the
"Partnership Agreement"), (b) represents and warrants that the Assignee has all
right, power and authority and, if an individual, the capacity necessary to
enter into the Partnership Agreement, (c) appoints the General Partner of the
Partnership and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as the Assignee's attorney-in-fact to execute, swear to, acknowledge
and file any document, including, without limitation, the Partnership Agreement
and any amendment thereto and the Certificate of Limited Partnership of the
Partnership and any amendment thereto, necessary or appropriate for the
Assignee's admission as a Substituted Limited Partner and as a party to the
Partnership Agreement, (d) gives the powers of attorney provided for in the
Partnership Agreement, and (e) makes the waivers and gives the consents and
approvals contained in the Partnership Agreement. Capitalized terms not defined
herein have the meanings assigned to such terms in the Partnership Agreement.

Date:
     -----------------

Social Security or other identifying number of          Signature of Assignee
                Assignee

Purchase Price including commissions, if any        Name and Address of Assignee

Type of Entity (check one):

      |_|  Individual            |_|   Partnership         |_|   Corporation

      |_|  Trust                 |_|   Other (specify)

Nationality (check one):

      |_|  U.S. Citizen, Resident or Domestic Entity

      |_|  Foreign Corporation   |_|      Non-resident Alien

      If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.

      Under Section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interestholder's interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interestholder).


                                     -107-
<PAGE>

Complete Either A or B:

A.    Individual Interestholder

      1.    I am not a non-resident alien for purposes of U.S. income taxation.

      2.    My U.S. taxpayer identification number (Social Security Number) is
            __________.

      3.    My home address is ___________.

B.    Partnership, Corporation or Other Interestholder

      1.    ________________ is not a foreign corporation, foreign partnership,
            foreign trust (Name of Interestholder) or foreign estate (as those
            terms are defined in the Code and Treasury Regulations).

      2.    The interestholder's U.S. employer identification number is
            ___________.

      3.    The interestholder's office address and place of incorporation (if
            applicable) is ___________.

      The interestholder agrees to notify the Partnership within sixty (60) days
of the date the interestholder becomes a foreign person.

      The interestholder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.

      Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of:


                        --------------------------------
                             Name of Interestholder

                        --------------------------------
                               Signature and Date

                        --------------------------------
                              Title (if applicable)

      Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.


                                     -108-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>d01268exv10w4.txt
<DESCRIPTION>THIRD AMENDED/RESTATED LIMITED LIABILITY AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.4

                           THIRD AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                                 WILLIAMS GP LLC

                      A Delaware Limited Liability Company

      This THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement") of WILLIAMS GP LLC (the "Company"), dated as of September 30, 2002
(the "Effective Date"), is adopted, executed and agreed to, for good and
valuable consideration, by Williams Energy Services, LLC, a Delaware limited
liability company ("WES") and Williams Natural Gas Liquids, Inc., a Delaware
corporation ("WNGL"), as the members ("Members").

                                    RECITALS

      1. The name of the company is "Williams GP LLC" (the "Company").

      2. The Company was originally formed as a Delaware limited liability
company by the filing of a Certificate of Formation (the "Delaware
Certificate"), dated as of August 30, 2000 (the "Original Filing Date") with the
Secretary of State of the State of Delaware, pursuant to the Delaware Limited
Liability Company Act with WES as the sole member.

      3. WES and the Company desire to admit WNGL as a member of the Company in
exchange for its capital contribution as set forth in Section 5.01.


                                       1
<PAGE>

                                   ARTICLE I.
                                   DEFINITIONS

      SECTION 1.01 DEFINITIONS.

      (a) As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Sections referred to below:

      "Act" means the Delaware Limited Liability Company Act, as amended from
time to time.

      "Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:

      (i) Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or pursuant to
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5);

      (ii) Debit to such Capital Account the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).

      The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

      "Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For the purposes of this definition, "control" when
used with respect to any 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.

      "Agreement" has the meaning given such term in the Recitals.

      "Applicable Law" means (a) any United States Federal, state or local law,
statute, rule, regulation, order, writ, injunction, judgment, decree or permit
of any Governmental Authority and (b) any rule or listing requirement of any
applicable national stock exchange or listing


                                       2
<PAGE>

requirement of any national stock exchange or Commission recognized trading
market on which securities issued by the MLP are listed or quoted.

      "Assignee" means any Person that acquires a Membership Interest or any
portion thereof through a Disposition; provided, however, that, an Assignee
shall have no right to be admitted to the Company as a Member except in
accordance with Article IV. The Assignee of a dissolved Member is the
shareholder, partner, member or other equity owner or owners of the dissolved
Member to whom such Member's Membership Interest is assigned by the Person
conducting the liquidation or winding up of such Member. The Assignee of a
Bankrupt Member is (a) the Person or Persons (if any) to whom such Bankrupt
Member's Membership Interest is assigned by order of the bankruptcy court or
other Governmental Authority having jurisdiction over such Bankruptcy, or (b) in
the event of a general assignment for the benefit of creditors, the creditor to
which such Membership Interest assigned.

      "Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a)
such Person (i) makes a general assignment for the benefit of creditors; (ii)
files a voluntary bankruptcy petition; (iii) becomes the subject of an order for
relief or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Applicable Law; (v) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in a proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or
acquiesces in the appointment of a trustee, receiver, or liquidator of such
Person or of all or any substantial part of such Person's properties; or (b) a
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Applicable Law has been
commenced against such Person and 120 Days have expired without dismissal
thereof or with respect to which, without such Person's consent or acquiescence,
a trustee, receiver, or liquidator of such Person or of all or any substantial
part of such Person's properties has been appointed and 90 Days have expired
without the appointment's having been vacated or stayed, or 90 Days have expired
after the date of expiration of a stay, if the appointment has not previously
been vacated.

      "Board" has the meaning given such term in Section 7.01.

      "Business Day" means any day other than a Saturday, a Sunday, or a day
when banks in New York, New York are authorized by Applicable Law to be closed.

      "Capital Account" means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:

            (i) To each Member's Capital Account there shall be credited such
      Member's Capital Contributions, such Member's distributive share of
      Profits and any items in the


                                       3
<PAGE>

      nature of income or gain which are specially allocated pursuant to Section
      6.03 hereof, and the amount of any Company liabilities assumed by such
      Member or which are secured by any property (other than money) distributed
      to such Member.

            (ii) To each Member's Capital Account there shall be debited the
      amount of cash and the Gross Asset Value of any property (other than
      money) distributed to such Member pursuant to any provision of this
      Agreement, such Member's distributive share of Losses and any items in the
      nature of expenses or losses which are specially allocated pursuant to
      Section 6.03 hereof, and the amount of any liabilities of such Member
      assumed by the Company or which are secured by any property (other than
      money) contributed by such Member to the Company.

            (iii) In the event all or a portion of a Membership Interest is
      transferred in accordance with the terms of this Agreement, the transferee
      shall succeed to the Capital Account of the transferor to the extent it
      relates to the Membership Interest so transferred.

            (iv) In determining the amount of any liability for purposes of the
      foregoing subparagraphs (i) and (ii) of this definition of "Capital
      Account," there shall be taken into account Section 752(c) of the Code and
      any other applicable provisions of the Code and Treasury Regulations.

      The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in
a manner consistent with such Treasury Regulations.

      "Capital Contribution" means, with respect to any Member, the amount of
money and the net agreed value of any property (other than money) contributed to
the Company by such Member. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.

      "Certified Public Accountants" means a firm of independent public
accountants selected from time to time by the Board.

      "Claim" means any and all judgments, claims, causes of action, demands,
lawsuits, suits, proceedings, Governmental investigations or audits, losses,
assessments, fines, penalties, administrative orders, obligations, costs,
expenses, liabilities and damages (whether actual, consequential or punitive),
including interest, penalties, reasonable attorneys' fees, disbursements and
costs of investigations, deficiencies, levies, duties and imposts.

      "Code" means the Internal Revenue Code of 1986, as amended from time to
time.


                                       4
<PAGE>

      "Company" has the meaning given such term in the Recitals.

      "Compensation Committee" has the meaning given such term in Section
7.10(d).

      "Conflicts Committee" has the meaning given such term in Section 7.10(c).

      "Day" means a calendar day; provided, however, that, if any period of Days
referred to in this Agreement shall end on a Day that is not a Business Day,
then the expiration of such period shall be automatically extended until the end
of the next succeeding Business Day.

      "Delaware Certificate" has the meaning given such term in the Recitals.

      "Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for Federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the Federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Manager.

      "Director" or "Directors" has the meaning given such term in Section 7.02.

      "Dispose," "Disposing" or "Disposition" means with respect to any asset
(including a Membership Interest or any portion thereof), a sale, assignment,
transfer, conveyance, gift, exchange or other disposition of such asset, whether
such disposition be voluntary, involuntary or by operation of Applicable Law.

      "Disposing Member" has the meaning given such term in Section 4.02.

      "Dissolution Event" has the meaning given such term in Section 12.01(a).

      "Effective Date" has the meaning given such term in the Recitals.


                                       5
<PAGE>

      "Encumber," "Encumbering," or "Encumbrance" means the creation of a
security interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance be voluntary, involuntary or by operation of Applicable Law.

      "GAAP" means generally accepted accounting principles.

      "Governmental Authority" or "Governmental" means any Federal, state or
local court or governmental or regulatory agency or authority or any arbitration
board, tribunal or mediator having jurisdiction over the Company or its assets
or Members.

      "Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for

      Federal income tax purposes, except as follows:

            (i) The initial Gross Asset Value of any asset contributed by a
      Member to the Company shall be the gross fair market value of said asset,
      as determined by the contributing Member and the Board, in a manner that
      is consisted with Section 7701(g) of the Code;

            (ii) The Gross Asset Values of all Company assets shall be adjusted
      to equal their respective gross fair market values, as determined by the
      Board, in a manner that is consistent with Section 7701(g) of the Code, as
      of the following times: (a) the acquisition of an additional Membership
      Interest by any new or existing Member in exchange for more than a de
      minimis Capital Contribution; (b) the distribution by the Company to a
      Member of more than a de minimis amount of property other than money as
      consideration for an Membership Interest; and (c) the liquidation of the
      Company within the meaning of Treasury Regulations Section
      1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
      clauses (a) and (b) above shall be made only if the Tax Matters Officer
      reasonably determines that such adjustments are necessary or appropriate
      to reflect the relative economic interests of the Members in the Company;

            (iii) The Gross Asset Value of any Company asset distributed to any
      Member shall be the gross fair market value (taking Section 7701(g) of the
      Code into account) of such asset on the date of distribution; and

            (iv) The Gross Asset Values of any Company assets shall be increased
      (or decreased) to reflect any adjustments to the adjusted basis of such
      assets pursuant to Section 734(b) of the Code or Section 743(b) of the
      Code, but only to the extent that such adjustments are taken into account
      in determining Capital Accounts pursuant to Treasury Regulations Section
      1.704-1 (b)(2)(iv)(m) and the definition of Capital Account hereof,
      provided, however, that Gross Asset Values shall not be adjusted pursuant
      to this


                                       6
<PAGE>

      subparagraph (iv) to the extent the Tax Matter Officer determines that an
      adjustment pursuant to the foregoing subparagraph (ii) of this definition
      is necessary or appropriate in connection with a transaction that would
      otherwise result in an adjustment pursuant to this subparagraph (iv).

      If the Gross Asset Value of an asset has been determined or adjusted
pursuant to the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.

      "Incentive Plan" means any plan or arrangement pursuant to which the
Company may compensate its employees, consultants, directors and/or service
providers.

      "Indemnitee" means (a) any Person who is or was an Affiliate of the
Company, (b) any Person who is or was a member, partner, officer, director,
employee, agent or trustee of the Company or any Affiliate of the Company and
(c) any Person who is or was serving at the request of the Company or any
Affiliate of the Company as an officer, director, employee, member, partner,
agent, fiduciary or trustee of another Person; provided, that a Person shall not
be an Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services.

      "Independent Director" has the meaning given such term in Section 7.10(b).

      "Majority Interest" means greater than 50% of the Sharing Ratios.

      "Member" means any Person executing this Agreement as of the date of this
Agreement as a member of the Company or hereafter admitted to the Company as a
member as provided in this Agreement, but such term does not include any Person
who has ceased to be a member in the Company.

      "Membership Interest" means, with respect to any Member, (a) that Member's
status as a Member; (b) that Member's share of the income, gain, loss, deduction
and credits of, and the right to receive distributions from, the Company; (c)
all other rights, benefits and privileges enjoyed by that Member (under the Act,
this Agreement, or otherwise) in its capacity as a Member, including that
Member's rights to vote, consent and approve and otherwise to participate in the
management of the Company, including through the Board; and (d) all obligations,
duties and liabilities imposed on that Member (under the Act, this Agreement or
otherwise) in its capacity as a Member, including any obligations to make
Capital Contributions.

      "Notices" has the meaning given such term in Section 13.02.


                                       7
<PAGE>

      "NYSE" has the meaning given such term in Section 7.10(b).

      "Omnibus Agreement" means that Omnibus Agreement, dated as of February 9,
2001, among The Williams Companies, Inc., Williams Energy Services, LLC,
Williams Natural Gas Liquids, Inc., Williams Pipe Line Company, LLC, Williams
Information Services Corporation, the Company, the Partnership and Williams OLP,
L.P., a Delaware limited partnership, as such agreement may be amended,
supplemented or restated from time to time.

      "Original Filing Date" has the meaning given such term in the Recitals.

      "Partnership" means Williams Energy Partners L.P., a Delaware limited
partnership.

      "Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated February 9, 2001, as amended, or
any successor agreement.

      "Person" means any individual, firm, partnership, corporation, limited
liability company, association, joint-stock company, unincorporated
organization, joint venture, trust, court, governmental agency or any political
subdivision thereof, or any other entity.

      "Profits" and "Losses" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss, or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:

            (i) Any income of the Company that is exempt from Federal income tax
      and not otherwise taken into account in computing Profits or Losses
      pursuant to this definition shall be added to such taxable income or loss;

            (ii) Any expenditures of the Company described in Section
      705(a)(2)(B) of the Code, and not otherwise taken into account in
      computing Profits or Losses pursuant to this definition shall be
      subtracted from such taxable income or loss;

            (iii) In the event the Gross Asset Value of any Company asset is
      adjusted pursuant to subparagraph (ii) or (iv) of the definition of Gross
      Asset Value hereof, the amount of such adjustment shall be taken into
      account as gain or loss from the disposition of such asset for purposes of
      computing Profits or Losses;

            (iv) Gain or loss resulting from any disposition of property (other
      than money) with respect to which gain or loss is recognized for Federal
      income tax purposes shall be


                                       8
<PAGE>

      computed by reference to the Gross Asset Value of the property disposed of
      notwithstanding that the adjusted tax basis of such property differs from
      its Gross Asset Value;

            (v) In lieu of the depreciation, amortization and other cost
      recovery deductions taken into account in computing such taxable income or
      loss, there shall be taken into account Depreciation for such fiscal year
      or other period, computed in accordance with the definition of
      Depreciation hereof; and

            (vi) Notwithstanding any other provision of this definition of
      "Profits and Losses," any items which are specially allocated pursuant to
      Section 6.03(d) and Section 6.03(e) hereof shall not be taken into account
      in computing Profits or Losses.

      "Proper Officer" or "Proper Officers" means those officers authorized by
the Board to act on behalf of the Company.

      "Services Agreement" means that Operating Services Agreement, dated as of
_________________ among The Williams Companies, Inc., the Company, and various
of their Affiliates, as such agreement may be amended, supplemented or restated
from time to time.

      "Sharing Ratio" means, subject in each case to adjustments in accordance
with this Agreement or in connection with Dispositions of Membership Interests,
(a) in the case of a Member executing this Agreement as of the date of this
Agreement or a Person acquiring such Member's Membership Interest, the
percentage specified for that Member as its Sharing Ratio on Exhibit A, and (b)
in the case of Membership Interests issued pursuant to Section 3.02, the Sharing
Ratio established pursuant thereto; provided, however, that the total of all
Sharing Ratios shall always equal 100%.

      "Special Approval" means approval by a majority of the members of the
Conflicts Committee.

      "Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a


                                       9
<PAGE>

partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has
(i) at least a majority ownership interest or (ii) the power to elect or direct
the election of a majority of the directors or other governing body of
such-Person.

      "Target Capital Account Amount" means, with respect to a Member, the
distribution the Member would receive pursuant to Section 6.02 if the amount to
be distributed to the Member equaled the product of (i) the amount described in
Section 12.02(a)(iii)(C) multiplied by (ii) the Member's Sharing Ratio.

      "Tax Matters Officer" has the meaning given such term in Section 9.03(a).

      "Term" has the meaning given such term in Section 2.06.

      "Treasury Regulations" - the regulations (including temporary regulations)
promulgated by the United States Department of the Treasury pursuant to and in
respect of provisions of the Code. All references herein to sections of the
Treasury Regulations shall include any corresponding provision or provisions of
succeeding, similar or substitute, temporary or final Treasury Regulations.

      "Williams Group" means The Williams Companies, Inc., a Delaware
corporation, and its Subsidiaries and Affiliates (other than the Company and the
Partnership and its Subsidiaries).

      "Withdraw," "Withdrawing" or "Withdrawal" - the withdrawal, resignation or
retirement of a Member from the Company as a Member. Such terms shall not
include any Dispositions of Membership Interest (which are governed by Article
IV), even though the Member making a Disposition may cease to be a Member as a
result of such Disposition.

      (b) Other terms defined herein have the meanings so given them.

      SECTION 1.02 CONSTRUCTION.

      Whenever the context requires, (a) the gender of all words used in this
Agreement includes the masculine, feminine and neuter, (b) the singular forms of
nouns, pronouns and verbs shall include the plural and vice versa, (c) all
references to Articles and Sections refer to articles and sections in this
Agreement, each of which is made a part for all purposes and (d) the term
"include" or "includes" means includes, without limitation, and "including"
means including, without limitation.


                                       10
<PAGE>

                                  ARTICLE II.
                                  ORGANIZATION

      SECTION 2.01 FORMATION.

      WES formed the Company as a Delaware limited liability company by the
filing of the Delaware Certificate, dated as of the Original Filing Date, with
the Secretary of State of Delaware pursuant to the Act.

      SECTION 2.02 NAME.

      The name of the Company is "Williams GP LLC" and all Company business must
be conducted in that name or such other names that comply with Applicable Law as
the Board may select.

      SECTION 2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE.

      The name of the Company's registered agent for service of process is The
Corporation Trust Company, and the address of the Company's registered office in
the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The
principal place of business of the Company shall be located at One Williams
Center, Tulsa, Oklahoma 74172. The Board may change the Company's registered
agent or the location of the Company's registered office or principal place of
business as the Board may from time to time determine.

      SECTION 2.04 PURPOSES.

      (a) The Company may (i) act as the general partner of the Partnership and
only undertake activities that are ancillary or related thereto and (ii) in
connection with acting in such capacity, carry on any lawful business or
activity permitted by the Act.

      (b) Subject to the limitations expressly set forth in this Agreement, the
Company shall have the power and authority to do any and all acts and things
deemed necessary or desirable by the Board to further the Company's purposes and
carry on its business, including, without limitation, the following:

            (i) acting as the general partner of the MLP;


                                       11
<PAGE>

            (ii) entering into any kind of activity and performing contracts of
      any kind necessary or desirable for the accomplishment of its business
      (including the business of the MLP and the OLP);

            (iii) acquiring any property, real or personal, in fee or under
      lease or license, or any rights therein or appurtenant thereto, necessary
      or desirable for the accomplishment of its business;

            (iv) borrowing money and issuing evidences of indebtedness and
      securing any such indebtedness by mortgage or pledge of, or other lien on,
      the assets of the Company;

            (v) entering into any such instruments and agreements as the Board
      may deem necessary or desirable for the ownership, management, operation,
      leasing and sale of the Company's property; and

            (vi) negotiating and concluding agreements for the sale, exchange or
      other disposition of all or substantially all of the properties of the
      Company, or for the refinancing of any loan or payment obtained by the
      Company.

      The Members hereby specifically consent to and approve the execution and
delivery by the Proper Officers on behalf of the Company of all loan agreements,
notes, security agreements or other documents or instruments, if any, as
required by any lender providing funds to the Company and ancillary documents
contemplated thereby.

      SECTION 2.05 FOREIGN QUALIFICATION.

      Prior to the Company's conducting business in any jurisdiction other than
Delaware, the Proper Officers shall cause the Company to comply, to the extent
procedures are available and those matters are reasonably within the control of
such officers, with all requirements necessary to qualify the Company as a
foreign limited liability company in that jurisdiction. At the request of the
Proper Officers, the Members shall execute, acknowledge, swear to, and deliver
all certificates and other instruments conforming with this Agreement that are
necessary or appropriate to qualify, continue, and terminate the Company as a
foreign limited liability company in all such jurisdictions in which the Company
may conduct business.

      SECTION 2.06 TERM.

      The period of existence of the Company (the "Term") commenced on the
Original Filing Date and shall end at such time as a certificate of cancellation
is filed with the Secretary of State of Delaware in accordance with Section
12.04.


                                       12
<PAGE>

      SECTION 2.07 NO STATE LAW PARTNERSHIP.

      The Members intend that the Company not be a partnership (including a
limited partnership) or joint venture, and that no Member be a partner or joint
venturer of any other Member, for any purposes other than Federal and state
income tax purposes, and this Agreement may not be construed to suggest
otherwise.

      SECTION 2.08 CERTAIN UNDERTAKINGS RELATING TO THE SEPARATENESS OF THE
COMPANY AND THE PARTNERSHIP.

            (a) SEPARATE RECORDS. The Company shall, and shall cause the
      Partnership to, maintain (i) its books and records, (ii) its accounts, and
      (iii) its financial statements, separate from those of any other Person,
      except its consolidated Subsidiaries.

            (b) SEPARATE ASSETS. The Company shall not, and shall not permit the
      Partnership to, commingle or pool its funds or other assets with those of
      any other Person, except its consolidated Subsidiaries, and shall, and
      shall cause the Partnership to, maintain its assets in a manner that is
      not costly or difficult to segregate, ascertain or otherwise identify as
      separate from those of any other Person.

            (c) SEPARATE NAME. The Company shall, and shall cause the
      Partnership to, (i) conduct its business in its own name, (ii) use
      separate stationery, invoices, and checks, (iii) correct any known
      misunderstanding regarding its separate identity, and (iv) generally hold
      itself out as a separate entity.

            (d) SEPARATE CREDIT. The Company shall not, and shall not permit the
      Partnership to, (i) pay its own  liabilities  from a source other than its
      own funds,  (ii) guarantee or become  obligated for the debts of any other
      Person,  except its  Subsidiaries  and,  in the case of the  Company,  the
      Partnership,  (iii) hold out its credit as being  available to satisfy the
      obligations of any other Person,  except its Subsidiaries and, in the case
      of  the  Company,  the  Partnership,  (iv)  acquire  obligations  or  debt
      securities of any member of the Williams  Group,  or (v) pledge its assets
      for the  benefit of any Person or make loans or  advances  to any  Person,
      except its Subsidiaries and, in the case of the Company,  the Partnership;
      provided that the Company or the Partnership may engage in any transaction
      described  in clauses  (ii)-(v) of this Section  2.08(d) if prior  Special
      Approval has been obtained for such transaction and either (A) in the case
      of  transactions  described  in  clauses  (ii) and  (iii),  the  Conflicts
      Committee has determined,  or has obtained  reasonable  written  assurance
      from a nationally  recognized  firm of  independent  public  accounts or a
      nationally  recognized  investment  banking or  valuation  firm,  that the
      borrower or recipient of the credit  extension is not then  insolvent  and
      will not be rendered  insolvent as a result of such  transaction or (B) in
      the case of transactions described in


                                       13
<PAGE>

      clause (iv), such  transaction is completed  through a public auction or a
      nationally recognized exchange.

            (e) SEPARATE FORMALITIES. The Company shall, and shall cause the
      Partnership to, (i) observe all limited liability or partnership
      formalities, as the case may be, and other formalities required by its
      organizational documents, the laws of the jurisdiction of its formation,
      or other laws, rules, regulations and orders of governmental authorities
      exercising jurisdiction over it, (ii) engage in transactions with any
      member of the Williams Group in conformity with the requirements of
      Section 7.10(c), and (iii) subject to the terms of the Omnibus Agreement
      and the Services Agreement, promptly pay, from its own funds, and on a
      current basis, its allocable share of general and administrative expenses,
      capital expenditures, and costs for shared services performed by any
      Member of the Williams Group. Each material contract between the Company
      or the Partnership, on the one hand, and any member of the Williams Group,
      on the other hand, shall be in writing.

                                  ARTICLE III.
                                   MEMBERSHIP

      SECTION 3.01 MEMBERSHIP INTERESTS; ADDITIONAL MEMBERS.

      The Members own Membership Interests in the Company as reflected in
Exhibit A attached hereto. Persons may be admitted to the Company as Members, on
such terms and conditions as the Board determines at the time of admission. The
terms of admission or issuance must specify the Sharing Ratios applicable
thereto and may provide for the creation of different classes or groups of
Members having different rights, powers, and duties. The Board may reflect the
creation of any new class or group in an amendment to this Agreement indicating
the different rights, powers, and duties, and such an amendment shall be
approved by the Board and executed by the Proper Officers. Any such admission is
effective only after such new Member has executed and delivered to the Members
and the Company an instrument containing the notice address of the new Member,
the Member's ratification of this Agreement and agreement to be bound by it.

      SECTION 3.02 ACCESS TO INFORMATION.

      Each Member shall be entitled to receive any information that it may
request concerning the Company; provided, however, that this Section 3.02 shall
not obligate the Company to create any information that does not already exist
at the time of such request (other than to convert existing information from one
medium to another, such as providing a printout of information that is stored in
a computer database). Each Member shall also have the right, upon reasonable
notice, and at all reasonable times during usual business hours to inspect the
properties of the Company and to audit, examine and make copies of the books of
account and other records of


                                       14
<PAGE>

the Company. Such right may be exercised through any agent or employee of such
Member designated in writing by it or by an independent public accountant,
engineer, attorney or other consultant so designated. All costs and expenses
incurred in any inspection, examination or audit made on such Member's behalf
shall be borne by such Member.

      SECTION 3.03 LIABILITY.

      (a) No Member shall be liable for the debts, obligations or liabilities of
the Company.

      (b) The Company and the Members agree that the rights, duties and
obligations of the Members in their capacities as members of the Company are
only as set forth in this Agreement and as otherwise arise under the Act.
Furthermore, the Members agree that the existence of any rights of a Member, or
the exercise or forbearance from exercise of any such rights shall not create
any duties or obligations of the Member in their capacities as members of the
Company, nor shall such rights be construed to enlarge or otherwise alter in any
manner the duties and obligations of the Members.

      SECTION 3.04 WITHDRAWAL.

      A Member does not have the right or power to Withdraw.

                                  ARTICLE IV.
                       DISPOSITION OF MEMBERSHIP INTERESTS

      SECTION 4.01 GENERAL RESTRICTION.

      A Member may not Dispose of all or any portion of its Membership Interests
except in strict accordance with this Article IV. References in this Article IV
to Dispositions of a Membership Interest shall also refer to Dispositions of a
portion of a Membership Interest. Any attempted Disposition of a Membership
Interest, other than in strict accordance with this Article IV, shall be, and is
hereby declared, null and void ab initio. The Members agree that a breach of the
provisions of this Article IV may cause irreparable injury to the Company and to
the other Members for which monetary damages (or other remedy at law) are
inadequate in view of (a) the complexities and uncertainties in measuring the
actual damages that would be sustained by reason of the failure of a Member to
comply with such provision and (b) the uniqueness of the Business and the
relationship among the Members. Accordingly, the Members agree that the
provisions of this Article IV may be enforced by specific performance.

      SECTION 4.02 ADMISSION OF ASSIGNEE AS A MEMBER.


                                       15
<PAGE>

      An Assignee has the right to be admitted to the Company as a Member, with
the Membership Interests (and attendant Sharing Ratio) so transferred to such
Assignee, only if (a) the Member making the Disposition (a "Disposing Member")
has granted the Assignee either (i) all, but not less than all, of such
Disposing Member's Membership Interests or (ii) the express right to be so
admitted; and (b) such Disposition is effected in strict compliance with this
Article IV.

      SECTION 4.03 REQUIREMENTS APPLICABLE TO ALL DISPOSITIONS AND ADMISSIONS.

      Any Disposition of Membership Interests and any admission of an Assignee
as a Member shall also be subject to the following requirements, and such
Disposition (and admission, if applicable) shall not be effective unless such
requirements are complied with; provided, however, that the Board, in its sole
and absolute discretion, may waive any of the following requirements:

      (a) Disposition Documents. The following documents must be delivered to
the Board and must be satisfactory, in form and substance, to the Board:

            (i) Disposition Instrument. A copy of the instrument pursuant to
      which the Disposition is effected.

            (ii) Ratification of this Agreement. With respect to any
      Disposition, an instrument, executed by the Disposing Member and its
      Assignee, containing the following information and agreements, to the
      extent they are not contained in the instrument described in Section
      4.03(a)(i): (A) the notice address of the Assignee; (B) the Sharing Ratios
      after the Disposition of the Disposing Member and its Assignee (which
      together must total the Sharing Ratio of the Disposing Member before the
      Disposition); (C) the Assignee's ratification of this Agreement and
      agreement to be bound by it; and (D) representations and warranties by the
      Disposing Member and its Assignee (1) that the Disposition and admission
      is being made in accordance with Applicable Laws, and (2) that the matters
      set forth in Section 4.03(a)(i) and this Section 4.03(a)(ii) are true and
      correct.

            (iii) Opinions. With respect to any Disposition, such opinions of
      counsel regarding tax and securities law matters as the board, in its sole
      discretion, may require.

      (b) Payment of Expenses. The Disposing Member and its Assignee shall pay,
or reimburse the Company for, all reasonable costs and expenses incurred by the
Company in connection with the Disposition and admission of the Assignee as a
Member, including the legal fees incurred in connection with the legal opinions
referred to in Section 4.03(a)(iii).


                                       16
<PAGE>

      (c) No Release. No Disposition of Membership Interest shall effect a
release of the Disposing Member from any liabilities to the Company or the other
Members arising from events occurring prior to the Disposition.

                                   ARTICLE V.
                              CAPITAL CONTRIBUTIONS

      SECTION 5.01 INITIAL CAPITAL CONTRIBUTIONS.

      At the time of the formation of the Company or contemporaneously with the
adoption by the Members of this Agreement, as appropriate, each Member shall be
deemed to have made Capital Contributions as set forth next to the Member's name
on Exhibit A.

      SECTION 5.02 LOANS.

      If the Company does not have sufficient cash to pay its obligations, any
Member(s) that may agree to do so with the consent of the Board may advance all
or part of the needed funds to or on behalf of the Company. An advance described
in this Section 5.02 constitutes a loan from the Member to the Company, bears
interest at a rate determined by the Board from the date of the advance until
the date of payment, and is not a Capital Contribution.

      SECTION 5.03 RETURN OF CONTRIBUTIONS.

      Except as expressly provided herein, no Member is entitled to the return
of any part of its Capital Contributions or to be paid interest in respect of
either its Capital Account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Member. A Member is not
required to contribute or to lend any cash or property to the Company to enable
the Company to return any Member's Capital Contributions.

      SECTION 5.04 CAPITAL ACCOUNTS.

      An individual Capital Account shall be established and maintained for each
Member. A Member that has more than one class or series of Membership Interest
shall have a single Capital Account that reflects all such class, classes or
series of Membership Interests, regardless of the classes or series of
Membership Interests owned by such Member and regardless of the time or manner
in which such Membership Interests were acquired. Upon the Disposition of all or
a portion of a Membership Interest, the Capital Account of the Disposing Member
that is attributable to such Membership Interest shall carry over to the
Assignee in accordance with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(l).


                                       17
<PAGE>

                                  ARTICLE VI.
                          DISTRIBUTIONS AND ALLOCATIONS

      SECTION 6.01 DISTRIBUTIONS.

      Except as otherwise provided in Section 6.02 and Section 6.05,
distributions to the Members shall be made only to all Members simultaneously in
proportion to their respective Sharing Ratios (at the time the amounts of such
distributions are determined) and in such aggregate amounts and at such times as
shall be determined by the Board; provided, however, any loans from Members
pursuant to Section 5.02 shall be repaid prior to any distributions to Members
pursuant to this Section 6.01.

      SECTION 6.02 DISTRIBUTIONS ON DISSOLUTION AND WINDING UP.

      Upon the dissolution and winding up of the Company, after adjusting the
Capital Accounts for all distributions made under Section 6.01 and all
allocations under Article VI, all available proceeds distributable to the
Members as determined under Section 12.02 shall be distributed to all of the
Members in amounts equal to the Members' positive Capital Account balances.

      SECTION 6.03 ALLOCATIONS.

      Subject to the allocation rules of Section 6.03(c), (d) and (e) hereof,
Profits and Losses of the Company for any fiscal year shall be allocated as
follows:

      (a) Profits for any fiscal year shall be allocated in the following order
of priority:

            (i) First, to all Members, in proportion to the deficit balances (if
      any) in their Capital Accounts, in an amount necessary to eliminate any
      deficits in the Members' Capital Accounts and restore such Capital
      Accounts balances to zero;

            (ii) Second, to the Members until each Member has been allocated an
      amount equal to the amount distributed to such Member pursuant to Section
      6.01 in the current and in all previous fiscal years in excess of amounts
      previously allocated to such Members pursuant to this Section 6.03(a)(ii);

            (iii) Third, to the Members, to the greatest extent possible, an
      amount required to cause the positive Capital Account balances of each of
      the Members to be in the same proportion as the Member's respective
      Sharing Ratios; and


                                       18
<PAGE>

            (iv) Thereafter, to the Members in proportion their respective
      Sharing Ratios.

      (b) Losses for any fiscal year shall be allocated in the following order
of priority:

            (i) First, to the Members, to the greatest extent possible, an
      amount required to cause the positive Capital Account balances of each of
      the Members to be in the same proportion as the Member's respective
      Sharing Ratios

            (ii) Next, to the Members in proportion to their respective Sharing
      Ratios until the Capital Account balances of such Members have been
      reduced to zero;

            (iii) Next, to any Member that has a positive Capital Account
      balance until the Capital Account balances of all of the Members have been
      reduced to zero; and

            (iv) Thereafter, to the Members in proportion to their respective
      Sharing Ratios.

      (c) Notwithstanding the allocation provisions of Section 6.03(a) and (b),
if the allocation of Profits or Losses to a Member pursuant to Sections 6.03(a)
and (b) in the current fiscal year would cause a Member to have a positive
Capital Account balance that is greater than or less than the amount that has
been distributed to such Member in the current fiscal year pursuant to Section
6.01, then the allocations of Profits and Losses in the current fiscal year
shall be adjusted, to the greatest extent possible, to cause the positive
Capital Account balances of each Member to equal the amount of distributions
made to such Member in the current fiscal year. In addition, in the event of the
dissolution of the Company pursuant to Section 12.01 hereof, if the allocation
of Profits or Losses to a Member pursuant to Sections 6.03(a) and (b) would
cause a Member to have a Capital Account balance in an amount that is greater
than or less than the Member's Target Capital Account Amount, then the
allocations of Profits and Losses shall be adjusted, to the greatest extent
possible, to cause the positive Capital Account balances of each Member to equal
such an amount.

      (d) The following special allocations shall be made in the following
order:

            (i) Qualified Income Offset. In the event any Member unexpectedly
      receives any adjustments, allocations, or distributions described in
      Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
      1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Company
      income and gain shall be specially allocated to each such Member in an
      amount and manner sufficient to restore, to the extent required by the
      Treasury Regulations, the Member's Adjusted Capital Account Deficit of
      such Member as quickly as possible, provided that an allocation pursuant
      to this Section 6.03(d)(i) shall be made only if and to the extent that
      such Member would have an Adjusted Capital Account


                                       19
<PAGE>

      Deficit after all other allocations provided for in this Article VI have
      been tentatively made as if this Section 6.03(d)(i) was not in the
      Agreement.

            (ii) Gross Income Allocation. In the event any Member has a deficit
      Capital Account at the end of any Company fiscal year which is in excess
      of the sum of (x) the amount such Member is obligated to restore pursuant
      to any provision of this Agreement and (y) the amount such Member is
      deemed to be obligated to restore pursuant to the penultimate sentence of
      Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
      Member shall be specially allocated items of Company income and gain in
      the amount of such excess as quickly as possible, provided that an
      allocation pursuant to this Section 6.03(d)(ii) shall be made only if and
      to the extent that such Member would have a deficit Capital Account
      balance in excess of such sum after all other allocations provided for in
      this Article VI have been made as if Section 6.03(d)(i) hereof and this
      Section 6.03(d)(ii) were not in the Agreement.

            (iii) Section 754 Adjustments. To the extent an adjustment of the
      adjusted tax basis of any Company asset pursuant to Section 734(b) of the
      Code or Section 743(b) of the Code is required, pursuant to Treasury
      Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
      determining Capital Accounts, the amount of such adjustment to the Capital
      Accounts shall be treated as an item of gain (if the adjustment increases
      the basis of the asset) or loss (if the adjustment decreases such basis)
      and such gain or loss shall be specially allocated to the Members in a
      manner consistent with the manner in which their Capital Accounts are
      required to be adjusted pursuant to such section of the Treasury
      Regulations.

      (e) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the
definition of same under this Agreement). In the event the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraph (ii) of the definition of
Gross Asset Value hereof, subsequent allocations of income, gain, loss, and
deduction with respect to such asset shall take account of any variation between
the adjusted basis of such asset for federal income tax purposes and its Gross
Asset Value in the same manner as under Section 704(c) of the Code and the
Treasury Regulations thereunder. Any elections or other decisions relating to
such allocations shall be made by the Tax Matters Officer in any manner that
reasonably reflects the purpose and intention of this Agreement, provided that,
the Company shall use the remedial allocation method set forth in Treasury
Regulation Section 1.704-3(d). Allocations pursuant to this Section 6.03(e) are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.

      SECTION 6.04 VARYING INTERESTS.


                                       20
<PAGE>

      All items of income, gain, loss, deduction or credit shall be allocated,
and all distributions shall be made, to the Persons shown on the records of the
Company to have been Members as of the last calendar day of the period for which
the allocation or distribution is to be made. Notwithstanding the foregoing, if
during any taxable year there is a change in any Member's Sharing Ratio, the
Members agree that their allocable shares of such items for the taxable year
shall be determined on any method determined by the Board to be permissible
under Code Section 706 and the related Treasury Regulations to take account of
the Members' varying Sharing Ratios.

      SECTION 6.05 TAX DISTRIBUTIONS.

            To the extent the Board, in good faith, determines the Company has
sufficient funds, the Company shall make distributions on quarterly basis after
the end of each fiscal quarter of the Company, beginning with the second quarter
for the fiscal year ending December 31, 2000, to each Member in an amount equal
to (i) the total amount of taxable income allocated to such Member for such
fiscal year which exceeds the aggregate allocation of Losses pursuant to
Sections 6.03(b) and (c) for the succeeding fiscal years multiplied by (ii) a
tax rate reasonably selected by the Board; provided, however, that subsequent
distributions to the Members made during such fiscal year and subsequent fiscal
years shall be adjusted as necessary to ensure that, over the entire term of the
Company, the aggregate cash distributed to a Member shall be equal to the amount
to which such Member would have been entitled had there been no distributions
made pursuant to this Section 6.05.

      SECTION 6.06 WITHHELD TAXES.

      All amounts withheld pursuant to the Code or any provision of any state or
local tax law with respect to any payment, distribution or allocation to the
Company or the Members shall be treated as amounts distributed to the Members
pursuant to this Article VI for all purposes of this Agreement. The Board is
authorized to withhold from distributions, or with respect to allocations, to
the Members and to pay over to any federal, state or local government any
amounts required to be so withheld pursuant to the Code or any provision of any
other federal, state or local law and shall allocate such amounts to those
Members with respect to which such amounts were withheld.

      SECTION 6.07 LIMITATIONS ON DISTRIBUTIONS.

      Notwithstanding any provision to the contrary contained in this Agreement,
the Company shall not make a distribution to any Member on account of its
interest in the Company if such distribution would violate Section 18-607 of the
Act or other applicable law.


                                       21
<PAGE>

                                  ARTICLE VII.
                                   MANAGEMENT

      SECTION 7.01 MANAGEMENT BY BOARD OF DIRECTORS AND EXECUTIVE OFFICERS.

      The business and affairs of the Company shall be fully vested in, and
managed by, a Board of Directors (the "Board"), subject to the executive
officers elected pursuant to Article VIII hereof. The Directors and executive
officers shall collectively constitute "managers" of the Company within the
meaning of the Act. Except as otherwise specifically provided in this Agreement,
the authority and functions of the Board, on the one hand, and the executive
officers, on the other hand, shall be identical to the authority and functions
of the board of directors and officers, respectively, of a corporation organized
under the General Corporate Law of the State of Delaware. The executive officers
shall be vested with such powers and duties as are set forth in Article VIII
hereof and as are specified by the Board. Accordingly, except as otherwise
specifically provided in this Agreement, the business and affairs of the Company
shall be managed under the direction of the Board, and the day-to-day activities
of the Company shall be conducted on the Company's behalf by the executive
officers who shall be agents of the Company.

      In addition to the powers and authorities expressly conferred on the Board
by this Agreement, the Board may exercise all such powers of the Company and do
all such acts and things as are not restricted by the Act or Applicable Law.

      SECTION 7.02 NUMBER; QUALIFICATION; TENURE.

      The number of directors constituting the Board shall be seven (each a
"Director" and collectively, the "Directors"), unless otherwise fixed from time
to time pursuant to a resolution adopted by a majority of the Directors. A
Director need not be a Member. The Directors shall be elected or approved by the
Members at an annual meeting of the Members and shall serve as Directors of the
Company until their death or removal from office or until their successors are
elected and qualified.

      The initial Directors of the Company shall be Keith E. Bailey, Steven J.
Malcolm, Philip D. Wright, and Don R. Wellendorf. The Members will appoint three
additional Directors within 90 days of the date of this Agreement.

      SECTION 7.03 REGULAR MEETINGS.

      The Board shall meet at least quarterly, and a regular meeting of the
Board shall be held without notice other than this Section 7.03 immediately
after, and at the same place as, the


                                       22
<PAGE>

annual meeting of Members. The Board may, by resolution, provide the time and
place for the holding of additional regular meetings without other notice than
such resolution.

      SECTION 7.04 SPECIAL MEETINGS.

      A special meeting of the Board may be called at any time at the request of
(a) the Chairman of the Board or (b) any four Directors.

      SECTION 7.05 NOTICE.

      Written notice of all regular meetings of the Board must be given to all
Directors at least 10 Days prior to the regular meeting of the Board and two
Business Days prior to any special meeting of the Board. All notices and other
communications to be given to Directors shall be sufficiently given for all
purposes hereunder if in writing and delivered by hand, courier or overnight
delivery service or three days after being mailed by certified or registered
mail, return receipt requested, with appropriate postage prepaid, or when
received in the form of a telegram or facsimile, and shall be directed to the
address or facsimile number as such Director shall designate by notice to the
Company. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board need be specified in the notice of such
meeting, except for amendments to this Agreement, as provided herein. A meeting
may be held at any time without notice if all the Directors are present or if
those not present waive notice of the meeting either before or after such
meeting.

      SECTION 7.06 ACTION BY CONSENT OF BOARD.

      Except as otherwise required by Applicable Law, all decisions of the Board
shall require the affirmative vote of a majority of the Directors present at a
meeting at which a quorum, as described in Section 7.08, is present. To the
extent permitted by Applicable Law, the Board may act without a meeting so long
as all Directors shall have executed a written consent with respect to any Board
action taken in lieu of a meeting.

      SECTION 7.07 CONFERENCE TELEPHONE MEETINGS.

      Directors or members of any committee of the Board may participate in a
meeting of the Board or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.


                                       23
<PAGE>

      SECTION 7.08 QUORUM.

      A majority of Directors, present in person or participating in accordance
with Section 7.07, shall constitute a quorum for the transaction of business,
but if at any meeting of the Board there shall be less than a quorum present, a
majority of the Directors present may adjourn the meeting from time to time
without further notice. Any act of the majority of the Directors present at a
meeting at which a quorum is present shall be the act of the Board. The
Directors present at a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal of enough Directors to leave
less than a quorum.

      SECTION 7.09 VACANCIES; INCREASES IN THE NUMBER OF DIRECTORS.

      Unless otherwise provided in this Agreement, vacancies and newly created
directorships resulting from any increase in the authorized number of Directors
may be filled by a majority of the Directors then in office, although less than
a quorum, or a sole remaining Director; and any Director so chosen shall hold
office until the next annual election and until his successor shall be duly
elected and shall qualify, unless sooner displaced.

      SECTION 7.10 COMMITTEES.

      (a) The Board may establish committees of the Board and may delegate
certain of its responsibilities to such committees.

      (b) The Board shall have an audit committee comprised of three Directors,
all of whom shall be Independent Directors. Such audit committee shall establish
a written audit committee charter in accordance with the rules of the New York
Stock Exchange, Inc. (the "NYSE"), as amended from time to time. "Independent
Director" shall mean Directors meeting the independence and experience
requirements as set forth most recently by the NYSE.

      (c) The Board shall have a conflicts committee comprised of three or more
Directors, all of whom shall be Independent Directors (the "Conflicts
Committee"). Any matter approved by the Conflicts Committee in the manner
provided for in the Partnership Agreement shall be conclusively deemed to be
fair and reasonable to the Partnership, and not a breach by the Company of any
fiduciary or other duties owed to the Partnership by the Company.

            (i) Special Approval of the Conflicts Committee shall be required
      for the acquisition of any assets or business (including any equity
      interest in an entity) by the Partnership or any of its subsidiaries from
      the Company or any member of the Williams Group if the purchase price of
      such assets or business will exceed 5% of the gross (undepreciated) book
      value of property, plant and equipment as reflected on the


                                       24
<PAGE>

      Partnership's consolidated balance sheet as of the end of the calendar
      three-month or annual period next preceding the date of any such
      acquisition.

            (ii) Special Approval of the Conflicts Committee shall be required
      for any action to cause the Company to (1) make or consent to a general
      assignment for the benefit of the Company's creditors; (2) file or consent
      to the filing of any bankruptcy, insolvency or reorganization petition for
      relief under the United States Bankruptcy Code naming the Company as
      debtor or otherwise institute bankruptcy or insolvency proceedings by or
      against the Company or otherwise seek, with respect to the Company, relief
      from debts or protection from creditors generally; (3) file or consent to
      the filing of a petition or answer seeking for the Company a liquidation,
      dissolution, arrangement or similar relief under any law; (4) file an
      answer or other pleading admitting or failing to contest the material
      allegations of a petition filed against the Company in a proceeding of the
      type described in clauses (1) - (3) of this Section 7.10(d); (5) seek,
      consent to or acquiesce in the appointment of a receiver, liquidator,
      conservator, assignee, trustee, sequestrator, custodian or any similar
      official for the Company or for all or any substantial portion of its
      properties; or (6) dissolve, liquidate, consolidate, merge, or sell all or
      substantially all of its assets. In acting or otherwise voting on the
      matters referred to in this Section 4.1(m), to the fullest extent
      permitted by law, including Section 18-1101(c) of the Act, as amended from
      time to time, the Directors constituting the Conflicts Committee shall
      consider only the interest of the General Partner including its respective
      creditors.

      (d) Special Approval of the Conflicts Committee shall be required for any
amendment to Section 7.10(c), or this subsection (d), to the definition of
"Independent Director" in Section 7.10(b), and to Section 2.08.

      (e) The Board shall have a compensation committee comprised of the
Directors serving on the Conflicts Committee (the "Compensation Committee"). The
Compensation Committee shall be charged with setting compensation for officers
of the Company and the Partnership, as well as administering any Incentive Plans
put in place by the Company.

      (f) A majority of any committee may determine its action and fix the time
and place of its meetings unless the Board shall otherwise provide. Notice of
such meetings shall be given to each member of the committee in the manner
provided for in Section 7.05. The Board shall have power at any time to fill
vacancies in, to change the membership of, or to dissolve any such committee.
Nothing herein shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not Directors;
provided, however, that no such committee shall have or may exercise any
authority of the Board.

      SECTION 7.11 REMOVAL.


                                       25
<PAGE>

      Any Director or the entire Board may be removed, with or without cause, by
the holders of a Majority Interest then entitled to vote at an election of
Directors.

                                 ARTICLE VIII.
                                    OFFICERS

      SECTION 8.01 ELECTED OFFICERS.

      The executive officers of the Company shall serve at the pleasure of, the
Board. Such officers shall have the authority and duties delegated to each of
them, respectively, by the Board from time to time. The elected officers of the
Company shall be a Chairman of the Board, a President, a Secretary, a Treasurer,
and such other officers (including, without limitation, Executive Vice
Presidents, Senior Vice Presidents and Vice Presidents) as the Board from time
to time may deem proper. The Chairman of the Board shall be chosen from among
the Directors. All officers elected by the Board shall each have such powers and
duties as generally pertain to their respective offices, subject to the specific
provisions of this Article VIII. The Board or any committee thereof may from
time to time elect, such other officers (including one or more Vice Presidents,
Controllers, Assistant Secretaries and Assistant Treasurers), as may be
necessary or desirable for the conduct of the business of the Company. Such
other officers and agents shall have such duties and shall hold their offices
for such terms as shall be provided in this Agreement or as may be prescribed by
the Board or such committee, as the case may be.

      SECTION 8.02 ELECTION AND TERM OF OFFICE.

      The names and titles of the initial officers of the Company are set forth
on Exhibit B hereto. Thereafter, the officers of the Company shall be elected
annually by the Board at the regular meeting of the Board held after the annual
meeting of the Members. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as convenient. Each
officer shall hold office until such person's successor shall have been duly
elected and shall have qualified or until such person's death or until he shall
resign or be removed pursuant to Section 8.08.

      SECTION 8.03 CHAIRMAN OF THE BOARD; CHIEF EXECUTIVE OFFICER.

      The Chairman of the Board shall preside at all meetings of the Members and
of the Board and shall be the Chief Executive Officer of the Company. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Company and shall perform all duties incidental to such person's
office which may be required by law and all such other duties as are properly
required of him by the Board. He shall make reports to the Board and the Members
and shall see that all orders and resolutions of the Board and of any committee
thereof


                                       26
<PAGE>

are carried into effect. The Directors also may elect a Vice-Chairman to act in
the place of the Chairman upon his or her absence or inability to act.

      SECTION 8.04 PRESIDENT; CHIEF OPERATING OFFICER.

      The President shall act as the Chief Operating Officer of the Company and
shall assist the Chairman of the Board in the administration and operation of
the Company's business and general supervision of its policies and affairs. The
President, if he is also a director, shall, in the absence of or because of the
inability to act of the Chairman of the Board, perform all duties of the
Chairman of the Board and preside at all meetings of Members and of the Board.

      SECTION 8.05 VICE PRESIDENTS.

      Each Executive Vice President and Senior Vice President and any Vice
President shall have such powers and shall perform such duties as shall be
assigned to him by the Board.

      SECTION 8.06 TREASURER.

      (a) The Treasurer shall exercise general supervision over the receipt,
custody and disbursement of corporate funds. The Treasurer shall cause the funds
of the Company to be deposited in such banks as may be authorized by the Board,
or in such banks as may be designated as depositories in the manner provided by
resolution of the Board. The Treasurer shall, in general, perform all duties
incident to the office of the Treasurer and shall have such further powers and
duties and shall be subject to such directions as may be granted or imposed from
time to time by the Board.

      (b) Assistant Treasurers shall have such of the authority and perform such
of the duties of the Treasurer as may be provided in this Agreement or assigned
to them by the Board or the Treasurer. Assistant Treasurers shall assist the
Treasurer in the performance of the duties assigned to the Treasurer, and in
assisting the Treasurer, each Assistant Treasurer shall for such purpose have
the powers of the Treasurer. During the Treasurer's absence or inability, the
Secretary's authority and duties shall be possessed by such Assistant Treasurer
or Assistant Treasurers as the Board may designate.


                                       27
<PAGE>

      SECTION 8.07 SECRETARY.

      (a) The Secretary shall keep or cause to be kept, in one or more books
provided for that purpose, the minutes of all meetings of the Board, the
committees of the Board and the Members. The Secretary shall see that all
notices are duly given in accordance with the provisions of this Agreement and
as required by law; shall be custodian of the records and the seal of the
Company and affix and attest the seal to all documents to be executed on behalf
of the Company under its seal; and shall see that the books, reports,
statements, certificates and other documents and records required by law to be
kept and filed are properly kept and filed; and in general, shall perform all
the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to the Secretary by the Board.

      (b) Assistant Secretaries shall have such of the authority and perform
such of the duties of the Secretary as may be provided in this Agreement or
assigned to them by the Board or the Secretary. Assistant Secretaries shall
assist the Secretary in the performance of the duties assigned to the Secretary,
and in assisting the Secretary, each Assistant Secretary shall for such purpose
have the powers of the Secretary. During the Secretary's absence or inability,
the Secretary's authority and duties shall be possessed by such Assistant
Secretary or Assistant Secretaries as the Board may designate.

      SECTION 8.08 REMOVAL.

      Any officer elected, or agent appointed, by the Board may be removed by
the affirmative vote of a majority of the Board whenever, in their judgment, the
best interests of the Company would be served thereby. No elected officer shall
have any contractual rights against the Company for compensation by virtue of
such election beyond the date of the election of such person's successor, such
person's death, such person's resignation or such person's removal, whichever
event shall first occur, except as otherwise provided in an employment contract
or under an employee deferred compensation plan.

      SECTION 8.09 VACANCIES.

      A newly created elected office and a vacancy in any elected office because
of death, resignation or removal may be filled by the Board for the unexpired
portion of the term at any meeting of the Board.

                                  ARTICLE IX.
                          INDEMNIFICATION OF DIRECTORS,
                         OFFICERS, EMPLOYEES AND AGENTS

      SECTION 9.01 INDEMNIFICATION.


                                       28
<PAGE>

      (a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Company from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an Indemnitee; provided, that in each case the Indemnitee acted in
good faith and in a manner that such Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Company and, with respect to any
criminal proceeding, had no reasonable cause to believe its conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Indemnitee acted in a manner contrary to
that specified above. Any indemnification pursuant to this Section 9.01 shall be
made only out of the assets of the Company.

      (b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
9.01(a) in defending any claim, demand, action; suit or proceeding shall, from
time to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of any
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 9.01.

      (c) The indemnification provided by this Section 9.01 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
as a matter of law or otherwise, both as to actions in the Indemnitee's capacity
as an Indemnitee and as to actions in any other capacity, and shall continue as
to an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.

      (d) The Company may purchase and maintain insurance on behalf of the
Company, its Affiliates and such other Persons as the Company shall determine,
against any liability that may be asserted against or expense that may be
incurred by such Person in connection with the Company's activities or such
Person's activities on behalf of the Company, regardless of whether the Company
would have the power to indemnify such Person against such liability under the
provisions of this Agreement.

      (e) For purposes of this Section 9.01, the Company shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Company also imposes duties
on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 9.01(a); and action taken or omitted by the
Indemnitee with respect to any employee benefit plan in the performance of its
duties for a purpose


                                       29
<PAGE>

reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Company.

      (f) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 9.01 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

      (g) The provisions of this Section 9.01 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

      (h) No amendment, modification or repeal of this Section 9.01 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Company, nor the
obligations of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 9.01 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

      SECTION 9.02 LIABILITY OF INDEMNITEES.

      (a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Company or any other
Persons who have acquired membership interests in the Company, for losses
sustained or liabilities incurred as a result of any act or omission if such
Indemnitee acted in good faith.

      (b) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Company,
such Indemnitee acting in connection with the Company's business or affairs
shall not be liable to the Company or to any Member for its good faith reliance
on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict or otherwise modify the duties and liabilities of an
Indemnitee otherwise existing at law or in equity, are agreed by the Members to
replace such other duties and liabilities of such Indemnitee.

      (c) Any amendment, modification or repeal of this Section 9.02 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Company, and the Company's directors,
officers and employees under this Section 9.02 as in effect immediately prior to
such amendment, modification or repeal with respect to claims


                                       30
<PAGE>

arising from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims may arise
or be asserted.

                                   ARTICLE X.
                                      TAXES

      SECTION 10.01 TAX RETURNS.

      The Tax Matters Officer (as defined below) of the Company shall prepare
and timely file (on behalf of the Company) all federal, state and local tax
returns required to be filed by the Company. Each Member shall furnish to the
Company all pertinent information in its possession relating to the Company's
operations that is necessary to enable the Company's tax returns to be timely
prepared and filed. The Company shall bear the costs of the preparation and
filing of its returns.

      SECTION 10.02 TAX ELECTIONS.

      (a) The Company shall make the following elections on the appropriate tax
returns:

            (i) to adopt as the Company's fiscal year the calendar year;

            (ii) to adopt the accrual method of accounting;

            (iii) if a distribution of the Company's property as described in
      Section 734 of the Code occurs or upon a transfer of Membership Interest
      as described in Section 743 of the Code occurs, on request by notice from
      any Member, to elect, pursuant to Section 754 of the Code, to adjust the
      basis of the Company's properties;

            (iv) to elect to amortize the organizational expenses of the Company
      ratably over a period of 60 months as permitted by Section 709(b) of the
      Code; and

            (v) any other election the Board may deem appropriate.

      (b) Neither the Company nor any Member shall make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law and no provision of this Agreement (including Section 2.07) shall be
construed to sanction or approve such an election.


                                       31
<PAGE>

      SECTION 10.03 TAX MATTERS OFFICER.

      (a) The Board shall select the President or the Chief Financial Officer
(or, if there are no officers serving under such titles, such other officer in a
comparable position), of the Company to act as the "tax matters partner" of the
Company pursuant to Section 6231(a)(7) of the Code (the "Tax Matters Officer").
The Tax Matters Officer shall take such action as may be necessary to cause to
the extent possible each Member to become a "notice partner" within the meaning
of Section 6223 of the Code. The Tax Matters Officer shall inform each Member of
all significant matters that may come to its attention in its capacity as Tax
Matters Officer by giving notice thereof on or before the fifth Business Day
after becoming aware thereof and, within that time, shall forward to each Member
copies of all significant written communications it may receive in that
capacity.

      (b) The Tax Matters Officer shall take no action without the authorization
of the Board, other than such action as may be required by Applicable Law. Any
cost or expense incurred by the Tax Matters Officer in connection with its
duties, including the preparation for or pursuance of administrative or judicial
proceedings, shall be paid by the Company.

      (c) The Tax Matters Officer shall not enter into any extension of the
period of limitations for making assessments on behalf of the Members without
first obtaining the consent of the Board. The Tax Matters Officer shall not bind
any Member to a settlement agreement without obtaining the consent of such
Member. Any Member that enters into a settlement agreement with respect to any
Company item (as described in Section 6231(a)(3) of the Code) shall notify the
other Members of such settlement agreement and its terms within 90 Days from the
date of the settlement.

      (d) No Member shall file a request pursuant to Section 6227 of the Code
for an administrative adjustment of Company items for any taxable year without
first notifying the other Members. If the Board consents to the requested
adjustment, the Tax Matters Officer shall file the request for the
administrative adjustment on behalf of the Members. If such consent is not
obtained within 30 Days from such notice, or within the period required to
timely file the request for administrative adjustment, if shorter, any Member
may file a request for administrative adjustment on its own behalf. Any Member
intending to file a petition under Sections 6226, 6228 or other Section of the
Code with respect to any item involving the Company shall notify the other
Members of such intention and the nature of the contemplated proceeding. In the
case where the Tax Matters Officer is intending to file such petition on behalf
of the Company, such notice shall be given within a reasonable period of time to
allow the Members to participate in the choosing of the forum in which such
petition will be filed.

      (e) If any Member intends to file a notice of inconsistent treatment under
Section 6222(b) of the Code, such Member shall give reasonable notice under the
circumstances to the other Members of such intent and the manner in which the
Member's intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Members.


                                       32
<PAGE>

                                  ARTICLE XI.
                   BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

      SECTION 11.01 MAINTENANCE OF BOOKS.

      (a) The Board shall cause to be kept a record containing the minutes of
the proceedings of the meetings of the Board and of the Members, appropriate
registers and such books of records and accounts as may be necessary for the
proper conduct of the business of the Company.

      (b) The books of account of the Company shall be (i) maintained on the
basis of a fiscal year that is the calendar year, (ii) maintained on an accrual
basis in accordance with GAAP, consistently applied and (iii) audited by the
Certified Public Accountants at the end of each calendar year.

      SECTION 11.02 REPORTS.

      With respect to each calendar year, the Board shall prepare, or cause to
be prepared, and deliver, or cause to be delivered, to each Member:

      (a) Within 120 Days after the end of such calendar year, a profit and loss
statement and a statement of cash flows for such year, a balance sheet and a
statement of each Member's Capital Account as of the end of such year, together
with a report thereon of the Certified Public Accountants; and

      (b) Such federal, state and local income tax returns and such other
accounting, tax information and schedules as shall be necessary for the
preparation by each Member on or before June 15 following the end of each
calendar year of its income tax return with respect to such year.

      SECTION 11.03 BANK ACCOUNTS.

      Funds of the Company shall be deposited in such banks or other
depositories as shall be designated from time to time by the Board. All
withdrawals from any such depository shall be made only as authorized by the
Board and shall be made only by check, wire transfer, debit memorandum or other
written instruction.


                                       33
<PAGE>

                                  ARTICLE XII.
               DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION

      SECTION 12.01 DISSOLUTION.

      (a) The Company shall dissolve and its affairs shall be wound up on the
first to occur of the following events (each a "Dissolution Event"):

            (i) the unanimous consent of the Members; or

            (ii) entry of a decree of judicial dissolution of the Company under
      Section 18-802 of the Act.

      (b) No other event shall cause a dissolution of the Company.

      SECTION 12.02 WINDING-UP AND TERMINATION.

      (a) On the occurrence of a Dissolution Event of the type described in
Section 12.01(a)(i) or Section 12.01(a)(ii), the Board shall act as liquidator.
The liquidator shall proceed diligently to wind up the affairs of the Company
and make final distributions as provided herein and in the Act. The costs of
winding up shall be borne as a Company expense. Until final distribution, the
liquidator shall continue to operate the Company properties with all of the
power and authority of the Members. The steps to be accomplished by the
liquidator are as follows:

            (i) as promptly as possible after dissolution and again after final
      winding up, the liquidator shall cause a proper accounting to be made by a
      recognized firm of certified public accountants of the Company's assets,
      liabilities, and operations through the last Day of the month in which the
      dissolution occurs or the final winding up is completed, as applicable;

            (ii) the liquidator shall discharge from Company funds all of the
      debts, liabilities and obligations of the Company (including all expenses
      incurred in winding up or otherwise make adequate provision for payment
      and discharge thereof (including the establishment of a cash escrow fund
      for contingent liabilities in such amount and for such term as the
      liquidator may reasonably determine); and

            (iii) all remaining assets of the Company shall be distributed to
      the Members as follows:


                                       34
<PAGE>

      (A) the liquidator may sell any or all Company property, including to
Members, and any resulting gain or loss from each sale shall be computed and
allocated to the Capital Accounts of the Members in accordance with the
provisions of Article VI;

      (B) with respect to all Company property that has not been sold, the fair
market value of that property shall be determined and the Capital Accounts of
the Members shall be adjusted to reflect the manner in which the unrealized
income, gain, loss, and deduction inherent in property that has not been
reflected in the Capital Accounts previously would be allocated among the
Members if there were a taxable disposition of that property for the fair market
value of that property on the date of distribution; and

      (C) Company property (including cash) shall be distributed among the
Members in accordance with Section 6.02; and those distributions shall be made
by the end of the taxable year of the Company during which the liquidation of
the Company occurs (or, if later, 90 Days after the date of the liquidation).

      (b) The distribution of cash or property to a Member in accordance with
the provisions of this Section 12.02 constitutes a complete return to the Member
of its Capital Contributions and a complete distribution to the Member of its
Membership Interest and all the Company's property and constitutes a compromise
to which all Members have consented pursuant to Section 18-502(b) of the Act. To
the extent that a Member returns funds to the Company, it has no claim against
any other Member for those funds.

      SECTION 12.03 DEFICIT CAPITAL ACCOUNTS.

      No Member will be required to pay to the Company, to any other Member or
to any third party any deficit balance that may exist from time to time in the
Member's Capital Account.

      SECTION 12.04 CERTIFICATE OF CANCELLATION.

      On completion of the distribution of Company assets as provided herein,
the Members (or such other Person or Persons as the Act may require or permit)
shall file a certificate of cancellation with the Secretary of State of
Delaware, cancel any other filings made pursuant to Section 2.05, and take such
other actions as may be necessary to terminate the existence of the Company.
Upon the filing of such certificate of cancellation, the existence of the
Company shall terminate (and the Term shall end), except as may be otherwise
provided by the Act or by Applicable Law.


                                       35
<PAGE>

                                 ARTICLE XIII.
                               GENERAL PROVISIONS

      SECTION 13.01 OFFSET.

      Whenever the Company is to pay any sum to any Member, any amounts that
Member owes the Company may be deducted from that sum before payment.

      SECTION 13.02 NOTICES.

      All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given upon delivery of such notice:

        TO THE COMPANY:

        Williams GP LLC
        One Williams Center
        Tulsa, Oklahoma  74172
        Attn:  Craig Rich, General Counsel
        Telephone:    (918) 573-3090
        Fax:          (918) 573-8024

        TO WILLIAMS ENERGY SERVICES:

        Williams Energy Services
        One Williams Center
        Tulsa, Oklahoma  74172
        Attn:  Rebecca Hilborne, General Counsel
        Telephone:    (918) 573-3015
        Fax:          (918) 573-3005


                                       36
<PAGE>

        TO WILLIAMS NATURAL GAS LIQUIDS, INC.

        Williams Energy Services
        One Williams Center
        Tulsa, Oklahoma  74172
        Attn:  President
        Telephone:    (918) 573-2000
        Fax:          (918) 573-3005

      SECTION 13.03 ENTIRE AGREEMENT; SUPERSEDING EFFECT.

      This Agreement constitutes the entire agreement of the Members and their
Affiliates relating to the Company and the transactions contemplated hereby, and
supersedes all provisions and concepts contained in all prior contracts or
agreements between the Members or any of their Affiliates with respect to the
Company, whether oral or written.

      SECTION 13.04 EFFECT OF WAIVER OR CONSENT.

      Except as otherwise provided in this Agreement, a waiver or consent,
express or implied, to or of any breach or default by any Member in the
performance by that Member of its obligations with respect to the Company is not
a consent or waiver to or of any other breach or default in the performance by
that Member of the same or any other obligations of that Member with respect to
the Company. Except as otherwise provided in this Agreement, failure on the part
of a Member to complain of any act of any Member or to declare any Member in
default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Member of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

      SECTION 13.05 AMENDMENT OR RESTATEMENT.

      This Agreement or the Delaware Certificate may be amended or restated only
by a written instrument executed (or, in the case of the Delaware Certificate,
approved) by the Members.

      SECTION 13.06 BINDING EFFECT.

      Subject to the restrictions on Dispositions set forth in this Agreement,
this Agreement is binding on and shall inure to the benefit of the Members and
their respective successors and permitted assigns.

      SECTION 13.07 GOVERNING LAW; SEVERABILITY.


                                       37
<PAGE>

      THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR
PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT
TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between
the provisions of this Agreement and any mandatory, non-waivable provision of
the Act, such provision of the Act shall control. If any provision of the Act
provides that it may be varied or superseded in a limited liability company
agreement (or otherwise by agreement of the members or managers of a limited
liability company), such provision shall be deemed superseded and waived in its
entirety if this Agreement contains a provision addressing the same issue or
subject matter. If any provision of this Agreement or the application thereof to
any Member or circumstance is held invalid or unenforceable to any extent, (a)
the remainder of this Agreement and the application of that provision to other
Members or circumstances is not affected thereby, and (b) the Members shall
negotiate in good faith to replace that provision with a new provision that is
valid and enforceable and that puts the Members in substantially the same
economic, business and legal position as they would have been in if the original
provision had been valid and enforceable.

      SECTION 13.08 FURTHER ASSURANCES.

      In connection with this Agreement and the transactions contemplated
hereby, each Member shall execute and deliver any additional documents and
instruments and perform any additional acts that may be necessary or appropriate
to effectuate and perform the provisions of this Agreement and those
transactions.

      SECTION 13.09 WAIVER OF CERTAIN RIGHTS.

      Each Member irrevocably waives any right it may have to maintain any
action for dissolution of the Company or for partition of the property of the
Company.

      SECTION 13.10 COUNTERPARTS.

      This Agreement may be executed in any number of counterparts with the same
effect as if all signing parties had signed the same document. All counterparts
shall be construed together and constitute the same instrument.

      SECTION 13.11 JURISDICTION.

      Any and all Claims arising out of, in connection with or in relation to
(i) the interpretation, performance or breach of this Agreement, or (ii) any
relationship before, at the time of entering into, during the term of, or upon
or after expiration or termination of this Agreement, between the parties
hereto, shall be brought in any court of competent jurisdiction in


                                       38
<PAGE>

the State of Delaware. Each party hereto unconditionally and irrevocably
consents to the jurisdiction of any such court over any Claims and waives any
objection that such party may have to the laying of venue of any Claims in any
such court.

      IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date first set forth above.

                                            MEMBERS
                                            WILLIAMS ENERGY SERVICES, LLC

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

                                            WILLIAMS NATURAL GAS LIQUIDS, INC.

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


                                       39
<PAGE>

                                    EXHIBIT A

<TABLE>
<CAPTION>
                                                                          EFFECTIVE CAPITAL
MEMBER                                      MEMBERSHIP INTEREST              CONTRIBUTION
------                                      -------------------              ------------
<S>                                         <C>                           <C>
Williams Energy Services, LLC                     80.8%                      $  4,027,254

Williams Natural Gas Liquids, Inc.                19.2%                           956,970
</TABLE>


                                       1
<PAGE>

                                    EXHIBIT B

Steven J. Malcolm             Chief Executive Officer
Phillip D. Wright             President and Chief Operating Officer
Don R. Wellendorf             Chief Financial Officer and Treasurer
Jay A. Wiese                  Vice President, Terminal Services and Development
Craig R. Rich                 General Counsel and Assistant Secretary
Suzanne H. Costin             Secretary


                                       1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>d01268exv10w5.txt
<DESCRIPTION>SHORT-TERM LOAN EXTENSION AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.5

                       FIRST AMENDMENT TO CREDIT AGREEMENT

      THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is entered
into as of October 8, 2002, among WILLIAMS PIPE LINE COMPANY, LLC, a Delaware
limited liability company and WILLIAMS ENERGY PARTNERS L.P., a Delaware limited
partnership (each a "BORROWER" and collectively, the "BORROWERS"), BANK OF
AMERICA, N.A., as Administrative Agent (the "ADMINISTRATIVE AGENT") for the
Lenders under the Credit Agreement hereinafter referenced, Lehman Brothers Inc.
and Citibank, N.A., as SYNDICATION AGENTS, Merrill Lynch & Co., as DOCUMENTATION
AGENT, and the Lenders (as defined in the Credit Agreement) party hereto.

      Reference is made to the Credit Agreement dated as of April 11, 2002 (the
"CREDIT AGREEMENT") among Borrowers, Administrative Agent, Syndication Agents,
the Documentation Agent, and the Lenders party thereto. Unless otherwise defined
in this Amendment, capitalized terms used herein shall have the meaning set
forth in the Credit Agreement; all Section and Schedule references herein are to
Sections and Schedules in the Credit Agreement; and all Paragraph references
herein are to Paragraphs in this Amendment.

                                    RECITALS

      A. Borrowers have requested that Administrative Agent and Lenders extend
the Stated Maturity Date from October 8, 2002, until November 27, 2002.

      B. Subject to the terms and conditions of this Amendment, the
Administrative Agent and the undersigned Lenders are willing to agree to such
amendments.

      Accordingly, for adequate and sufficient consideration, the parties hereto
agree, as follows:

      PARAGRAPH 1. AMENDMENT.

      (a) The definition of "STATED MATURITY DATE" is amended in its entirety to
read as follows:

            "STATED MATURITY DATE means November 27, 2002."

      PARAGRAPH 2. EFFECTIVE DATE. Notwithstanding any contrary provision, this
Amendment is not effective until the date (the "EFFECTIVE DATE") the
Administrative Agent shall have received (A) counterparts of this Amendment,
executed by Borrowers, and Lenders, (B) counterparts of the fee letter dated as
of October 8, 2002, executed by each Borrower, and receipt of the amendment fee
referenced therein in immediately available funds, and (C) each document and
other items listed on the attached ANNEX A, each of which must be in form and
substance acceptable to Administrative Agent.

      PARAGRAPH 3. ACKNOWLEDGMENT AND RATIFICATION. As a material inducement to
the Administrative Agent and the Lenders to execute and deliver this Amendment,
and each Borrower (a) consents to the agreements in this Amendment and (b)
agrees and acknowledges that the execution, delivery, and performance of this
Amendment shall in no way release, diminish, impair, reduce, or otherwise affect
the respective obligations of any Borrower under the Loan Documents to which it
is a party, which Loan Documents shall remain in full force and effect, and all
guaranties and Rights thereunder are hereby ratified and confirmed.

<PAGE>

      PARAGRAPH 4. REPRESENTATIONS. As a material inducement to the
Administrative Agent and the Lenders to execute and deliver this Amendment, each
Borrower represents and warrants to the Administrative Agent and the Lenders
that as of the Effective Date of this Amendment and as of the date of execution
of this Amendment, (a) all representations and warranties in the Loan Documents
are true and correct in all material respects as though made on the date hereof,
except to the extent that any of them speak to a different specific date, and
(b) no Default or Event of Default exists.

      PARAGRAPH 5. EXPENSES. Borrowers shall be jointly and severally liable to
pay all reasonable costs, fees, and expenses paid or incurred by the
Administrative Agent incident to this Amendment, including, without limitation,
the fees and expenses of the Administrative Agent's counsel in connection with
the negotiation, preparation, delivery, and execution of this Amendment and any
related documents.

      PARAGRAPH 6. MISCELLANEOUS. This Amendment is a "Loan Document" referred
to in the Credit Agreement. The provisions relating to Loan Documents in ARTICLE
X of the Credit Agreement are incorporated in this Amendment by reference.
Unless stated otherwise (a) the singular number includes the plural and vice
versa and words of any gender include each other gender, in each case, as
appropriate, (b) headings and captions may not be construed in interpreting
provisions, (c) this Amendment must be construed, and its performance enforced,
under New York law, (d) if any part of this Amendment is for any reason found to
be unenforceable, all other portions of it nevertheless remain enforceable, and
(e) this Amendment may be executed in any number of counterparts with the same
effect as if all signatories had signed the same document, and all of those
counterparts must be construed together to constitute the same document.

      PARAGRAPH 7. ENTIRE AGREEMENT. THIS AMENDMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THIS AMENDMENT AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

      PARAGRAPH 8. PARTIES. This Amendment binds and inures to the benefit of
Borrowers, Administrative Agent, Syndication Agents, Documentation Agent,
Lenders, and their respective successors and assigns.

      PARAGRAPH 9. FURTHER ASSURANCES. The parties hereto each agree to execute
from time to time such further documents as may be necessary to implement the
terms of this Agreement.

      The parties hereto have executed this Amendment in multiple counterparts
to be effective as of the Effective Date.

                     REMAINDER OF PAGE INTENTIONALLY BLANK.
                           SIGNATURE PAGES TO FOLLOW.


                                       2
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

                             WILLIAMS PIPE LINE COMPANY, LLC

                             By: WILLIAMS ENERGY PARTNERS L.P.,
                                 its Sole Member
                             By: Williams GP LLC,
                                 its General Partner

                                 By:
                                    ------------------------------------------
                                 Name:  Don R. Wellendorf
                                 Title: President and Chief Executive Officer


                             WILLIAMS ENERGY PARTNERS L.P.

                             By: WILLIAMS GP LLC,
                                 its General Partner

                                 By:
                                    ------------------------------------------
                                 Name:  Don R. Wellendorf
                                 Title: President and Chief Executive Officer


                                SIGNATURE PAGE TO
                       FIRST AMENDMENT TO CREDIT AGREEMENT
<PAGE>

                             BANK OF AMERICA, N.A., as Administrative Agent and
                             Lender

                             By:
                                 --------------------------------------
                             Name:    Claire M. Liu
                             Title:   Managing Director


                                SIGNATURE PAGE TO
                       FIRST AMENDMENT TO CREDIT AGREEMENT
<PAGE>

                                    SYNDICATED LOAN FUNDING TRUST

                                    By Lehman Commercial Paper Inc., not in its
                                    individual capacity but solely as Asset
                                    Manager, as a Lender

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


                                SIGNATURE PAGE TO
                       FIRST AMENDMENT TO CREDIT AGREEMENT
<PAGE>

                                    CITIBANK, N.A., as Syndication Agent and as
                                    a Lender

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


                                SIGNATURE PAGE TO
                       FIRST AMENDMENT TO CREDIT AGREEMENT
<PAGE>

                                   MERRILL LYNCH CREDIT CORPORATION, as a Lender

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


                                SIGNATURE PAGE TO
                       FIRST AMENDMENT TO CREDIT AGREEMENT
<PAGE>

                                   JPMORGAN CHASE BANK, as a Lender

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


                                SIGNATURE PAGE TO
                       FIRST AMENDMENT TO CREDIT AGREEMENT
<PAGE>

                                                                         ANNEX A
                                     ANNEX A

                               CLOSING CONDITIONS

          Unless otherwise specified, all documents must be dated as of
                 October 8, 2002 (the "AMENDMENT-CLOSING DATE").

H&B         [1.] FIRST AMENDMENT TO CREDIT AGREEMENT dated as of the
            Amendment-Closing Date, executed and delivered by each of the
            parties set forth therein, accompanied by:

                  Annex A - Closing Conditions

Borrower    [2.] OFFICERS' CERTIFICATE dated as of the Amendment-Closing Date,
            executed by the Manager/Officer and Secretary or an Assistant
            Secretary of the General Partner of Williams GP LLC, certifying
            resolutions adopted by such Borrower, incumbency of certain officers
            of such Borrower, and changes to such Borrower's organizational
            documents, if any, attached to which are:

                  Annex A - Resolutions
                  Annex B - Changes to organizational documents, if any

Borrower    [3.] OFFICERS' CERTIFICATE dated as of the Amendment-Closing Date,
            executed by Manager/Officer and Secretary or an Assistant Secretary
            of the General Partner of the Sole Member of Williams Pipe Line
            Company, LLC, certifying resolutions adopted by such Borrower,
            incumbency of certain officers of such Borrower, and changes to such
            Borrower's organizational documents, if any, attached to which are:

                  Annex A - Resolutions
                  Annex B - Changes to organizational documents, if any

Borrowers   [4.] Payment of all reasonable fees owed by Borrowers to Haynes and
            Boone, LLP.

            [5.] Such other agreements, documents, instruments, and items as
            Lenders may reasonably request.

----------
[ ]   Denotes  items not  furnished or complete at the time this version of this
      Annex  was  prepared  along  with the  names or  initials  of the party or
      counsel responsible for each.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>8
<FILENAME>d01268exv10w6.txt
<DESCRIPTION>PURCHASE AND SALE AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.6

                         WILLIAMS PIPE LINE COMPANY, LLC

                               Up to $540,000,000

         Floating Rate Series A Senior Secured Notes due October 7, 2007
          Fixed Rate Series B Senior Secured Notes due October 7, 2007

                             NOTE PURCHASE AGREEMENT

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         PAGE
<S>                                                                                      <C>
1.  AUTHORIZATION OF NOTES .........................................................        1

2.  SALE AND PURCHASE OF NOTES .....................................................        2

3.  CLOSINGS .......................................................................        2

4.  CONDITIONS TO THE COMMITMENTS AND THE CLOSINGS .................................        4
    4.1  Conditions Precedent to Effectiveness of the Commitments ..................        4
    4.2  Conditions Precedent to the Initial Closing ...............................        5
    4.3  Conditions Precedent to the Subsequent Closing ............................        8

5.  REPRESENTATIONS AND WARRANTIES .................................................       11
    5.1  Financial Condition .......................................................       11
    5.2  No Change .................................................................       12
    5.3  Existence; Compliance with Law ............................................       12
    5.4  Power; Authorization; Enforceable Obligations .............................       13
    5.5  No Legal Bar ..............................................................       13
    5.6  Litigation ................................................................       13
    5.7  No Default ................................................................       14
    5.8  Ownership of Property; Liens ..............................................       14
    5.9  Intellectual Property .....................................................       14
    5.10 Taxes .....................................................................       14
    5.11 Federal Regulations .......................................................       14
    5.12 Labor Matters .............................................................       15
    5.13 ERISA .....................................................................       15
    5.14 Investment Company Act; Other Regulations .................................       16
    5.15 Subsidiaries ..............................................................       16
    5.16 Environmental Matters .....................................................       16
    5.17 Accuracy of Information, etc ..............................................       18
    5.18 Security Documents ........................................................       18
    5.19 Solvency ..................................................................       18
    5.20 Regulation H ..............................................................       19
    5.21 Acquisition Documentation .................................................       19
    5.22 Private Offering by the Company ...........................................       19
    5.23 Foreign Assets Control Regulations, etc ...................................       19
    5.24 Eminent Domain Authority ..................................................       19
    5.25 Tariff Disputes ...........................................................       19
    5.26 Regulatory Matters ........................................................       20
    5.27 Permits ...................................................................       20
    5.28 Existing Indebtedness; Future Liens .......................................       20
    5.29 Fairness Opinions .........................................................       20
</TABLE>


                                       i
<PAGE>

<TABLE>
<S>                                                                                        <C>
6.  REPRESENTATIONS OF THE PURCHASER ...............................................       21
    6.1  Purchase for Investment ...................................................       21
    6.2  Source of Funds ...........................................................       21

7.  REPAYMENT OF THE NOTES .........................................................       23
    7.1  Maturity ..................................................................       23
    7.2  Scheduled Prepayment of the Notes .........................................       23
    7.3  Optional Prepayment of the Notes ..........................................       23
    7.4  Mandatory Prepayments of the Notes ........................................       25
    7.5  Maturity; Surrender, etc. upon Prepayment .................................       25
    7.6  Purchase of Notes .........................................................       26
    7.7  Pro Rata Treatment and Payments ...........................................       26
    7.8  Benefitted Holder .........................................................       26

8.  AFFIRMATIVE COVENANTS ..........................................................       27
    8.1  Financial Statements ......................................................       27
    8.2  Certificates; Other Information ...........................................       28
    8.3  Payment of Obligations ....................................................       29
    8.4  Maintenance of Existence; Compliance ......................................       29
    8.5  Maintenance of Property; Insurance ........................................       30
    8.6  Application of Proceeds from Condemnation/Eminent Domain; Event of Loss ...       33
    8.7  Restoration ...............................................................       34
    8.8  Utility Charges ...........................................................       34
    8.9  Inspection of Property; Books and Records; Discussions ....................       34
    8.10 Notices ...................................................................       34
    8.11 Environmental Laws ........................................................       35
    8.12 Perfection of Certain Security Interests ..................................       36
    8.13 Additional Collateral, etc ................................................       36
    8.14 General Partner Bank Account ..............................................       37
    8.15 Deposits into the Cash Escrow Account .....................................       37
    8.16 Current Report ............................................................       37

9.  NEGATIVE COVENANTS .............................................................       38
    9.1  Financial Condition Covenants .............................................       38
    9.2  Indebtedness ..............................................................       38
    9.3  Liens .....................................................................       39
    9.4  Fundamental Changes .......................................................       40
    9.5  Disposition of Property ...................................................       41
    9.6  Restricted Payments .......................................................       42
    9.7  Investments ...............................................................       42
    9.8  Transactions with Affiliates ..............................................       43
    9.9  Swap Agreements ...........................................................       43
    9.10 Changes in Fiscal Periods .................................................       43
    9.11 Negative Pledge Clauses ...................................................       43
    9.12 Lines of Business .........................................................       44
    9.13 Amendments to Acquisition Documents and Various Agreements ................       44
</TABLE>


                                       ii
<PAGE>

<TABLE>
<S>                                                                                        <C>
    9.14 Clauses Restricting Subsidiary Distributions ..............................       44
    9.15 Sales and Leasebacks ......................................................       44
    9.16 No Subsidiaries ...........................................................       45

10. GUARANTEE ......................................................................       45
    10.1 Scope of Guarantee ........................................................       45
    10.2 Guarantor Consent .........................................................       46
    10.3 Character of Obligations of Guarantor .....................................       46
    10.4 Absolute and Unconditional Obligation .....................................       48
    10.5 Waiver of Subrogation and Contribution ....................................       48
    10.6 Preference ................................................................       48

11. LIMITED PUT RIGHT ..............................................................       48

12. EVENTS OF DEFAULT ..............................................................       49

13. REMEDIES ON DEFAULT, ETC .......................................................       51
    13.1 Acceleration ..............................................................       51
    13.2 Other Remedies ............................................................       52
    13.3 No Waivers or Election of Remedies, Expenses, etc .........................       52
    13.4 No General Partner's Liability ............................................       53

14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES ..................................       53
    14.1 Registration of Notes .....................................................       53
    14.2 Transfer and Exchange of Notes ............................................       53
    14.3 Replacement of Notes ......................................................       54

15. PAYMENTS ON NOTES ..............................................................       54

16. EXPENSES, ETC ..................................................................       55

17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT ...................       56

18. AMENDMENT AND WAIVER ...........................................................       56
    18.1 Requirements ..............................................................       56
    18.2 Solicitation of Holders of Notes ..........................................       57
    18.3 Binding Effect, etc .......................................................       57
    18.4 Notes held by Company, etc ................................................       57
    18.5 Releases of Guarantees and Liens ..........................................       58
</TABLE>


                                      iii
<PAGE>

<TABLE>
<S>                                                                                        <C>
19. NOTICES ........................................................................       58

20. REPRODUCTION OF DOCUMENTS ......................................................       58

21. CONFIDENTIAL INFORMATION .......................................................       59

22. SUBSTITUTION OF PURCHASER ......................................................       60

23. MISCELLANEOUS ..................................................................       60
    23.1 Successors and Assigns ....................................................       60
    23.2 Severability ..............................................................       60
    23.3 Construction ..............................................................       60
    23.4 Counterparts ..............................................................       61
    23.5 Governing Law .............................................................       61
    23.6 Submission to Jurisdiction ................................................       61
    23.7 Judgment Currency .........................................................       62
    23.8 Effectiveness of Security Documents .......................................       62
</TABLE>

         SCHEDULE A-1         --   Commitments of and Information Relating to
                                   Purchasers, First Funding
         SCHEDULE A-2         --   Commitments of and Information Relating to
                                   Purchasers, Second Funding
         SCHEDULE B           --   Defined Terms
         SCHEDULE C           --   Mortgaged Properties
         SCHEDULE D           --   Acquisition Adjustments
         SCHEDULE 5.4         --   Consents, Authorizations, Filings and Notices
         SCHEDULE 5.11        --   Use of Proceeds
         SCHEDULE 5.18(a)     --   UCC Filing Jurisdictions
         SCHEDULE 5.18(b)-1   --   Mortgage Filing Jurisdictions
         SCHEDULE 5.18(b)-2   --   Owned and Leased Real Property
         SCHEDULE 5.28        --   Indebtedness
         SCHEDULE 9.2(b)(iii) --   Permitted Existing Indebtedness
         SCHEDULE 9.3(f)      --   Permitted Existing Liens

         EXHIBIT A   --    Form of Floating Rate Series A Senior Secured Note
         EXHIBIT B   --    Form of Fixed Rate Series B Senior Secured Note
         EXHIBIT C   --    Form of Security Agreement
         EXHIBIT D   --    Form of Mortgage
         EXHIBIT E   --    Form of Collateral Agency Agreement
         EXHIBIT F   --    Form of Opinion of Counsel for the Company
         EXHIBIT G   --    Form of Opinion of General Counsel for the Company
         EXHIBIT H   --    Form of Opinion of General Counsel for The Williams
                           Companies
         EXHIBIT I   --    Form of Opinion of Counsel for the Purchasers
         EXHIBIT J   --    Form of Closing Certificate
         EXHIBIT K   --    Form of Compliance Certificate
         EXHIBIT L   --    Form of Omnibus Agreement Amendment
         EXHIBIT M   --    Form of General Partner LLC Agreement Amendment


                                       iv
<PAGE>

         EXHIBIT N   --    Form of Guarantor Partnership Agreement Amendment
         EXHIBIT O   --    Form of The Williams Companies Officer Certificate


                                       v
<PAGE>

         Floating Rate Series A Senior Secured Notes due October 7, 2007
          Fixed Rate Series B Senior Secured Notes due October 7, 2007

                                                                 October 1, 2002

TO THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A-1
AND SCHEDULE A-2:

Ladies and Gentlemen:

      Each of Williams Pipe Line Company, LLC, a Delaware limited liability
company (the "COMPANY"), Williams Energy Partners L.P., a Delaware limited
partnership (the "GUARANTOR"), and Williams GP LLC, a Delaware limited liability
company and its successors and assigns, including a newly organized Delaware
limited liability company to be formed and to which the general partner interest
and incentive distribution rights in the Guarantor held by Williams GP LLC will
be transferred (the "GENERAL PARTNER"), agrees as follows:

1.    AUTHORIZATION OF NOTES.

      The Company will authorize the issue and sale of:

      (a) up to $200,000,000 aggregate principal amount of its Floating Rate
Series A Senior Secured Notes due October 7, 2007 (the "SERIES A NOTES", such
term to include the Series A-1 Notes and Series A-2 Notes described below and
any such notes issued in substitution therefor pursuant to Section 14 of this
Agreement;) and

      (b) up to $340,000,000 aggregate principal amount of its Fixed Rate Series
B Senior Secured Notes due October 7, 2007 (the "SERIES B NOTES", such term to
include the Series B-1 Notes, the Series B-2A Notes and the Series B-2B Notes
described below and any such notes issued in substitution therefor pursuant to
Section 14 of this Agreement).

      The Series A Notes shall be issued in two series, the Series A-1 Notes
(the "SERIES A-1 NOTES") and the Series A-2 Notes (the "SERIES A-2 NOTES"), on
the Initial Closing Date and the Subsequent Closing Date, respectively. The
Series B Notes shall be issued in three series; the Series B-1 Notes (the
"SERIES B-1 NOTES") shall be issued on the Initial Closing Date, and the Series
B-2A Notes (as defined below) and the Series B-2B Notes (as defined below) shall
be issued on the Subsequent Closing Date. The Series A Notes and Series B Notes
shall be substantially in the form set out in Exhibit A and Exhibit B,
respectively, with such changes therefrom, if any, as may be approved by the
Purchasers and the Company. The Series A Notes and Series B Notes are
collectively referred to herein as the "NOTES", and individually as a "NOTE".
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.

<PAGE>
                                                                               2


      The Company is a direct subsidiary of the Guarantor, which owns 100% of
the membership interests in the Company. Pursuant to Section 10 below (the
"GUARANTEE"), the Guarantor will guarantee to the holders of the Notes, (i) the
full and prompt payment of the principal of and interest, the Prepayment
Premium, the Make-Whole Amount and other amounts owing, if any, on the Notes
from time to time outstanding, as and when such payments become due and payable
(including interest on overdue payments of principal, interest, the Prepayment
Premium and the Make-Whole Amount at the rate set forth in the Notes), (ii) the
full and prompt payment of all attorneys' fees, costs and expenses of collection
incurred by the holders of such Notes in connection with the enforcement of the
Guarantee and (iii) if the Guarantor shall fail to make any payment required to
be made by it to any holder of any Note under Section 10 hereof on the date such
payment is due thereunder, full and prompt payment of the interest on the amount
of such payment, at the rate of interest then in effect with respect to overdue
payments of principal or interest on the Notes concerned, from the date such
payment was required to be made until the same is actually paid to such holder.

2.    SALE AND PURCHASE OF NOTES.

      Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each Purchaser, and each Purchaser severally commits to
purchase from the Company, at the times provided for in Section 3, Notes in the
principal amount specified opposite such Purchaser's name in Schedule A-1 and
Schedule A-2 (collectively, its "COMMITMENT"; together with the Commitment of
each other Purchaser, the "COMMITMENTS") at the purchase price of 100% of the
principal amount thereof. Each Purchaser's Commitment hereunder is a several and
not joint obligation, and no Purchaser shall have any obligation or liability to
any Person for the performance or non-performance by any other Purchaser
hereunder.

3.    CLOSINGS.

      The sale and purchase of the Notes shall occur as follows:

      (a) The sale and purchase of Series A-1 Notes and Series B-1 Notes in an
aggregate principal amount of up to $420,000,000 to be purchased by the
Purchasers shall occur at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, at 10:00 a.m., New York City time,
at a closing (the "INITIAL CLOSING") on November 12, 2002 or on such other
Business Day thereafter on or prior to November 27, 2002 as may be agreed upon
by the Company and the Purchasers in writing (the "INITIAL CLOSING DATE"); and

      (b) The sale and purchase of Series A-2 Notes and Series B-2 Notes (as
defined below) in an aggregate principal amount of up to the remaining balance
of the aggregate Commitments to be purchased by the Purchasers shall occur at
the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New
York 10017, at 10:00 a.m., New York City time, at a single closing (the
"SUBSEQUENT CLOSING", together with the Initial Closing, the "CLOSINGS" and each
a "CLOSING") to be held on the tenth calendar day (or, if such date is not a
Business Day, the next succeeding Business Day) following the giving of written
notice by the Company to the Purchasers of the date of the Subsequent Closing
(the "SUBSEQUENT CLOSING DATE") and the principal amount of Series A-2 Notes and
Series B-2 Notes to be issued at the Subsequent Closing; provided, however, that
the Subsequent Closing shall in any event occur on

<PAGE>
                                                                               3


or prior to December 31, 2002. Commitments not utilized on or prior to December
31, 2002 shall automatically terminate.

      The interest rate applicable to the Series A-1 Notes to be sold at the
Initial Closing and the Series A-2 Notes to be sold at the Subsequent Closing
shall be determined on the second Business Day prior to the Initial Closing Date
and Subsequent Closing Date, respectively, and shall be set based on the
Six-Month LIBOR Rate then in effect plus the greater of (a) 425 basis points
(4.25%) and (b) such margin as is necessary so that the interest rate on the
Series A Notes shall equal the swap-adjusted equivalent of the weighted average
interest rate on the Series B Notes issued at the same Closing. On each Interest
Payment Date (as defined in the Series A Notes), the Company shall provide the
Cash Escrow Agent with written notice of the Interest Rate (as defined in the
Series A Notes) on the Series A Notes for the then current six-month interest
period.

      The interest rate applicable to the Series B-1 Notes shall be 7.67%. The
interest rate applicable to the Series B-2 Notes shall be equal to the yield on
the five-year United States Treasury Bond plus 470 basis points (4.70%) as
determined on the second Business Day prior to the Subsequent Closing Date (the
"SERIES B-2A NOTES"); provided, however, that on or prior to November 4, 2002,
each Purchaser shall be entitled to elect that the interest rate with respect to
the Series B-2 Notes to be purchased by it at the Subsequent Closing shall
instead be determined based on the yield on the five-year United States Treasury
Bond as of the close of trading on October 31, 2002 (the "SERIES B-2B NOTES";
together with the Series B-2A Notes, the "SERIES B-2 NOTES").

      Notes to be sold by the Company at each Closing shall be allocated between
Purchasers of the Series A Notes and the Purchasers of the Series B Notes pro
rata in accordance with the Purchasers' Commitments.

      At each Closing the Company will deliver the Notes to be purchased by each
Purchaser in the form of a single Note dated the date of such Closing and
registered in such Purchaser's name (or in the name of its nominee), against
delivery by such Purchaser to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
5572665 at Bank One Chicago, ABA 071000013. Upon the request of any Purchaser,
the Company shall deliver two or more notes to such Purchaser each having
denominations of at least $1,000,000 which together equal the amount of such
Purchaser's investment on such Closing Date. If at either Closing the Company
shall fail to tender such Notes to each Purchaser as provided above in this
Section 3, or any of the conditions specified in Sections 4.1, 4.2 or 4.3 shall
not have been fulfilled to any Purchaser's satisfaction, such Purchaser shall,
at its election, be relieved of its Commitment with respect to such Closing and
from all further obligations under this Agreement, without thereby waiving any
rights it may have by reason of such failure or such nonfulfillment.

<PAGE>
                                                                               4


4.    CONDITIONS TO THE COMMITMENTS AND THE CLOSINGS.

4.1   CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE COMMITMENTS.

      Each Purchaser's Commitment is subject to the fulfillment to its
satisfaction of the following conditions precedent:

      (a) Note Purchase Agreement; Security Agreement; Collateral Agency
Agreement; Mortgages. The Purchasers shall have received this Agreement,
executed and delivered by the General Partner, Guarantor and the Company. The
Collateral Agent shall have received (i) the Security Agreement, executed and
delivered by the Guarantor, the Company and the Collateral Agent, (ii) the
Collateral Agency Agreement, executed and delivered by the Purchasers, the
Guarantor, the Company and the Collateral Agent and (iii) a Mortgage with
respect to each Mortgaged Property, executed and delivered by the Company in
favor of the Collateral Agent for the benefit of the holders of the Notes.

      (b) Representations and Warranties. Each of the representations and
warranties of the General Partner, the Guarantor and the Company contained in
the Note Purchase Documents shall be true and correct on and as of the date
hereof.

      (c) No Default. No Default or Event of Default shall have occurred and be
continuing on the date hereof.

      (d) Financial Statements. Each Purchaser shall have received (i) audited
consolidated financial statements of the Guarantor and audited financial
statements of the Company for the 2000 and 2001 fiscal years and (ii) unaudited
interim financial statements of each of the Guarantor (consolidated) and the
Company for each fiscal quarter ended after the date of the latest applicable
financial statements delivered pursuant to clause (i) of this paragraph as to
which such financial statements are available, and such financial statements
shall not, in any Purchaser's reasonable judgment, reflect the occurrence of any
Material Adverse Effect since June 30, 2002.

      (e) Approvals. All governmental and material third party approvals
necessary in connection with the continuing operations of the Guarantor and the
Company and the transactions contemplated to occur on the Initial Closing Date
shall have been obtained and be in full force and effect; and all notices
necessary to be given in connection with the continuing operations of the
Company and the transactions contemplated to occur on the Initial Closing Date
shall have been given and be in full force and effect except for those notices
(i) which are customarily given after the Initial Closing Date and (ii) as to
which the failure to give such notice would not in the aggregate have a Material
Adverse Effect.

      (f) Lien Searches. Each Purchaser shall have received the results of any
Lien search it shall have requested, and such search shall reveal no Liens on
any of the assets of the Company except for Liens permitted by Section 9.3 or
discharged on or prior to the date hereof pursuant to documentation satisfactory
to such Purchaser.

      (g) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent shall
have received (i) any certificates representing the shares of Capital Stock of
the Company pledged by

<PAGE>
                                                                               5


the Guarantor pursuant to the Security Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized officer
of the pledgor thereof and (ii) each promissory note (if any) pledged to the
Collateral Agent pursuant to the Security Agreement endorsed (without recourse)
in blank (or accompanied by an executed transfer form in blank) by the pledgor
thereof.

      (h) Services Agreement. The Purchasers shall have received the Services
Agreement, duly executed by Williams Petroleum Services, LLC, Williams Energy
Services, LLC and the General Partner (the "SERVICES AGREEMENT"), in form and
substance reasonably satisfactory to each Purchaser.

      (i) General Partner LLC Agreement Amendment. The General Partner LLC
Agreement shall have been amended in form and substance reasonably satisfactory
to the Purchasers to provide that the General Partner shall not be authorized or
permitted to, without the prior written consent of a majority of the Independent
Directors (and no such actions shall be taken or authorized unless there are at
least three Independent Directors then serving in such capacity), (i) file or
consent to the filing of any bankruptcy, insolvency or reorganization petition
naming the General Partner as debtor or otherwise institute bankruptcy or
insolvency proceedings by or against the General Partner or otherwise seek, with
respect to the General Partner, relief from debts or the protection from
creditors generally, (ii) seek or consent to the appointment of a receiver,
liquidator, conservator, assignee, trustee, sequestrator, custodian or any
similar official for the General Partner or all or any substantial portion of
any of its properties, (iii) make or consent to a general assignment for the
benefit of its creditors. In acting or otherwise voting on the matters referred
to in this Section 4.1(i), to the fullest extent permitted by law, including
Section 18-1101(c) of the Delaware Limited Liability Company Act, as amended
from time to time, the Independent Directors shall consider only the interests
of the General Partner including its respective creditors.

      (j) Omnibus Agreement Amendment. The Omnibus Agreement shall have been
amended substantially in the form of Exhibit L.

      (k) General Partner Bank Account. The Purchasers shall have received
evidence that the General Partner shall have opened a bank deposit account (the
"GENERAL PARTNER BANK ACCOUNT") in its own name.

      (l) Purchaser Credit Approval. Each Purchaser shall have received any
internal credit approval required in respect to its purchase of the Notes.

4.2   CONDITIONS PRECEDENT TO THE INITIAL CLOSING.

      Each Purchaser's obligation to purchase and pay for the Series A-1 Notes
or Series B-1 Notes to be sold to it at the Initial Closing is subject to the
fulfillment to such Purchaser's satisfaction, prior to or at the Initial
Closing, of the conditions precedent contained in Section 4.1 and of the
following conditions precedent:

      (a) Sale of Other Notes. Contemporaneously with the Initial Closing, the
Company shall have sold to the other Purchasers, and the other Purchasers shall
have purchased, the

<PAGE>
                                                                               6


Series A-1 Notes and Series B-1 Notes to be purchased by them at the Initial
Closing in accordance with the amounts set forth in Schedule A-1.

      (b) Legal Opinions. The Purchasers shall have received the following
executed legal opinions:

            (i) the legal opinion of Vinson & Elkins, counsel to the General
            Partner, the Guarantor and the Company, substantially in the form of
            Exhibit F;

            (ii) the legal opinion of Craig Rich, general counsel of the General
            Partner, the Guarantor and the Company, substantially in the form of
            Exhibit G;

            (iii) the legal opinion of William G. von Glahn, general counsel of
            The Williams Companies, substantially in the form of Exhibit H;

            (iv) the legal opinion of Richards, Layton & Finger, Delaware
            special counsel to the Company;

            (v) the legal opinion of local counsel in each of the jurisdictions
            where real property of the Company is located; and

            (vi) the legal opinion of Simpson Thacher & Bartlett, counsel to the
            Purchasers substantially in the form of Exhibit I.

Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Purchasers may reasonably
require.

      (c) Formation Agreement Amendments. The General Partner LLC Agreement and
the Guarantor Partnership Agreement shall have been amended substantially in the
forms of Exhibit M and Exhibit N, respectively (collectively, the "FORMATION
AGREEMENT AMENDMENTS").

      (d) Closing Certificate; Certified Certificate of Incorporation; Good
Standing Certificates. The Purchasers shall have received a certificate of each
of the General Partner, the Guarantor and the Company, dated the Initial Closing
Date, substantially in the form of Exhibit J, with appropriate insertions and
attachments, including (i) the certificate of formation of such entity certified
by the relevant authority of the jurisdiction of its formation, (ii) the
Formation Agreement of such entity and (iii) a good standing certificate for
such entity, if available, from its jurisdiction of organization.

      (e) Representations and Warranties. Each of the representations and
warranties made by the General Partner, the Guarantor and the Company pursuant
to Section 5 of this Agreement or contained in any other Note Purchase Document
shall be true and correct on and as of the Initial Closing Date as if made on
and as of such date other than those representations and warranties that
expressly relate solely to a specific date, which shall be remain true and
correct as of such earlier date.

<PAGE>
                                                                               7


      (f) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the purchase of Notes on the
Initial Closing Date.

      (g) Repayment of Bridge Financing. The Purchasers shall have received
satisfactory evidence that the $700,000,000 Senior Loan Facility by and among
the Company and the Guarantor, as Co-Borrowers, Bank of America, N.A., as
administrative agent, and the lenders party thereto shall have been terminated
and all amounts outstanding thereunder shall have been paid in full with the
proceeds of the Notes issued at the Initial Closing.

      (h) Private Placement Number. A Private Placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Series A-1 Notes and Series B-1 Notes.

      (i) Expenses. The Purchasers shall have received all expenses for which
invoices have been presented (including the reasonable fees and expenses of
external legal counsel to Purchasers), on or before the Initial Closing Date. No
fee shall be paid to any Purchaser by the Company or any of its Affiliates
unless the same fee shall have been offered to each other Purchaser. All such
amounts will be paid with proceeds of Notes sold on the Initial Closing Date and
will be reflected in the funding instructions given by the Company to the
Purchasers on or before the Initial Closing Date.

      (j) Responsible Officer Certificate. The Purchasers shall have received a
certificate from a Responsible Officer of each of the General Partner, the
Guarantor and the Company, dated the Initial Closing Date, (i) stating that (A)
the representations and warranties made by the General Partner, the Guarantor or
the Company pursuant to Section 5 of this Agreement or contained in any other
Note Purchase Document shall be true and correct on and as of the Initial
Closing Date as if made on and as of such date and (B) no Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the purchase of Notes on the Initial Closing Date, and (ii) in the
case of the Guarantor and the Company, setting forth in reasonable detail a
calculation demonstrating compliance with the covenants set forth in Section 9.1
after giving effect to the issuance of the Notes on the Initial Closing Date on
a pro forma basis.

      (k) Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by the Security Documents
or under law or reasonably requested by the Purchasers to be filed, registered
or recorded in order to create in favor of the Collateral Agent, for the benefit
of the holders of the Notes, a perfected Lien on assets representing at least
95% of the aggregate value of the Collateral, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by Section
9.3), shall be in proper form for filing, registration or recordation, and shall
have been filed in the correct filing offices. In addition, the Company shall
have paid all filing and recording fees and all costs and expenses in connection
with the Security Documents, including those of the Collateral Agent and its
counsel.

<PAGE>
                                                                               8


      (l) Insurance. The Purchasers shall have received insurance certificates,
endorsements and reports satisfying the requirements of Section 8.5.

      (m) Each Purchaser's purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by any Purchaser, such Purchaser shall have received an officer's
certificate from the Company certifying as to such matters of fact as such
Purchaser may reasonably specify to enable such Purchaser to determine whether
such purchase is so permitted.

      (n) Neither the Guarantor nor the Company shall have changed its
jurisdiction of organization or been a party to any merger or consolidation or
shall have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements delivered.

      (o) The Purchasers shall have received a certificate from a Responsible
Officer of The Williams Companies, dated the Initial Closing Date, substantially
in the form of Exhibit O ("THE WILLIAMS COMPANIES OFFICER CERTIFICATE").

      (p) The general partner interest of Williams GP LLC shall have been
transferred to a newly organized Delaware limited liability company, and such
newly organized Delaware limited liability company shall have been admitted as
the general partner of the Guarantor pursuant to the General Partnership
Agreement and shall have agreed to assume the rights and duties of the general
partner under the Guarantor Partnership Agreement, and Williams GP LLC shall
have withdrawn as a general partner of the Guarantor.

      (q) All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents, instruments and
legal matters incident to such transactions shall be satisfactory to each
Purchaser and each Purchaser's counsel, and each Purchaser and such counsel
shall have received all such counterpart originals or certified or other copies
of such documents as each Purchaser or such counsel may reasonably request.

4.3   CONDITIONS PRECEDENT TO THE SUBSEQUENT CLOSING.

      Each Purchaser's obligation to purchase and pay for the Series A-2 Notes
or Series B-2 Notes to be sold to it at the Subsequent Closing is subject to the
fulfillment to such Purchaser's satisfaction, prior to or at the Subsequent
Closing, of the conditions precedent contained in Section 4.1 and 4.2 and of the
following conditions precedent:

<PAGE>
                                                                               9


      (a) Acquisition, etc. If the Subsequent Closing shall be for an amount in
excess of $60,000,000:

            (i) (A) the Company shall have completed the acquisition from Tesoro
            of its 430-mile pipeline system extending between Mandan, North
            Dakota and Minneapolis, Minnesota and four related terminals for up
            to $115,000,000 on terms and conditions reasonably satisfactory to
            the Purchasers (the "ACQUISITION"); (B) Tesoro shall have affirmed
            that all of the representations and warranties of Tesoro contained
            in the Acquisition Documentation shall be true and correct in all
            material respects; and (C) all governmental and material third party
            approvals necessary in connection with the Acquisition and the
            Acquisition financing contemplated hereby shall have been obtained
            and be in full force and effect, and all applicable waiting periods
            shall have expired without any action being taken or threatened by
            any competent authority that would restrain, prevent or otherwise
            impose adverse conditions on the Acquisition or the financing
            contemplated hereby.

            (ii) Lien Searches. Each Purchaser shall have received the results
            of any Lien search it shall have requested relating to assets
            acquired in the Acquisition, and such search shall reveal no Liens
            on any such assets except for Liens permitted by Section 9.3 or
            discharged on or prior to the Subsequent Closing Date pursuant to
            documentation satisfactory to such Purchaser.

            (iii) Filings, Registrations and Recordings. Each document
            (including any mortgage agreement or Uniform Commercial Code
            financing statement) required by Section 8.13 of this Agreement, the
            Security Documents or under law or requested by the Purchasers to be
            filed, registered or recorded in order to create in favor of the
            Collateral Agent, for the benefit of the holders of the Notes, a
            perfected Lien on substantially all of the assets acquired in
            connection with the Acquisition, prior and superior in right to any
            other Person (other than with respect to Liens expressly permitted
            by Section 9.3), shall have been filed concurrently with the
            Subsequent Closing.

            (iv) Local Counsel Legal Opinion. The Purchasers shall have received
            the legal opinion of local counsel in each of the jurisdictions
            where real property acquired in the Acquisition is located.

      (b) Sale of Other Notes. Contemporaneously with the Subsequent Closing,
the Company shall have sold to the other Purchasers, and the other Purchasers
shall have purchased, the Series A-2 Notes and Series B-2 Notes to be purchased
by them at the Subsequent Closing in accordance with the amounts set forth in
Schedule A-2.

      (c) Representations and Warranties. Each of the representations and
warranties made by the General Partner, the Guarantor and the Company pursuant
to Section 5 of this Agreement or contained in any the Note Purchase Document
shall be true and correct on and as of the Subsequent Closing Date, after giving
effect to the Acquisition and the purchase of Notes on the Subsequent Purchase
Date, as if made on and as of such date other than those representations and

<PAGE>
                                                                              10


warranties that expressly relate solely to a specific date, which shall be true
and correct as of such earlier date.

      (d) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Acquisition and the
purchase of the Notes on the Subsequent Closing Date.

      (e) Legal Opinions. The Purchasers shall have received the following
executed legal opinions:

            (i) the legal opinion of Vinson & Elkins, counsel to the General
            Partner, the Guarantor and the Company;

            (ii) the legal opinion of Craig Rich, general counsel of the General
            Partner, the Guarantor and the Company; and

            (iii) the legal opinion of Simpson Thacher & Bartlett, counsel to
            the Purchasers.

Each such legal opinion shall cover such matters as are relevant to the
enforceability of the Notes issued on the Subsequent Closing Date and, in the
case of clause (ii), the valid existence and good standing of the General
Partner, the Guarantor and the Company on the Subsequent Closing Date and, in
the case of the Guarantor and the Company, their authority to issue and deliver
the Notes and the Guarantee to be issued on the Subsequent Closing Date.

      (f) Private Placement Number. A Private Placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Series A-2 Notes, the Series B-2A Notes and the
Series B-2B Notes to be issued and sold on the Subsequent Closing Date.

      (g) Expenses. The Purchasers shall have received all expenses for which
invoices have been presented (including the reasonable fees and expenses of
external legal counsel to the Purchasers), on or before the Subsequent Closing
Date. Except as reflected in the terms of the Notes, no fee shall be paid to any
Purchaser unless the same fee shall have been offered to each other Purchaser.
All such amounts will be paid with proceeds of Notes sold on the Subsequent
Closing Date and will be reflected in the funding instructions given by the
Company to the Purchasers on or before the Subsequent Closing Date. In addition,
the Company shall have paid all filing and recording fees and all costs and
expenses in connection with any new Mortgages.

      (h) Responsible Officer Certificate. The Purchasers shall have received a
certificate from a Responsible Officer of each of the General Partner, the
Guarantor and the Company, dated the Subsequent Closing Date, (i) stating that
(A) the representations and warranties made by the General Partner, the
Guarantor or the Company pursuant to Section 5 of this Agreement or contained in
any other Note Purchase Document shall be true and correct on and as of the
Subsequent Closing Date as if made on and as of such date and (B) no Default or
Event of Default shall have occurred and be continuing on such date or after
giving effect to the Acquisition and the purchase of Notes on the Subsequent
Closing Date, and (ii) in the case of the

<PAGE>
                                                                              11


Guarantor and the Company, setting forth in reasonable detail a calculation
demonstrating compliance with the covenants set forth in Section 9.1 after
giving effect to the Acquisition, if applicable, and the issuance of the Notes
on the Subsequent Closing Date on a pro forma basis.

      (i) Each Purchaser's purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by any Purchaser, such Purchaser shall have received an officer's
certificate from the Company certifying as to such matters of fact as such
Purchaser may reasonably specify to enable such Purchaser to determine whether
such purchase is so permitted.

      (j) Neither the Guarantor nor the Company shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation or
shall have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements delivered.

      (k) All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents, instruments and
legal matters incident to such transactions shall be satisfactory to each
Purchaser and each Purchaser's counsel, and each Purchaser and such counsel
shall have received all such counterpart originals or certified or other copies
of such documents as each Purchaser or such counsel may reasonably request.

5.    REPRESENTATIONS AND WARRANTIES.

      The General Partner, the Guarantor and the Company jointly and severally
represent and warrant to the Purchasers that:

5.1   FINANCIAL CONDITION.

      (a) The unaudited pro forma balance sheet of the Company as at June 30,
2002 (including the notes thereto) (the "PRO FORMA BALANCE SHEET"), copies of
which have heretofore been furnished to each Purchaser, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Acquisition, (ii) the Notes to be sold to the Purchasers on the Initial
Closing Date and Subsequent Closing Date and the use of proceeds thereof and
(iii) the payment of fees and expenses in connection with the foregoing. The Pro
Forma Balance Sheet has been prepared based on the best information available to
the Company as of the date of delivery thereof, and presents fairly on a pro
forma basis the combined financial position of Company and Tesoro as of June 30,
2002, assuming that the events specified in the preceding sentence had actually
occurred at such date. None of the General Partner, the Guarantor or the Company
is aware of any fact or circumstance that would result in the Pro Forma Balance
Sheet being inaccurate as of the date hereof.

<PAGE>
                                                                              12


      (b) The audited consolidated balance sheet of the Guarantor as of December
31, 2000 and December 31, 2001, and the related consolidated statements of
income and of cash flows for the fiscal years ended on such dates, as reported
on by and accompanied by an unqualified report from Ernst & Young LLP, presents
fairly the consolidated financial condition of the Guarantor and its
Subsidiaries as of such date, and the consolidated results of its operations and
cash flows for the respective fiscal years then ended. The audited balance
sheets of the Company as of December 31, 2000 and December 31, 2001, and the
related statements of income and of cash flows for the fiscal years ended on
such dates, present fairly the financial condition of the Company as at such
date, and the results of its operations and its cash flows for the respective
fiscal years then ended. The unaudited consolidated balance sheet of the
Guarantor and its Subsidiaries as of June 30, 2002, and the related unaudited
consolidated statement of income and cash flows for the six-month period ended
on such date, presents fairly the consolidated financial condition the Guarantor
as of such date, and the consolidated results of their operations and
consolidated cash flows for the six-month period then ended (subject to normal
year-end audit adjustments). The unaudited balance sheet of the Company as at
June 30, 2002, and the related unaudited statement of income and cash flows for
the six-month period ended on such date, presents fairly the financial condition
of the Company as at such date, and the results of its operations and its
consolidated cash flows for the six-month period then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). Neither the Guarantor
(on a consolidated basis) nor the Company has any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any long-term
leases or unusual forward or long-term commitments, including any interest rate
or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from June 30, 2002 to and
including the date hereof there has been no Disposition by either the Guarantor
(on a consolidated basis) or the Company of any material part of its business or
property.

5.2   NO CHANGE.

      Since June 30, 2002, there has been no development or event that has had
or could reasonably be expected to have a Material Adverse Effect.

5.3   EXISTENCE; COMPLIANCE WITH LAW.

      Each of the General Partner, the Guarantor and the Company (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation or entity and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, except as in the aggregate
could not reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

<PAGE>
                                                                              13


5.4   POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.

      Each of the General Partner, the Guarantor and the Company has the power
and authority to make, deliver and perform the Note Purchase Documents to which
it is a party and, in the case of the Company, to sell the Notes pursuant to the
terms and conditions of this Agreement. Each of the General Partner, the
Guarantor and the Company has taken all necessary organizational action to
authorize the execution, delivery and performance of the Note Purchase Documents
to which it is a party and, in the case of the Company, to authorize the sale of
the Notes on the terms and conditions of this Agreement. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
sale of Notes hereunder or with the execution, delivery, performance, validity
or enforceability of this Agreement or any of the Note Purchase Documents,
except (i) consents, authorizations, filings and notices described in Schedule
5.4, which consents, authorizations, filings and notices have been obtained or
made and are in full force and effect, (ii) the filings referred to in Section
5.18 and (iii) notices customarily given after the Initial Closing Date for
which the failure to give would not in the aggregate have a Material Adverse
Effect. Each Note Purchase Document has been duly executed and delivered on
behalf of each party thereto. This Agreement constitutes, and each other Note
Purchase Document upon execution by the General Partner, the Guarantor and the
Company, as applicable, will constitute, a legal, valid and binding obligation
of each party thereto, enforceable against each such party in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

5.5   NO LEGAL BAR.

      The execution, delivery and performance of this Agreement and the other
Note Purchase Documents, the sale of Notes hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or any Contractual Obligation of
the General Partner, the Guarantor or the Company or, as of the Initial Funding
Date, any Contractual Obligation of The Williams Companies listed on Exhibit A
to The Williams Companies Officer Certificate and, as of the Initial Funding
Date, will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or any such Contractual Obligation (other than the Liens created by the
Security Documents). No Requirement of Law or Contractual Obligation applicable
to the General Partner, the Guarantor or the Company, and, as of the Initial
Funding Date, no Contractual Obligation applicable to The Williams Companies
listed on Exhibit A to The Williams Companies Officer Certificate, could
reasonably be expected to have a Material Adverse Effect.

5.6   LITIGATION.

      No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the General Partner,
the Guarantor or the Company, threatened by or against the General Partner, the
Guarantor or the Company or against any of their respective properties or
revenues (a) with respect to any of the Note Purchase Documents or

<PAGE>
                                                                              14


any of the transactions contemplated hereby or thereby or (b) that could
reasonably be expected to have a Material Adverse Effect.

5.7   NO DEFAULT.

      None of the General Partner, the Guarantor or the Company is in default
under or with respect to any of its Contractual Obligations in any respect that
could reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.

5.8   OWNERSHIP OF PROPERTY; LIENS.

      The Company has (a) indefeasible record title in fee simple to, or a valid
leasehold or beneficial easement interest in, all real property used or
necessary for the conduct of the Company's business as it is presently
conducted, and (b) except for property covered by Section 5.9 hereof, good title
to, or a valid leasehold interest in, all other property used or necessary for
the conduct of the Company's business as it is presently conducted. No such real
or other property is subject to any Lien except as permitted by Section 9.3.
Except for office space and certain control room facilities located in One
Williams Center, Tulsa, Oklahoma, the Company operates its business without the
use of any material facilities shared with or owned or jointly owned by The
Williams Companies.

5.9   INTELLECTUAL PROPERTY.

      The Company owns, or licenses pursuant to the Omnibus Agreement, all
Intellectual Property necessary for the conduct of its business (including the
operation of its pipeline facilities) as currently conducted. No material claim
has been asserted and is pending by any Person challenging or questioning the
Company's use or ownership of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the General Partner, the
Guarantor or the Company know of any valid basis for any such claim. The use of
Intellectual Property by the Company does not infringe on the rights of any
Person in any material respect.

5.10  TAXES.

      Each of the Guarantor and the Company has filed or caused to be filed all
Federal, state and other material tax returns that are required to be filed and
has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Guarantor or the
Company, as applicable); no tax Lien has been filed, and, to the knowledge of
the Guarantor and the Company, no claim is being asserted, with respect to any
such tax, fee or other charge.

5.11  FEDERAL REGULATIONS.

      The Company will apply the proceeds of the sale of the Notes to prepay
existing Indebtedness in accordance with Schedule 5.11, to finance the
Acquisition and directly or indirectly for other general corporate purposes and
capital expenditures as described in the

<PAGE>
                                                                              15


Supplied Confidential Information. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of such Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of such Board (12
CFR 220). Margin stock does not constitute more than 10% of the value of the
consolidated assets of the General Partner, the Guarantor or Company and none of
the General Partner, the Guarantor or the Company has the present intention that
margin stock will constitute more than 10% of the value of such assets. As used
in this Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation U.

5.12  LABOR MATTERS.

      None of the General Partner, the Guarantor or the Company has any
employees. Except as, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect: (a) there are no strikes or other pending labor
disputes involving those employees of The Williams Companies relevant to the
continuing operations of the General Partner, the Guarantor or the Company nor,
to the best of the knowledge of the General Partner, the Guarantor or the
Company, are any such strikes or disputes threatened; (b) to the best of the
knowledge of the General Partner, the Guarantor or the Company, the hours worked
by and payment made to any employees of The Williams Companies which are
relevant to the continuing operations of the General Partner, the Guarantor and
the Company have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters; and (c) to the
best of the knowledge of the General Partner, the Guarantor or the Company, all
payments due from The Williams Companies on account of employee health and
welfare insurance relating to employees of The Williams Companies which are
relevant to the continuing operations of the General Partner, the Guarantor and
the Company have been paid or accrued as a liability on the books of The
Williams Companies.

5.13  ERISA.

      (a) Except as, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: (i) Neither a Reportable Event nor
an "accumulated funding deficiency" (within the meaning of Section 412 of the
Code or Section 302 of ERISA) has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code; (ii) no termination of a Single Employer Plan
has occurred resulting in a Lien in favor of the PBGC or a Plan during such
five-year period; (iii) the present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits; (iv) none of The Williams Companies,
the Company, any Commonly Controlled Entity or an ERISA Affiliate has had a
complete or partial withdrawal from any Multiemployer Plan; (v) neither The
Williams Companies, the Company, any Commonly Controlled Entity or any ERISA
Affiliate would become subject to any liability under ERISA if The Williams
Companies, the Company, any such Commonly Controlled Entity

<PAGE>
                                                                              16


or any ERISA Affiliate were to withdraw completely from all Multiemployer Plans
as of the valuation date most closely preceding the date on which this
representation is made or deemed made; and (vi) no Multiemployer Plan is in
Reorganization or Insolvent.

      (b) The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c) of the Code. The General Partner, the
Guarantor and the Company, in making this representation, are relying upon the
accuracy of the Purchasers' representations in Section 6.2.

5.14  INVESTMENT COMPANY ACT; OTHER REGULATIONS.

      Neither the General Partner, the Guarantor or the Company is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Guarantor nor the Company is subject to regulation under any Requirement of
Law (other than Regulation X of the Board) that limits its ability to incur
Indebtedness.

5.15  SUBSIDIARIES.

      The Company has no Subsidiaries. There are no outstanding subscriptions,
options, warrants, calls, rights or other agreements or commitments of any
nature relating to any Capital Stock of the Company, except as created by the
Note Purchase Documents.

5.16  ENVIRONMENTAL MATTERS.

      (a) Except as, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect:

            (i) the facilities and properties owned, leased or operated by the
            Company (the "PROPERTIES") do not contain, and have not previously
            contained, any Materials of Environmental Concern in amounts or
            concentrations or under circumstances that constitute or constituted
            a violation of, or could give rise to liability under, any
            applicable Environmental Laws;

            (ii) the Company has not received any written notice of violation,
            alleged violation, non-compliance, liability or potential liability
            regarding environmental matters or compliance with Environmental
            Laws, and is not aware of such notice with regard to any of the
            Properties or the business operated by the Company (the "BUSINESS"),
            nor does the General Partner, the Guarantor or the Company have
            knowledge or reason to believe that any such notice will be received
            or is being threatened;

            (iii) Materials of Environmental Concern have not been transported
            or disposed of from the Properties by the Company or, to the
            knowledge of the General Partner, the Guarantor, or the Company, any
            other person or entity, in violation of, or in a manner or to a
            location that could give rise to liability under, any applicable
            Environmental Laws, nor have any Materials of Environmental

<PAGE>
                                                                              17


            Concern been generated, treated, stored or disposed of by the
            Company or, to the knowledge of the General Partner, the Guarantor,
            or the Company, any other person or entity, at, on or under any of
            the Properties in violation of, or in a manner that could give rise
            to liability under, any applicable Environmental Laws;

            (iv) no judicial proceeding or governmental or administrative action
            is pending or, to the knowledge of the General Partner, the
            Guarantor or the Company, threatened, under any Environmental Laws
            to which the Company is or, to the knowledge of the General Partner,
            the Guarantor or the Company, will be named as a party , nor are
            there any consent decrees or other decrees, consent orders,
            administrative orders , or other administrative or judicial
            requirements imposing obligations that remain pending under any
            Environmental Laws with respect to the Properties or the Business;

            (v) there has been no release or threat of release of Materials of
            Environmental Concern by the Company or, to the knowledge of the
            General Partner, the Guarantor or the Company, otherwise, at or from
            the Properties, or arising from or related to the operations of the
            Company in connection with the Properties or otherwise in connection
            with the Business, in violation of or in amounts or in a manner that
            could give rise to liability under any applicable Environmental
            Laws;

            (vi) the Properties and all operations at the Properties are in
            compliance with all applicable Environmental Laws, and there has
            been no violation of any Environmental Law with respect to the
            Properties or the Business; and

            (vii) none of the General Partner, the Guarantor or the Company has
            assumed any liability of any other Person under Environmental Laws.

For purposes of Section 12 of this Agreement (Events of Default), each of the
foregoing representations and warranties contained in this Section 5.16(a) that
are qualified by the knowledge of any of the General Partner, the Guarantor or
the Company shall be deemed not to be so qualified. For the avoidance of doubt,
it is understood that the Company is in the business of transporting by pipeline
a product that is included within the definition of Materials of Environmental
Concern, and it is agreed that the Company's product being transported by, and
entirely contained in, pipelines and related equipment in accordance with all
applicable Environmental Laws and without releases or threatened releases to the
environment is not, in and of itself, a condition that breaches any of the
representations and warranties in this Section 5.16(a).

      (b) All environmental audits, studies, correspondence and other documents
in the Company's possession or control pertaining to issues that could
reasonably be expected to be material to the Business involving Materials of
Environmental Concern or compliance with applicable Environmental Laws have been
made available to the Purchasers.

<PAGE>
                                                                              18


5.17  ACCURACY OF INFORMATION, ETC.

      No statement or information contained in this Agreement, any other Note
Purchase Document, the Supplied Confidential Information or any other document,
certificate or statement furnished by or on behalf of the General Partner, the
Guarantor or the Company to the Purchasers, or any of them, for use in
connection with the transactions contemplated by this Agreement or the other
Note Purchase Documents, contained as of the date such statement, information,
document or certificate was so furnished (or, in the case of the Supplied
Confidential Information, as of the date of this Agreement), any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements contained herein or therein not misleading. The projections
and pro forma financial information contained in the materials referenced above
are based upon good faith estimates and assumptions believed by management of
the Company to be reasonable at the time made and on the date hereof, it being
recognized by the Purchasers that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.

5.18  SECURITY DOCUMENTS.

      (a) The Security Agreement is effective to create in favor of the
Collateral Agent, for the benefit of the holders of the Notes, a legal, valid
and enforceable security interest in the Collateral described therein and
proceeds thereof. When financing statements and other filings specified on
Schedule 5.18(a) in appropriate form are filed in the offices specified on
Schedule 5.18(a), the Security Agreement shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Guarantor and
Company in the Collateral (to the extent that a Lien can be perfected by filing
under the Uniform Commercial Code as in effect in the applicable jurisdictions),
including the uncertificated Pledged Stock of the Company owned by the
Guarantor, and the proceeds thereof, as security for the Obligations (as defined
in the Security Agreement), in each case prior and superior in right to any
other Person (except, in the case of Collateral other than the Pledged Stock,
Liens permitted by Section 9.3).

      (b) Each of the Mortgages is effective to create in favor of the
Collateral Agent, for the benefit of the holders of the Notes, a legal, valid
and enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
5.18(b)-1, each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Company in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person, subject to Permitted Liens. Schedule 5.18(b)-2 lists, as of
the Initial Closing Date, each parcel of owned real property (other than
easements) and each leasehold interest in real property located in the United
States and held by the Company.

5.19  SOLVENCY.

      Each of the General Partner, the Guarantor and the Company is, and after
giving effect to the sale of the Notes and the consummation of the Acquisition
will be and will continue to be, Solvent.

<PAGE>
                                                                              19


5.20  REGULATION H.

      No Mortgage encumbers improved real property that is located in an area
that has been designated by the Director of the Federal Emergency Management
Agency as an area having special flood hazards and in which flood insurance has
been made available under the National Flood Insurance Act of 1968 and for which
the appropriate amount of flood insurance coverage has not been obtained by the
Company.

5.21  ACQUISITION DOCUMENTATION.

      The Guarantor and the Company has delivered to the Purchasers a complete
and correct copy of the Acquisition Documentation, including any amendments,
supplements or modifications with respect to any of the foregoing.

5.22  PRIVATE OFFERING BY THE COMPANY.

      None of the General Partner, the Guarantor, the Company or anyone acting
on their behalf has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with more than 20 other Institutional Investors,
each of which has been offered the Notes at a private sale for investment. None
of the General Partner, the Guarantor, the Company or anyone acting on their
behalf has taken, or will take, any action that would subject the issuance or
sale of the Notes to the registration requirements of Section 5 of the
Securities Act.

5.23  FOREIGN ASSETS CONTROL REGULATIONS, ETC.

      Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

5.24  EMINENT DOMAIN AUTHORITY.

      The Company has sufficient eminent domain authority to acquire real
property interests in the property underlying all of its pipeline facilities,
except to the extent that the failure to have such authority could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

5.25  TARIFF DISPUTES.

      Neither the Guarantor nor the Company is subject to any pending, or to the
knowledge of the General Partner, the Guarantor or the Company, threatened
actions before any federal, state or local governmental entity (including the
Federal Energy Regulatory Commission or the state utility commissions of
Illinois, Kansas or Oklahoma) to change, challenge or otherwise investigate the
Company's rates or charges.

<PAGE>
                                                                              20


5.26  REGULATORY MATTERS.

      The Company is a pipeline company subject to regulation by the Federal
Energy Regulatory Commission under the Interstate Commerce Act, the Energy
Policy Act and regulations, rules and orders promulgated pursuant thereto.
Except as set forth in the previous sentence, neither Guarantor nor the Company
is subject to regulation as a "public utility holding company," "public utility"
or "public service company" (or similar designation) by any foreign, federal,
state or local governmental entity except solely with respect to health and
safety matters or regulation that could not reasonably be expected to have a
Material Adverse Effect. None of Guarantor, the Company or any of its
"affiliates" is a "public utility company," "holding company" or "subsidiary" or
"affiliate" of a holding company as such terms are defined in the Public Utility
Holding Company Act of 1935. The Company is in material compliance with the
provisions of the Interstate Commerce Act and the Energy Policy Act and the
regulations, rules and orders promulgated pursuant thereto.

5.27  PERMITS.

      Except where the failure to obtain would not have a Material Adverse
Effect, the Company and the Guarantor have obtained all required permits and
have made all required registrations and filings with any Governmental Authority
that are applicable to the conduct of its business; all such permits are in full
force and effect and are not subject to any unsatisfied conditions to continued
effectiveness.

5.28  EXISTING INDEBTEDNESS; FUTURE LIENS.

      (a) The Company does not have any material outstanding Indebtedness except
(i) as set forth in the financial statements delivered pursuant to Section 5.1
hereof, (ii) liabilities to trade creditors incurred in the ordinary course of
business since the date of such balance sheets and (iii) as set forth in
Schedule 5.28.

      (b) The Company is not in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Indebtedness of the
Company and no event or condition exists with respect to any Indebtedness of the
Company that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.

      (c) Except as disclosed in Schedule 5.28, the Company has not agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 9.3.

5.29  FAIRNESS OPINIONS.

      The Conflicts Committee received an opinion (the "FAIRNESS OPINION") to
the effect that the consideration (as defined in the Fairness Opinion) paid by
the Guarantor in connection with the Guarantor's acquisition of the Company was
fair, from a financial point of view, to the Guarantor.

<PAGE>
                                                                              21


6.    REPRESENTATIONS OF THE PURCHASER.

6.1   PURCHASE FOR INVESTMENT.

      Each Purchaser severally represents that it is an "accredited investor"
(as that term is defined in Rule 501(a) of the Securities Act), and that it is
purchasing the Notes for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of
its or their property shall at all times be within such Purchaser's or their
control. Each Purchaser understands that the Notes have not been registered
under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Company is not required to
register the Notes. Each Purchaser has been provided with certain Confidential
Information ("SUPPLIED CONFIDENTIAL INFORMATION") and has had an opportunity to
ask questions of officers of the General Partner and the Company and has
received answers to them.

6.2   SOURCE OF FUNDS.

      Each Purchaser severally represents that at least one of the following
statements is an accurate representation as to each source of funds (a "SOURCE")
to be used by it to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder:

      (a) if it is an insurance company, the Source does not include assets
allocated to any separate account maintained by it in which any employee benefit
plan (or its related trust) has any interest, other than a separate account that
is maintained solely in connection with its fixed contractual obligations under
which the amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in any
manner by the investment performance of the separate account; or

      (b) the Source is either (i) an insurance company pooled separate account,
within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued
January 29, 1990), or (ii) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, except as it has disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or

      (c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of PTE 84-14 (issued March 13, 1984) (the "QPAM EXEMPTION")
managed by a "qualified professional asset manager" or "QPAM" (within the
meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such
employer or by the same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM on a discretionary basis,
the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither
the QPAM nor a

<PAGE>
                                                                              22


person controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company, the Guarantor, the General Partner or The Williams Companies and
(i) the identity of such QPAM and (ii) the names of all employee benefit plans
whose assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this paragraph (c); or

      (d) the Source is a governmental plan; or

      (e) the Source is an "insurance company general account", as such term is
defined in PTE 95-60 (issued July 12, 1995) and there is no employee benefit
plan with respect to which the aggregate amount of such general account's
reserves and liabilities for the contracts held by or on behalf of such employee
benefit plan and all other employee benefit plans maintained by the same
employer (and affiliates thereof as defined in Section V(a)(1) of PTE 95-60) or
by the same employee organization (in each case determined in accordance with
the provisions of PTE 95-60) exceeds 10% of the total reserves and liabilities
of such general account (as determined under PTE 95-60) (exclusive of separate
account liabilities) plus surplus as set forth in the U.S. National Association
of Insurance Commissioners Annual Statement filed with such Purchaser's state of
domicile; or

      (f) the Source is the assets of one or more employee benefit plans which
are managed by an "in-house asset manager," as that term is defined in PTE 96-23
(issued April 10, 1996), the conditions of Section I(a), (b), (c), (g) and (h)
of such exemption have been met with respect to the purchase of the Notes and
the names of all employee benefit plans whose assets are included in the
transaction have been disclosed to the Company in writing pursuant to this
clause (f); or

      (g) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA and Section 4975 of the Code.

      As used in this Section 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA except that the
term "employee benefit plan" shall also include any "plan" as defined in Section
4975(e)(1) of the Code. If any Purchaser or any subsequent transferee of the
Notes notifies the Company in writing that it or such transferee is relying on
any representation contained in paragraphs (b), (c) or (f) above, it shall
deliver to the Company on the date of Closing and on the date of any applicable
transfer, a certificate, which shall either state that (i) the Company is
neither a "party in interest" (as defined in Title I, Section 3(14) of ERISA)
nor a "disqualified person" (as defined in Section 4975(e)(2) of the Code), with
respect to any plan identified pursuant to paragraphs (b) or (f) above, or (ii)
with respect to any plan identified pursuant to paragraph (c) above, neither the
Company nor any "affiliate" (as defined in Section V(c) of the QPAM Exemption)
has at such time, and during the immediately preceding one year, exercised the
authority to appoint or terminate said QPAM as manager of any plan identified in
writing pursuant to paragraph (c) above or to negotiate the terms of said QPAM's
management agreement on behalf of any such identified plan.

<PAGE>
                                                                              23


7.    REPAYMENT OF THE NOTES.

7.1   MATURITY.

      As provided therein, the entire unpaid principal amount of the Series A
Notes and Series B Notes shall be due and payable on October 7, 2007 (the
"MATURITY DATE") at par and without payment of any Prepayment Premium or
Make-Whole Amount.

7.2   SCHEDULED PREPAYMENT OF THE NOTES.

      On each of October 7, 2005 and October 7, 2006, the Company will prepay
5.0% of the principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes then outstanding at par and without payment of the
Prepayment Premium or Make-Whole Amount. Scheduled prepayments made pursuant to
this Section 7.2 shall be allocated among all of the Series A Notes and Series B
Notes at the time outstanding in proportion to the respective outstanding
principal amounts thereof.

7.3   OPTIONAL PREPAYMENT OF THE NOTES.

      (a) Series A Notes. The Series A Notes shall not be prepaid prior to
October 7, 2005 except as required by Section 7.4. On and after October 7, 2005,
the Company may, at its option, upon notice as provided below, prepay at any
time all or from time to time any part of the Series A Notes at the following
redemption prices (expressed as percentages of the principal amount of the
Series A Notes to be prepaid; the amount in excess of 100.0%, if any, the
"PREPAYMENT PREMIUM"), plus accrued and unpaid interest to the redemption date:

<TABLE>
<CAPTION>
                                                                      Redemption
         Prepayment Date                                                Price
<S>                                                                   <C>
         October 7, 2005 through October 6, 2006                        103.0%
         October 7, 2006 through June 30, 2007                          101.5%
         July 1, 2007 and thereafter                                    100.0%
</TABLE>

      (b) Series B Notes. The Company may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any part of, the
Series B Notes at 100% of the principal amount so prepaid plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.

      The term "MAKE-WHOLE AMOUNT" means, with respect to any Series B Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Series B Note
over the amount of such Called Principal, provided that the Make-Whole Amount
may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:

      "CALLED PRINCIPAL" means, with respect to any Series B Note, the principal
of such Series B Note that is to be prepaid pursuant to Section 7.3 or has
become or is declared to be immediately due and payable pursuant to Section 12
as the context requires.

<PAGE>
                                                                              24


      "DISCOUNTED VALUE" means, with respect to the Called Principal of any
Series B Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective scheduled
due dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor (applied on
the same periodic basis as that on which interest on the Series B Notes is
payable) equal to the sum of (i) the Reinvestment Yield with respect to such
Called Principal and (ii) 100 basis points.

      "REINVESTMENT YIELD" means, with respect to the Called Principal of any
Series B Note, the yield to maturity implied by (i) the yields reported, as of
10:00 a.m. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as PX 1 Page on Bloomberg (or such other display as may replace Page 678 on
Telerate Access Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.

      "REMAINING AVERAGE LIFE" means, with respect to any Called Principal, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

      "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal
of any Series B Note, all payments of such Called Principal and interest thereon
that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Series B Notes, then
the amount of the next succeeding scheduled interest payment will be reduced by
the amount of interest accrued to such Settlement Date and required to be paid
on such Settlement Date pursuant to Section 7.3 or 13.

      "SETTLEMENT DATE" means, with respect to the Called Principal of any
Series B Note, the date on which such Called Principal is to be prepaid pursuant
to Section 7.3 or has become or is declared to be immediately due and payable
pursuant to Section 13, as the context requires.

<PAGE>
                                                                              25


      (c) Notice of Prepayment. The Company will give each holder of Notes to be
redeemed written notice of each optional prepayment under this Section 7.3 not
less than thirty (30) days and not more than sixty (60) days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 7.3(d)), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Responsible Officer of the Company as to the
estimated Prepayment Premium, in the case of the Series A Notes, or Make-Whole
Amount, in the case of the Series B Notes, due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two (2) Business
Days prior to such prepayment, the Company shall deliver to each holder of the
Notes to be prepaid a certificate of a Responsible Officer specifying the
calculation of the Prepayment Premium or Make-Whole Amount, as applicable, as of
the specified prepayment date.

      (d) Allocation of Partial Prepayments. In the case of each partial
optional prepayment of the Series B Notes prior to October 7, 2005, the
principal amount of the Series B Notes to be prepaid shall be allocated among
all of the Series B Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment. Partial optional prepayments made on or after October 7,
2005 shall be allocated among all of the Series A Notes and Series B Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.

7.4   MANDATORY PREPAYMENTS OF THE NOTES.

      If on any date the Company or any Subsidiary (or the Guarantor on behalf
of the Company or any Subsidiary) shall receive Net Cash Proceeds from any
Recovery Event then, unless such Net Cash Proceeds are applied by the Company or
any Subsidiary in accordance with Section 8.6, such Net Cash Proceeds shall
(unless the holders thereof otherwise consent) be applied toward the prepayment
of the Notes at par (plus accrued and unpaid interest thereon) pro rata in
accordance with the respective unpaid principal amounts thereof. In the event
that one or more holders of Notes decline the right to receive any prepayment to
be made pursuant to this Section 7.4, the aggregate amount of such declined
prepayments shall be applied to the prepayment of the Notes held by the holders
which have accepted prepayment pro rata in accordance with the respective unpaid
principal amount of the Notes held by such accepting holders.

7.5   MATURITY; SURRENDER, ETC. UPON PREPAYMENT.

      In the case of each prepayment of Notes made pursuant to Sections 7.2, 7.3
or 7.4, the principal amount of each Note to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together with interest on
such principal amount accrued to such date and the applicable Prepayment Premium
or Make-Whole Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and the Prepayment Premium and Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note paid or
prepaid in

<PAGE>
                                                                              26


full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount of
any Note.

7.6   PURCHASE OF NOTES.

      The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.

7.7   PRO RATA TREATMENT AND PAYMENTS.

      (a) Except as otherwise provided, each payment (including each prepayment)
by the Company on account of principal of the Notes shall be made pro rata
according to the respective outstanding principal amounts of the Notes then held
by the Purchasers.

      (b) All payments (including prepayments) to be made by the Company
hereunder and under the Notes, whether on account of principal, interest or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof, in U.S. dollars and
in immediately available funds. If any payment hereunder becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business Day (unless
such payment relates to the final maturity of the Notes in which case such
payment shall include interest on account of any additional days elapsed).

7.8   BENEFITTED HOLDER.

      Except to the extent that this Agreement expressly provides for payments
to be allocated to a particular holder or to the holders of a particular series
of the Notes, if any holder of Notes (a "BENEFITTED HOLDER") shall receive any
payment of all or part of the Obligations owing to it, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off pursuant to
Section 7.6 of the Security Agreement, pursuant to events or proceedings of the
nature referred to in Section 12(g) or otherwise), in a greater proportion than
any such payment to or collateral received by any other holder, if any, in
respect of the Obligations owing to such other holder, such Benefitted Holder
shall purchase for cash from the other holders a participating interest in such
portion of the Obligations owing to each such other holder, or shall provide
such other holders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Holder to share the excess payment or
benefits of such collateral ratably with each of the holders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Holder, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.

<PAGE>
                                                                              27


8.    AFFIRMATIVE COVENANTS.

      The General Partner, the Guarantor and the Company hereby jointly and
severally agree that, so long as any Note remains outstanding or any amount is
owing to any holder of Notes:

8.1   FINANCIAL STATEMENTS.

      Each of the General Partner, the Guarantor and the Company shall furnish,
or cause to be furnished, to each holder of Notes:

      (a) as soon as available, but in any event within five (5) days after the
date on which the Guarantor is required to file its annual report on Form 10-K,
a copy of the audited consolidated and unaudited consolidating balance sheet of
the Guarantor and its Subsidiaries as at the end of such year and the related
audited consolidated and unaudited consolidating statements of income and of
cash flows for such year, setting forth in each case in comparative form the
figures for the previous year and, in the case of the audited financial
statements, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by an
independent certified public accountants of nationally recognized standing;

      (b) as soon as available, but in any event within five (5) days after the
date on which the Guarantor is required to file its annual report on Form 10-K,
a copy of the unaudited balance sheet of the Company and any of its consolidated
Subsidiaries as at the end of such year and the related unaudited statements of
income and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year;

      (c) as soon as available, but in any event within five (5) days after the
date on which the Guarantor is required to file its annual report on Form 10-K,
a copy of the unaudited consolidated balance sheet of the General Partner as at
the end of such year and the related unaudited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer of the
General Partner as being fairly stated in all material respects;

      (d) as soon as available, but in any event within five (5) days after the
date on which the Guarantor is required to file its quarterly report on Form
10-Q for each of the first three quarterly periods of each fiscal year of the
Guarantor, the unaudited consolidated and consolidating balance sheet of the
Guarantor and its Subsidiaries as at the end of such quarter and the related
unaudited consolidated and consolidating statements of income and of cash flows
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer of the Guarantor as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and

      (e) as soon as available, but in any event within five (5) days after the
date on which the Guarantor is required to file its quarterly report on Form
10-Q for each of the first three quarterly periods of each fiscal year of the
Guarantor, the unaudited balance sheet of the Company and any consolidated
Subsidiaries as at the end of such quarter and the related unaudited statements
of income and of cash flows for such quarter and the portion of the fiscal

<PAGE>
                                                                              28


year through the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible Officer of
the Company as being fairly stated in all material respects (subject to normal
year-end audit adjustments).

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied (except as approved by such accountants or officer, as the case may be,
and disclosed in reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.

8.2   CERTIFICATES; OTHER INFORMATION.

      Each of the Guarantor and the Company shall, and the Company shall cause
each of its Subsidiaries to, furnish to each holder of Notes (or, in the case of
clause (h), to the relevant holder):

      (a) concurrently with the delivery of the financial statements referred to
in Section 8.1(a) and (b), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;

      (b) concurrently with the delivery of any financial statements pursuant to
Section 8.1, a Compliance Certificate executed by a Responsible Officer (i)
stating that (A) to the best of such Responsible Officer's knowledge, during
such period the General Partner, the Guarantor or the Company and its
Subsidiaries, as applicable, has observed or performed all of its covenants and
other agreements, and (B) such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate, (ii)
containing all information and calculations necessary for determining compliance
by the Guarantor or the Company, as applicable, with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or fiscal
year of the General Partner, the Guarantor, the Company or its Subsidiaries, as
the case may be and (iii) to the extent not previously disclosed to the holders
of the Notes and the Collateral Agent, a description of any change in the
jurisdiction of organization of the Company or any of its Subsidiaries and a
list of any Intellectual Property acquired by the Company or any of its
Subsidiaries since the date of the most recent report delivered pursuant to this
clause (iii) (or, in the case of the first such report so delivered, since the
Initial Closing Date);

      (c) as soon as available, and prior to the end of each fiscal year of the
Guarantor, the Company and its Subsidiaries, a detailed consolidated budget for
the Guarantor and its Subsidiaries for the following fiscal year (including a
projected consolidated balance sheet of the Guarantor and its Subsidiaries as of
the end of the following fiscal year, the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income and a description of the underlying assumptions applicable thereto), and,
as soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the "PROJECTIONS"),
which Projections shall in each case be accompanied by a certificate of a
Responsible Officer stating that such Projections are based on reasonable

<PAGE>
                                                                              29


estimates, information and assumptions and that such Responsible Officer has no
reason to believe that such Projections are incorrect or misleading in any
material respect;

      (d) no later than ten (10) Business Days after the effectiveness thereof,
execution copies of any amendment, supplement, waiver or other modification with
respect to the Acquisition Documentation, the General Partner LLC Agreement, the
Guarantor Partnership Agreement, the Services Agreement or the Omnibus
Agreement;

      (e) within five (5) days after the same are sent, copies of all financial
statements and reports that the Guarantor sends to the holders of any class of
its debt securities or public equity securities and, within five (5) days after
the same are filed, copies of all financial statements and reports that the
Guarantor may make to, or file with, the SEC;

      (f) promptly upon their becoming available all press releases and other
statements made available generally by the Guarantor or the Company to the
public concerning developments that are material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects of
the Guarantor or the Company; and

      (g) promptly, such additional financial and other information as any
holder of Notes may from time to time reasonably request.

8.3   PAYMENT OF OBLIGATIONS.

      Each of the General Partner, the Guarantor and the Company shall, and the
Company shall cause each of its Subsidiaries to, pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and, if required, reserves in conformity with GAAP with respect
thereto have been provided on the books of the General Partner, the Guarantor or
the Company or its Subsidiaries.

8.4   MAINTENANCE OF EXISTENCE; COMPLIANCE.

      Each of the General Partner, the Guarantor and the Company shall, and the
Company shall cause each of its Subsidiaries to, (a)(i) preserve, renew and keep
in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in the case of clause
(ii) above, to the extent that the General Partner or, to the extent applicable,
the Conflicts Committee determines that any right, privilege or franchise is no
longer valuable or useful in the conduct of its business; and (b) comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect. Nothing contained in this Section 8.4 shall
restrict any action permitted by Section 9.4.

<PAGE>
                                                                              30


8.5   MAINTENANCE OF PROPERTY; INSURANCE.

      (a) The Guarantor and the Company shall, and the Company shall cause each
of its Subsidiaries to, keep all property useful and necessary in their
respective businesses in good working order and condition, ordinary wear and
tear excepted.

      (b) Without limiting any of the other obligations or liabilities of the
Company under this Agreement, the Company shall, and the Company shall cause
each of its Subsidiaries to, during the term of this Agreement and while any
Notes are outstanding, carry and maintain, at its own expense, at least the
minimum insurance coverage set forth in this Section 8.5. To the extent that any
of the insurance required by this Section 8.5 is not available in the then
current insurance market, the Company shall, and shall cause each of its
Subsidiaries to, have the right to request a waiver of such requirements from
the Collateral Agent, and such request shall not be unreasonably denied or
delayed. The Company shall, and shall cause each of its Subsidiaries to, also
carry and maintain any other insurance that the Required Holders or Collateral
Agent may reasonably require from time to time. All insurance carried pursuant
to this Section 8.5 shall be placed with such insurers having a minimum a.m.
Best rating of A:X, or a comparable rating from another recognized rating agency
if such insurers do not have an A.M Best rating or as may be otherwise
reasonably acceptable to the Required Holders. Such insurance shall be in such
form, with terms, conditions, limits and deductibles as shall be reasonably
acceptable to the Required Holders.

            (i) All Risk Property Insurance. The Company shall, and shall cause
      each of its Subsidiaries to, maintain all risk property insurance covering
      against physical loss or damage except with respect to segments of the
      pipeline which are underground, including but not limited to fire and
      extended coverage, collapse, explosion, flood, earth movement and
      comprehensive boiler and machinery coverage (including electrical
      breakdown and mechanical breakdown). Boiler and machinery coverage shall
      be in an amount not less than $25,000,000. Coverage shall be written on a
      replacement cost basis in an amount reasonably acceptable to the Required
      Holders. Such insurance policy shall not contain any coinsurance penalty
      and shall include expediting expense coverage in an amount not less than
      $1,000,000, except $500,000 as respects boiler and machinery.

            (ii) Business Interruption. As an extension of the insurance
      required under subsection (b)(i), the Company shall, and the Company shall
      cause each of its Subsidiaries to, maintain business interruption
      insurance in an amount reasonably acceptable to the Required Holders
      covering net profits and continuing expenses (including debt payments) for
      a 12 month indemnity period. Such coverage shall also provide for
      contingent business interruption in an amount not less than $10,000,000
      covering the major suppliers and customers of the Company and its
      Subsidiaries. Such insurance shall not contain any coinsurance penalty and
      also cover service interruption and extra expenses in an amount not less
      than $1,000,000, except $500,000 as respects boiler and machinery. The
      deductibles on this policy shall not be greater than sixty (60) days or as
      may otherwise be reasonably acceptable to the Required Holders.

            (iii) Comprehensive or Commercial General Liability Insurance. The
      Company shall, and the Company shall cause each of its Subsidiaries to,
      maintain

<PAGE>
                                                                              31


      comprehensive or commercial general liability insurance written on an
      occurrence basis with a limit of not less than $1,000,000. Such coverage
      shall include, but not be limited to, premises/operations, explosion,
      collapse, underground hazards, sudden and accidental pollution,
      contractual liability, independent contractors, products/completed
      operations, property damage and personal injury liability. Such insurance
      shall not contain an exclusion for punitive or exemplary damages where
      insurable by law. The Company and its Subsidiaries shall have the right to
      self-insure with respect to the insurance coverage described in this
      clause (iii) to the extent consistent with sound industry practice.

            (iv) Workers' Compensation/Employer's Liability. In the event the
      Company or any of its Subsidiaries has any employees, the Company shall,
      and shall cause each of its Subsidiaries to, maintain Workers'
      Compensation insurance in accordance with statutory provisions covering
      accidental injury, illness or death of an employee of the Company or such
      Subsidiaries while at work or in the scope of his employment with the
      Company or such Subsidiaries and Employer's Liability in an amount not
      less than $1,000,000. Such coverage shall not contain any occupational
      disease exclusions.

            (v) Automobile Liability. In the event the Company or any of its
      Subsidiaries has any vehicles, the Company shall, and shall cause each of
      its Subsidiaries to, maintain Automobile Liability insurance covering
      owned, non-owned, leased, hired or borrowed vehicles against bodily injury
      or property damage. Such coverage shall have a limit of not less than
      $1,000,000.

            (vi) Excess/Umbrella Liability. The Company shall, and shall cause
      each of its Subsidiaries to, maintain excess or umbrella liability
      insurance in an amount not less than $150,000,000 written on an occurrence
      or claims made basis providing coverage limits excess of the insurance
      limits required under sections (b)(iii), (b)(iv) employer's liability
      only, and (b)(v). Such insurance shall not contain an exclusion for
      punitive or exemplary damages where insurable under law.

      (c) The Company shall, and shall cause each of its Subsidiaries to, cause
all insurance policies carried and maintained in accordance with this Section
8.5 to be endorsed as follows:

            (i) The Company shall, and shall cause each of its Subsidiaries to,
      be the named insured and the Collateral Agent, for the benefit of the
      holders of the Notes, shall be an additional insured with the Collateral
      Agent as loss payee with respect to policies described in subsections
      (b)(i) and (b)(ii). The Company shall, and shall cause each of its
      Subsidiaries to, be the named insured and the Collateral Agent, for the
      benefit of the holders of the Notes shall be additional insureds with
      respect to policies described in subsections (b)(iii), (b)(v) and (b)(vi).
      It shall be understood that any obligation imposed upon the Company and
      its Subsidiaries, including but not limited to the obligation to pay
      premiums, shall be the sole obligation of the Company and such
      Subsidiaries and not that of the Collateral Agent or the holders of the
      Notes;

            (ii) with respect to policies described in subsections (b)(i) and
      (b)(ii), to the extent available from the Company's and its Subsidiaries'
      insurers, the interests of the Collateral Agent and the holders of the
      Notes shall not be invalidated by any action or

<PAGE>
                                                                              32


      inaction of the Company, or any other Person, and shall insure the
      Collateral Agent, for the benefit of the holders of the Notes regardless
      of any breach or violation by the Company or any other Person, of any
      warranties, declarations or conditions of such policies;

            (iii) inasmuch as the liability policies are written to cover more
      than one insured, all terms conditions, insuring agreements and
      endorsements, with the exception of the limits of liability, shall operate
      in the same manner as if there were a separate policy covering each
      insured;

            (iv) the insurers thereunder shall waive all rights of subrogation
      against the Collateral Agent and the holders of the Notes, any right of
      setoff or counterclaim and any other right to deduction, whether by
      attachment or otherwise;

            (v) such insurance shall be primary without right of contribution of
      any other insurance carried by or on behalf of the Collateral Agent and
      the holders of the Notes with respect to this Agreement and the Notes
      issued pursuant hereto; and

            (vi) if such insurance is canceled for any reason whatsoever,
      including nonpayment of premium, or any material changes are initiated by
      the Company and its Subsidiaries, or carrier which affect the interests of
      the Collateral Agent and the holders of the Notes, such cancellation or
      change shall not be effective as to the Collateral Agent and the holders
      of the Notes until thirty (30) days, except for non-payment of premium
      which shall be ten (10) days, after receipt by the Collateral Agent and
      the holders of the Notes of written notice sent by registered mail from
      such insurer or from the insurance broker.

      (d) On the Initial Closing Date, and at each policy renewal, but not less
than annually, the Company shall, and shall cause each of its Subsidiaries to,
provide to the Collateral Agent approved certification from each insurer or by
an authorized representative of each insurer or from a nationally recognized
insurance broker. Such certification shall identify the underwriters, the type
of insurance, the limits, deductibles, and term thereof and shall specifically
list the special provisions delineated for such insurance required for this
Section 8.5.

      (e) Concurrently with the furnishing of all certificates referred to in
this Section 8.5, the Company shall furnish the Collateral Agent with an opinion
from an independent and nationally recognized insurance broker, stating that all
premiums then due have been paid and that, in the opinion of such broker, the
insurance then maintained by the Company and its Subsidiaries is in accordance
with this section. Furthermore, upon its first knowledge, such broker shall
advise the Collateral Agent and each holder of Notes promptly in writing of any
default in the payment of any premiums or any other act or omission, on the part
of any person, which might invalidate or render unenforceable, in whole or in
part, any insurance provided by the Company hereunder.

      (f) The Collateral Agent shall be entitled, upon reasonable advance
notice, to review the Company's and its Subsidiaries' books and records and
insurance policies regarding all insurance policies carried and maintained with
respect to the Company's and its Subsidiaries'

<PAGE>
                                                                              33


obligations under this Section 8.5. Upon request, the Company shall, and shall
cause each of its Subsidiaries to, furnish the Collateral Agent with
certificates of insurance, binders, and cover notes or other evidence of such
insurance. Notwithstanding anything to the contrary herein, no provision of this
Section 8.5 or any provision of this Agreement shall impose on the Collateral
Agent or any holder of Notes any duty or obligation to verify the existence or
adequacy of the insurance coverage maintained by the Company and its
Subsidiaries, nor shall the Collateral Agent or any holder of Notes be
responsible for any representations or warranties made by or on behalf of the
Company to any insurance broker, company or underwriter. The Collateral Agent,
at its sole option or at the request of the Required Holders, may obtain such
insurance if not provided by the Company or its Subsidiaries, and in such event,
the Company and its Subsidiaries, shall reimburse the Collateral Agent upon
demand for the cost thereof together with interest.

8.6   APPLICATION OF PROCEEDS FROM CONDEMNATION/EMINENT DOMAIN; EVENT OF LOSS.

      (a) Condemnation. Provided no Default or Event of Default shall have
occurred and be continuing, the Company shall, and shall cause each of its
Subsidiaries to, at its expense, diligently prosecute any proceeding relating to
condemnation of the any of the Mortgaged Properties, settle or compromise any
claims in connection therewith and receive any awards or proceeds thereof
(except to the extent any of the same shall constitute Net Cash Proceeds, in
which case Section 7.4 shall govern), provided that the Company and each of its
Subsidiaries, shall promptly repair and restore such Mortgaged Property to its
condition prior to such condemnation, regardless of whether any award shall have
been received or whether such award is sufficient to pay for the costs of such
repair and restoration.

      (b) Other Events of Loss. In the event of any Event of Loss other than a
condemnation, the Company shall, and shall cause each of its Subsidiaries to,
promptly commence the repair and restoration of the damaged property to its
condition immediately prior to such Event of Loss. If such Event of Loss shall
give rise to a Recovery Event, provided that no Default or Event of Default
shall have occurred and be continuing, the initial $20,000,000 (or such lesser
amount of proceeds necessary to pay expenses and costs described in this clause
(b)) of insurance proceeds received or paid to the Collateral Agent in
connection with such a Loss shall be released to the Company or a Subsidiary, as
applicable, upon delivery of a certificate of a Responsible Officer of the
Company or such Subsidiary, certifying that such proceeds shall be used solely
to pay expenses and costs directly relating to the repair and restoration of the
damaged portion of the Company's or such Subsidiary's property subject to such
Event of Loss (or, with respect to proceeds from any business interruption
insurance, to cover operating costs, expenses or losses of the Company or such
Subsidiary, as applicable). All insurance proceeds in excess of $20,000,000 (or
such lesser amount of proceeds necessary to pay expenses and costs described in
this clause (b)) received or paid to the Company, any Subsidiary, or the
Collateral Agent in connection with an Event of Loss shall be deposited into an
account in the name of the Collateral Agent (the "EXCESS PROCEEDS ACCOUNT") from
which account disbursements or reimbursements shall be made for costs incurred
(other than such costs that are funded pursuant to the second sentence of this
paragraph) in connection with the repair and restoration of the damaged property
to its condition immediately prior to the Event of Loss in accordance with a
plan prepared by the Company or such Subsidiary, as applicable, and submitted to
the holders of the Notes, and prior to any disbursement or reimbursement from
the Excess Proceeds Account

<PAGE>
                                                                              34


any such costs shall be verified by the Independent Engineer after review of the
relevant invoices or other reasonable supporting documentation. All proceeds
remaining in the Excess Proceeds Account shall be applied pursuant to Section
7.4.

8.7   RESTORATION.

      The Company shall, and shall cause each of its Subsidiaries to, except to
the extent constituting Net Cash Proceeds and applied pursuant to Section 7.4,
and subject to Section 8.6, use all insurance proceeds and all condemnation
proceeds and awards to promptly restore the affected Mortgaged Property to its
condition prior to such casualty or condemnation, (giving effect to the
remaining configuration of the Premises (as defined in the Mortgage) after such
condemnation) and in compliance with all Requirements of Law.

8.8   UTILITY CHARGES.

      Except for assessments or charges being contested in good faith by
appropriate proceedings, the Company shall, and shall cause each of its
Subsidiaries to, pay or cause to be paid when due all utility charges which are
incurred for gas, electricity, water or sewer services furnished to the premises
of Mortgaged Properties and all other assessments or charges of a similar
nature, whether public or private, affecting the premises of Mortgaged
Properties or any portion thereof, whether or not such assessments or charges
are liens thereon.

8.9   INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.

      Each of the General Partner, the Guarantor and the Company shall, and the
Company shall cause each of its Subsidiaries to, (a) keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities and (b) permit representatives of any
holder of Notes to visit and inspect any of its properties and examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired and to discuss the business, operations, properties
and financial and other condition of the General Partner, the Guarantor and the
Company and its Subsidiaries with officers and employees thereof and with their
independent certified public accountants.

      8.10 NOTICES.

      Each of the General Partner, the Guarantor and the Company shall, and the
Company shall cause each of its Subsidiaries to, promptly, but in no event later
than five (5) days thereafter, give written notice to each holder of Notes of:

      (a) the occurrence of any Default or Event of Default;

      (b) any (i) default or event of default under any Contractual Obligation
of the General Partner, the Guarantor, the Company or its Subsidiaries or (ii)
litigation, investigation or proceeding that may exist at any time between the
General Partner, the Guarantor, the Company or its Subsidiaries, on one hand,
and any Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;

<PAGE>
                                                                              35


      (c) any litigation or proceeding affecting the General Partner, the
Guarantor, the Company or any of its Subsidiaries (i) in which the amount
involved is $5,000,000 or more and not covered by insurance, (ii) in which
injunctive or similar relief is sought which if granted would constitute a
material interference with the operation of the Company's or such Subsidiary's
pipeline facilities or could reasonably be expected to result in a Material
Adverse Effect or (iii) which relates to any Note Purchase Document;

      (d) the following events (except where liability, individually or in the
aggregate, would not reasonably be expected to be material), as soon as possible
and in any event within thirty (30) days after the Company or any of its
Subsidiaries knows or has reason to know thereof: (i) the occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Company or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan;

      (e) any development or event that has had or could reasonably be expected
to have a Material Adverse Effect; and

      (f) any Change of Control or acquisition by The Williams Companies
together with its Affiliates of greater than 60% of the equity interests in the
Guarantor.

Each notice pursuant to this Section 8.10 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating, in the case of clauses (a) through (e), what action the
General Partner, the Guarantor, the Company or any of its Subsidiaries, as
applicable, proposes to take with respect thereto. Each notice sent to the
holders of the Notes pursuant to clause (a) shall also be sent to the Collateral
Agent.

8.11  ENVIRONMENTAL LAWS.

      Each of the Guarantor and the Company shall, and the Company shall cause
each of its Subsidiaries to:

      (a) Comply in all material respects with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
registrations or permits required by applicable Environmental Laws.

      (b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under applicable
Environmental Laws and promptly comply in all material respects with all
applicable lawful orders and directives of all Governmental Authorities
regarding Environmental Laws.

      (c) Prevent any releases and eliminate any threatened releases by the
Guarantor, the Company or any of its Subsidiaries of Materials of Environmental
Concern that could reasonably be expected to result in liability having a
Material Adverse Effect; and undertake reasonable

<PAGE>
                                                                              36


efforts to prevent any other Person from causing any release or threatened
release of Materials of Environmental Concern that could materially affect any
of the Properties.

8.12  PERFECTION OF CERTAIN SECURITY INTERESTS.

      (a) On or prior to December 15, 2002, the Company shall obtain evidence
reasonably satisfactory to the Required Holders that (in addition to the Liens
required to have been perfected on the Initial Funding Date) Mortgages on
properties representing at least 95% of the aggregate value of the Mortgaged
Properties have been recorded in the recording offices of the appropriate
jurisdictions in order to create in favor of the Collateral Agent for the
benefit of the holders a first priority perfected Lien with respect to such
Mortgaged Properties.

      (b) On or prior to February 28, 2003, the Company shall obtain evidence
reasonably satisfactory to the Required Holders that each document (including
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by any holder of the Notes to be
filed, registered or recorded in order to create in favor of the Collateral
Agent, for the benefit of the holders of the Notes, a perfected Lien on
substantially all of the Collateral prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section 9.3) has
been filed, registered or, in the case of the Mortgages, recorded.

8.13  ADDITIONAL COLLATERAL, ETC.

      The Company shall, and shall cause each of its Subsidiaries to:

      (a) With respect to any property acquired after the Initial Closing Date
by the Company or its Subsidiaries (other than (x) any property described in
paragraph (b) below or (y) any property subject to a Lien expressly permitted by
Section 9.3(g) or otherwise not material to the continuing operations of the
Company) as to which the Collateral Agent, for the benefit of the holders of the
Notes, does not have a perfected Lien, promptly (i) execute and deliver to the
Collateral Agent such amendments to the Security Agreement or such other
documents as any holder of Notes or the Collateral Agent deems necessary or
advisable to grant to the Collateral Agent, for the benefit of the holders of
the Notes, a security interest in such property and (ii) take all actions
necessary or advisable to grant to the Collateral Agent, for the benefit of the
holders of the Notes, a perfected first priority security interest in such
property, including the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Collateral Agreement or by law
or as may be requested by any holder of Notes or the Collateral Agent.

      (b) With respect to any interest in any real property acquired after the
Initial Closing Date by the Company or its Subsidiaries (other than any such
real property subject to a Lien expressly permitted by Section 9.3(g) or
otherwise not material to the continuing operations of the Company and its
Subsidiaries taken as a whole), promptly (i) execute and deliver a first
priority Mortgage, in favor of the Collateral Agent, for the benefit of the
holders of the Notes, covering such real property, (ii) if requested by any
holder of the Notes or the Collateral Agent, provide any consents or estoppels
reasonably deemed necessary or advisable by such holder of Notes or the
Collateral Agent in connection with such Mortgage, each of the foregoing in form

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                                                                              37


and substance reasonably satisfactory to such holder of Notes and the Collateral
Agent and (iii) if requested by any holder of the Notes, deliver to the holder
of the Notes legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the holders of the Notes.

      (c) With respect to any new Subsidiary created or acquired after the
Initial Closing Date by the Company or any of its Subsidiaries, promptly (i)
execute and deliver to the Collateral Agent such amendments to the Security
Agreement as the Collateral Agent deems necessary or advisable to grant to the
Collateral Agent, for the benefit of the holders of the Notes, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by the Company or any of its Subsidiaries, (ii) deliver to the Collateral
Agent the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the Company or Subsidiary, as applicable, (iii) cause such new Subsidiary (A) to
become a party to the Security Agreement for the purpose of granting to the
Collateral Agent a security interest in substantially all of such Subsidiary's
assets, (B) to take such actions necessary or advisable to grant to the
Collateral Agent for the benefit of the holders of the Notes a perfected first
priority security interest in the Collateral described in the Security Agreement
with respect to such new Subsidiary, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Security Agreement or by law or as may be requested by the Collateral Agent, (C)
to execute and deliver to each of the holders and the Collateral Agent a
guarantee agreement with respect to the Obligations in substance similar to the
Guarantee and (D) to deliver to the Collateral Agent a certificate of such
Subsidiary, substantially in the form of Exhibit J, with appropriate insertions
and attachments, and (iv) if requested by the Collateral Agent, deliver to the
Collateral Agent legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Collateral Agent.

8.14  GENERAL PARTNER BANK ACCOUNT.

      Settlement of amounts payable by the General Partner under the Omnibus
Agreement and the Services Agreement will be paid through the General Partner
Bank Account.

8.15  DEPOSITS INTO THE CASH ESCROW ACCOUNT.

      Not later than the end of each month, the Company will deposit to the Cash
Escrow Account for the benefit of the holders of the Notes an amount equal to
one-sixth (or in the case of the initial interest period, a fraction the
numerator of which is one and the denominator of which is equal to the number of
months left in the interest period (rounded up to the next whole month)) of the
amount of the next succeeding interest payment on the Notes. The amount on
deposit in the Cash Escrow Account shall be distributed by the Cash Escrow Agent
on each Interest Payment Date (as defined in the Notes) in payment of the amount
of interest then due on the Notes.

8.16  CURRENT REPORT.

      Promptly, but no later than the first Business Day following the Initial
Closing Date, the Guarantor shall file a Current Report on Form 8-K, in form and
substance reasonably satisfactory

<PAGE>
                                                                              38


to the Required Holders, disclosing that the Guarantor and the Company have
entered into this Agreement and that the Company has granted a first priority
Lien on substantially all of its assets, including the Mortgaged Properties, in
connection therewith. If the Company shall consummate the Acquisition, the
Guarantor shall promptly, but not later than the first Business Day following
the Subsequent Closing Date, file a Current Report on Form 8-K, in form and
substance reasonably acceptable to the Required Holders, disclosing that the
Company has granted a first priority Lien over substantially all of the assets
acquired in the Acquisition, including any acquired real property.

9.    NEGATIVE COVENANTS.

      The General Partner, the Guarantor and the Company jointly and severally
agree that, so long as any Note remains outstanding or any amount is owing to
any holder of Notes hereunder:

9.1   FINANCIAL CONDITION COVENANTS.

      The Guarantor and the Company shall not:

      (a) Consolidated Leverage Ratio. Permit the ratio of Consolidated Total
Debt of the Guarantor or the Company as at the last day of the most recently
ended period of four consecutive fiscal quarters of the Guarantor or the Company
to Consolidated EBITDA of the Guarantor or the Company, respectively, for such
period to exceed 4.50:1.00; and

      (b) Consolidated Interest Coverage Ratio. Permit the ratio of Consolidated
EBITDA of the Guarantor or the Company for the most recently ended period of
four consecutive fiscal quarters of the Guarantor or the Company to Consolidated
Interest Expense of the Guarantor or the Company, respectively, for such period
to be less than 2.50:1.00;

provided, that notwithstanding clause (a), the Guarantor may incur additional
Indebtedness having a maturity date equal to or less than 365 days from the date
of incurrence (but not any refinancing thereof) in order to finance Future
Acquisitions, in which case (i) during the term of any such Indebtedness the
Guarantor's compliance with Section 9.1 shall be determined without giving
effect to such Indebtedness or the Consolidated EBITDA of the business or assets
acquired in such Future Acquisition and (ii) upon maturity or termination of
such Indebtedness, the Guarantor's compliance with Section 9.1 shall be
determined after giving effect to any financing in connection therewith and
including the results of such acquired assets or business on a pro forma basis.

      Subject to the provisions of the immediately preceding paragraph, none of
the Guarantor, the Company and their respective Subsidiaries shall incur any
Indebtedness at any time unless, after giving effect to the incurrence such
Indebtedness, the Guarantor or the Company, as applicable, would be in
compliance with Section 9.1(a) as if such Indebtedness had been outstanding on
the last day of the most recently ended period of four consecutive fiscal
quarters.

9.2   INDEBTEDNESS.

      (a) The General Partner. The General Partner shall not create, issue,
incur, assume, become liable in respect of or suffer to exist any Indebtedness
except liabilities (i) to trade

<PAGE>
                                                                              39


creditors for the purchase of goods, materials and supplies, or the performance
of services, in the ordinary course of business and (ii) arising from its status
as general partner under the Guarantor Partnership Agreement.

      (b) The Company. The Company shall not, and shall not permit any
Subsidiary to, directly or indirectly create, issue, incur, assume, become
liable in respect of or suffer to exist any Indebtedness, except:

            (i) Indebtedness of the Company or any Subsidiary pursuant to any
      Note Purchase Document (including any Guarantee Obligation of a Subsidiary
      incurred pursuant to Section 8.13(c)(iii)(C));

            (ii) Indebtedness of the Company to any Subsidiary and of any Wholly
      Owned Subsidiary Guarantor to the Company or any other Subsidiary;

            (iii) Indebtedness outstanding on the date hereof and listed on
      Schedule 9.2(b)(iii) and any refinancings, refundings, renewals or
      extensions thereof (without increasing, or shortening the maturity of, the
      principal amount thereof);

            (iv) Indebtedness (including, without limitation, Capital Lease
      Obligations) secured by Liens permitted by Section 9.3(g) in an aggregate
      principal amount not to exceed $25,000,000 at any one time outstanding;
      and

            (v) additional Indebtedness of the Company or any of its
      Subsidiaries otherwise not expressly permitted by clauses (i) through (iv)
      of this Section 9.2(b) in an aggregate principal amount not to exceed
      $4,000,000 at any one time outstanding.

9.3   LIENS. The Company shall not, and shall not permit any of its Subsidiaries
      to, directly or indirectly create, incur, assume or suffer to exist any
      Lien upon any of its property, whether now owned or hereafter acquired,
      except:

      (a) Liens for taxes not yet due or that are being contested in good faith
by appropriate proceedings, provided that adequate cash reserves with respect
thereto are maintained on the books of the Company or of its Subsidiaries, if
required, in conformity with GAAP;

      (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business that are not overdue
for a period of more than thirty (30) days or that are being contested in good
faith by appropriate proceedings;

      (c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;

      (d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

<PAGE>
                                                                              40


      (e) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, do not in
any case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Company or
any of its Subsidiaries;

      (f) Liens in existence on the date hereof listed on Schedule 9.3(f),
securing Indebtedness permitted by Section 9.2(b)(iii), provided that no such
Lien is spread to cover any additional property after the date of this Agreement
and that the amount of Indebtedness secured thereby is not increased;

      (g) Liens securing Indebtedness of the Company or any of its Subsidiaries
incurred pursuant to Section 9.2(b)(iv) to finance the acquisition of fixed or
capital assets, provided that (i) such Liens shall be created within twelve
months of the acquisition of such fixed or capital assets, (ii) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby does not
exceed the acquisition price of the relevant assets and is not increased between
the time the assets are acquired by the Company and the time the Liens are
created;

      (h) Liens created pursuant to the Security Documents;

      (i) any interest or title of a lessor under any lease entered into by the
Company or any of its Subsidiaries in the ordinary course of its business and
covering only the assets so leased, and any interest of a landowner in the case
of easements entered into by the Company or any of its Subsidiaries in the
ordinary course of its business and covering only the property subject to the
easement;

      (j) Liens which secure obligations not to exceed $7,000,000 arising under
any Swap Agreement relating to Indebtedness incurred in connection with issuance
of the Notes, provided that incurrence of any such Liens shall be subject to the
prior execution of an intercreditor agreement with the Collateral Agent in form
and substance reasonably satisfactory to the Collateral Agent and the Required
Holders; and

      (k) Liens not otherwise permitted by this Section so long as neither (i)
the aggregate outstanding principal amount of the obligations secured thereby
nor (ii) the aggregate fair market value (determined as of the date such Lien is
incurred) of the assets subject thereto exceeds (as to the Company and all its
Subsidiaries) $4,000,000 at any one time.

      Except Liens created pursuant to the Security Agreement, the Guarantor
shall not create, incur, assume or suffer to exist any Lien upon its right,
title and interest in the membership interests of the Company.

9.4   FUNDAMENTAL CHANGES.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of all or substantially all of its property or
business, except that (a) any Investment expressly permitted by Section 9.7 may
be structured as a merger, consolidation or amalgamation and (b) the Company may
merge,

<PAGE>
                                                                              41


consolidate or amalgamate with any Person if (i) the Consolidated EBITDA of such
Person constitutes less than 5% of the Consolidated EBITDA of the Company for
the most recently completed four consecutive fiscal quarters, (ii) such Person
is not an Affiliate of The Williams Companies, (iii) such Person has positive
Consolidated Net Worth as of the date of such transaction, (iv) such Person does
not have contingent liabilities that are material in relation to the value of
the assets acquired and (v) such person is organized and validly existing under
the laws of the United States of America or any jurisdiction thereof, (vi)
immediately after giving effect to such merger, consolidation or amalgamation
and including the results of such Person on a pro forma basis and any
Indebtedness incurred in connection with such transaction, the surviving entity
is in compliance with Section 9.1 and (vii) immediately after giving effect to
such merger, consolidation or amalgamation, no Default or Event of Default shall
have occurred and be continuing. If the Company shall not be the surviving or
continuing Person as a result of such transaction, the Person formed by such
consolidation or into which the Company is merged shall expressly assume, in
form satisfactory to the holders of the Notes, all of the Obligations.

9.5   DISPOSITION OF PROPERTY.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any of its Subsidiaries, issue or sell
any shares of such Subsidiary's Capital Stock to any Person, except:

      (a) the Disposition of obsolete or worn out property in the ordinary
course of business;

      (b) the sale of inventory in the ordinary course of business;

      (c) the sale or issuance of any Subsidiary's Capital Stock to the Company
or any Wholly Owned Subsidiary Guarantor;

      (d) the lease of property by the Company and its Subsidiaries in the
ordinary course of business and in a manner consistent with existing and past
practice so long as the perfected, first priority security interest with respect
to such property in favor of the Collateral Agent for the benefit of the holders
is not adversely affected thereby;

      (e) the lease of property or rights acquired in the Acquisition to Tesoro
pursuant to a lease arrangement entered into substantially simultaneously with
the consummation of the Acquisition;

      (f) other property having a fair market value not to exceed $5,000,000 in
the aggregate for any fiscal year of the Company the disposition of which will
not materially impair operations of the Company's pipeline facilities; and

      (g) an exchange of assets for other similar assets in which the fair
market value of the asset(s) received by the Company and its Subsidiaries will
equal or exceed the fair market value of the asset(s) given by the Company and
its Subsidiaries in exchange therefor; provided, however, that (i) any
contingent liabilities related to such acquired assets shall not be material in
relation to the value thereof and (ii) the fair market value of assets so
received by the Company

<PAGE>
                                                                              42


and its Subsidiaries during the term of this Agreement shall not exceed, in the
aggregate, $20,000,000.

9.6   RESTRICTED PAYMENTS.

      (a) If a Default or Event of Default shall have occurred and be
continuing, the Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare or pay any distribution (other than
distributions payable solely in equity membership interests) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any Capital Stock of the Guarantor or the Company or any of their respective
Affiliates, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of any Affiliate (collectively, "RESTRICTED PAYMENTS") except
that any Subsidiary may make Restricted Payments to the Company or any Wholly
Owned Subsidiary thereof.

      (b) The Guarantor shall not redeem or retire the Guarantor's Class B units
except with the Net Cash Proceeds of Capital Stock issued by the Guarantor.

9.7   INVESTMENTS.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "INVESTMENTS"), except:

      (a) extensions of trade credit in the ordinary course of business;

      (b) investments in Cash Equivalents;

      (c) Guarantee Obligations permitted by Section 9.2;

      (d) the Acquisition;

      (e) Investments made pursuant to Section 8.6;

      (f) intercompany Investments by any Subsidiary in the Company or by the
Company or any of its Subsidiaries in any Person that, prior to such investment,
is a Wholly Owned Subsidiary Guarantor; and

      (g) Investments by the Company or any of its Subsidiaries in substantially
all of the Capital Stock of any Person provided that: (i) the Consolidated
EBITDA of such Person constitutes less than 5% of the Consolidated EBITDA of the
Company for the most recently completed four consecutive fiscal quarters, (ii)
such Person is not an Affiliate of The Williams Companies, (iii) such Person has
positive Consolidated Net Worth as of the date of such transaction, (iv) such
Person does not have contingent liabilities that are material in relation to the
value of the assets acquired and (v) such person is organized and validly
existing under the

<PAGE>
                                                                              43


laws of the United States of America or any jurisdiction thereof, (vi)
immediately after giving effect to such Investment and including the results of
such Person on a pro forma basis and any Indebtedness incurred in connection
with such transaction, the Company and the Guarantor are in compliance with
Section 9.1 and (vii) immediately after giving effect to such Investment, no
Default or Event of Default shall have occurred and be continuing.

9.8   TRANSACTIONS WITH AFFILIATES.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into any material transaction, including any
purchase, sale, lease or exchange of property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than any Wholly Owned Subsidiary Guarantor) unless such transaction is
(a) otherwise permitted under this Agreement, (b) upon terms no less favorable
to the Company than it would obtain in a comparable arm's length transaction and
(c) approved by the Conflicts Committee.

9.9   SWAP AGREEMENTS.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into any Swap Agreement, except (a) Swap
Agreements entered into in order to effectively cap, collar or exchange interest
rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment
of the Company or any of its Subsidiaries provided that the obligations with
respect thereto do not exceed $7,000,000; and (b) Swap Agreements entered into
in the ordinary course of business to effectively hedge or limit commodity price
exposure related to (i) transmix purchase and related product sales, (ii)
product grade imbalances or (iii) natural gas and diesel fuel purchased as fuel
for pipeline turbines; provided that the notional amount of purchases and sales
with respect to any Swap Agreements entered into pursuant to clause (b) shall
not exceed $15,000,000.

9.10  CHANGES IN FISCAL PERIODS.

      The Company shall not permit the fiscal year of the Company to end on a
day other than December 31 or change the Company's method of determining fiscal
quarters.

9.11  NEGATIVE PLEDGE CLAUSES.

      The Company shall not, and shall not permit any of its Subsidiaries to,
enter into or suffer to exist or become effective any agreement that prohibits
or limits the ability of the Company or any of its Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of its property or revenues,
whether now owned or hereafter acquired, other than (a) this Agreement and the
other Note Purchase Documents and (b) any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby).

<PAGE>
                                                                              44


9.12  LINES OF BUSINESS.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into any business, including by means of
acquisition, consolidation or otherwise, except for those businesses in which
the Company is engaged on the date of this Agreement or that are reasonably
related thereto.

9.13  AMENDMENTS TO ACQUISITION DOCUMENTS AND VARIOUS AGREEMENTS.

      The General Partner, the Guarantor and the Company, as applicable, shall
not (a) amend, supplement or otherwise modify (pursuant to a waiver or
otherwise) the terms and conditions of the indemnities and licenses furnished to
the Guarantor or the Company pursuant to the Acquisition Documentation such that
after giving effect thereto such indemnities or licenses shall be materially
less favorable to the interests of the Guarantor or the Company with respect
thereto, (b) amend, supplement or otherwise modify (pursuant to a waiver or
otherwise) the terms and conditions of any of the Formation Agreements
(including Sections 7.5 and 7.8 of the Company LLC Agreement, Sections 5.12(i),
6.7(a), 7.6, 7.9, 11.2 and 13.4 of the Guarantor Partnership Agreement, Sections
7.02 and 7.10(c) of the General Partner LLC Agreement and those sections of the
General Partner LLC Agreement amended pursuant to Section 4.1(i)), the Omnibus
Agreement or the Services Agreement in a manner materially adverse to the
interests of the holders of the Notes or (c) convert the General Partner,
Guarantor or Company into any other form of organization.

9.14  CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary of the
Company to (a) make Restricted Payments in respect of any Capital Stock of such
Subsidiary held by, or pay any Indebtedness owed to, the Company or any other
Subsidiary of the Company, (b) make loans or advances to, or other Investments
in, the Company or any other Subsidiary of the Company or (c) transfer any of
its assets to the Company or any other Subsidiary of the Company, except for
such encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Note Purchase Documents and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement that
has been entered into in connection with the Disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary.

9.15  SALES AND LEASEBACKS.

      Unless the Company and its Subsidiaries would then be entitled to incur
secured Indebtedness in an amount equal to the value of the property sold,
neither the Company nor any of its Subsidiaries shall enter into any arrangement
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property that has been or is to be sold or transferred by the
Company or any Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or any Subsidiary.

<PAGE>
                                                                              45


9.16  NO SUBSIDIARIES.

      The Company shall not create, acquire or own any Subsidiaries, except as
expressly provided in Section 9.7(g).

10.   GUARANTEE.

      The Guarantor does hereby covenant and agree with each Purchaser, each
subsequent holder of any of the Notes and the Collateral Agent as follows:

10.1  SCOPE OF GUARANTEE.

      Until the Obligations of the Company under this Agreement have been
terminated in accordance with their terms (other than by reason of an Event of
Default thereunder), the Guarantor hereby guarantees, as a primary obligor and
not merely as a surety, absolutely and unconditionally (i) the full and prompt
payment of the principal of and interest and the Prepayment Premium and
Make-Whole Amount, if any, and other liabilities or amounts payable on the Notes
from time to time outstanding, as and when such payments become due and payable,
whether by lapse of time, upon redemption or prepayment, by extension or by
acceleration or declaration, or otherwise, and the due and punctual payment of
any other Obligations or amounts owing to the holders of the Notes, or any of
them, by the Company under the Notes, this Agreement, any other Note Purchase
Document or otherwise (including interest on overdue payments of principal, the
Prepayment Premium and Make-Whole Amount, if any, or interest or other
liabilities or amounts at the rate set forth in the Notes), (ii) the full and
prompt payment of all attorneys' fees, costs and expenses of collection in
amounts actually incurred by the holders of such Notes in connection with the
enforcement of this Guarantee, (iii) the full and timely performance of all
other obligations of the Company under each Note Purchase Document and (iv) if
the Guarantor shall fail to make any payment required to be made by it to any
holder of any Note under this Section 10.1 on the date such payment is due
hereunder, full and prompt payment of the interest on the amount of such
payment, at the rate of interest then in effect with respect to overdue payments
of principal or interest on the Notes concerned, from the date such payment was
required to be made until the same is actually paid to such holder. The
Guarantee provided for herein is a guarantee of the immediate and timely payment
and performance of the obligations guaranteed hereby and shall not be deemed to
be a guarantee of the collectability of such payments and that in consequence
thereof each holder of the Notes may sue the Guarantor directly.

      The Guarantor hereby waives any right to require that any action on or in
respect of any Note or this Agreement be brought against the Company or that
resort be had to any direct or indirect security for the Notes of the Company or
any other remedy. Any holder of any Note may, at its option, proceed hereunder
against the Guarantor in the first instance to collect monies when due, the
payment of which is guaranteed hereby, without first proceeding against the
Company or any other Person and without first resorting to any direct or
indirect security for the Notes of the Company or any other remedy. The
liability of the Guarantor hereunder shall in no way be affected or impaired by
any acceptance or release by any holder of any Note or any direct or indirect
security for, or other guaranties of, any indebtedness, liability or obligation
of the Company or any other Person to any holder of any Note or by any failure,
delay, neglect or

<PAGE>
                                                                              46


omission by any holder of any Note to realize upon or protect any such
indebtedness, liability or obligation or any notes or other instruments
evidencing the same or any direct or indirect security therefor or by any
estoppel, consent, waiver, or other action taken, or omitted to be taken, by
such holder. Anything herein to the contrary notwithstanding, the maximum
liability of the Guarantor hereunder shall in no event exceed the amount which
can be guaranteed by the Guarantor under applicable laws relating to the
insolvency of debtors.

10.2  GUARANTOR CONSENT.

      The Guarantor hereby consents and agrees that any holder of any Note from
time to time, with or without any further notice to or assent from the Guarantor
may, without in any manner affecting the liability of the Guarantor, and upon
such terms and conditions as such holder may deem advisable: (1) extend in whole
or in part (by renewal or otherwise), modify, change, compromise, release or
extend the duration of the time for the performance or payment of, any
indebtedness, liability or obligation of the Company or of any other Person
secondarily or otherwise liable for any indebtedness, liability or obligations
of the Company on the Notes, or waive any default with respect thereto, or, with
the consent of the Company to the extent required by the terms thereof, waive,
modify, amend or change any provision of this Agreement or the Notes; (2) sell,
release, surrender, modify, impair, exchange or substitute any and all property,
of any nature and from whomsoever received, held by, or on behalf of, any such
holder as direct or indirect security for the payment or performance of any
indebtedness, liability or obligation of the Company or of any other Person
secondarily or otherwise liable for such indebtedness, liability or obligation;
and (3) settle, adjust or compromise any claim of the Company against any other
Person secondarily or otherwise liable for any indebtedness, liability or
obligation of the Company on the Notes. The Guarantor hereby ratifies and
confirms any such extension, renewal, change, sale, release, waiver, surrender,
exchange, modification, amendment, impairment, substitution, settlement,
adjustment or compromise and agrees that the same shall be binding upon it, and
hereby waives any and all defenses, counterclaims or offsets which it might or
could have by reason thereof, it being understood that the Guarantor shall at
all times be bound by this Guarantee and remain liable hereunder in accordance
with its terms.

10.3  CHARACTER OF OBLIGATIONS OF GUARANTOR.

      (a) The Guarantor hereby waives: (i) notice of acceptance of this
Guarantee by the holders of the Notes or of the creation, renewal or accrual of
any liability of the Company, present or future, or of the reliance of the
holders of the Notes upon this Guarantee (it being understood that every
indebtedness, liability and obligation described in Section 10.1 hereof shall
conclusively be presumed to have been created, contracted or incurred in
reliance upon the execution of this Guarantee); (ii) demand of payment by the
holders of the Notes from the Company or any other Person indebted in any manner
on or for any of the indebtedness, liabilities or obligations hereby guaranteed;
and (iii) presentment for payment by the holders of the Notes or any other
Person of the Notes of the Company or any other instrument, protest thereof and
notice of its dishonor to any party thereto and to the Guarantor.

      (b) Without limiting the generality of the foregoing, the obligations of
the Guarantor shall not be discharged or impaired or otherwise affected by:

<PAGE>
                                                                              47


      (A)   any default, failure or delay, willful or otherwise, in the
            performance by the Company of any obligations of any kind or
            character whatsoever of the Company (including, without limitation,
            the obligations and undertakings of the Company under this
            Agreement);

      (B)   any creditors' rights, bankruptcy, receivership or other insolvency
            proceeding of the Company or any other Person or in respect of the
            property of the Company or any other Person or any merger,
            consolidation, reorganization, dissolution, liquidation or winding
            up of the Company or any other Person;

      (C)   impossibility or illegality of performance on the part of the
            Company of its obligations under the Notes, this Agreement, any Note
            Purchase Document or any other instruments or documents;

      (D)   the validity or enforceability of the Notes, this Agreement, any
            Note Purchase Document or any other instruments or documents;

      (E)   in respect of the Company or any other Person, any change of
            circumstances, whether or not foreseen or foreseeable, whether or
            not imputable to the Company or any other Person, or other
            impossibility of performance through fire, explosion, accident,
            labor disturbance, floods, droughts, embargoes, wars (whether or not
            declared), civil commotions, acts of God or the public enemy, delays
            or failure of suppliers or carriers, inability to obtain materials,
            action of any federal or state regulatory body or agency, change of
            law or any other causes affecting performance, or any other force
            majeure, whether or not beyond the control of the Company or any
            other Person and whether or not of the kind hereinbefore specified;

      (F)   any attachment, claim, demand, charge, lien, order, process,
            encumbrance or any other happening or event of reason, similar or
            dissimilar to the foregoing, or any withholding or diminution at the
            source, by reason of any taxes, assessments, expenses, indebtedness,
            obligations or liabilities of any character, foreseen or unforeseen,
            and whether or not valid, incurred by or against any Person, or
            against any sums payable under this Guarantee, so that such sum
            would be rendered inadequate or would be unavailable to make the
            payments herein provided;

      (G)   any order, judgment, decree, ruling or regulation (whether or not
            valid) of any court of any nation or of any political subdivision
            thereof or any body, agency, department, official or administrative
            or regulatory agency of any thereof 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 any party of its respective obligations under this Agreement, any
            Note, any Note Purchase Document or any instrument relating thereto;

      (H)   any sale of all or any part of the Capital Stock of the Company;

      (I)   the failure of the Guarantor to receive any benefit from or as a
            result of its execution, delivery and performance of this Guarantee;
            or

<PAGE>
                                                                              48


      (J)   any other circumstances which might otherwise constitute a defense
            available to, or a discharge of, the Guarantor in respect of its
            obligations under this Guarantee.

10.4  ABSOLUTE AND UNCONDITIONAL OBLIGATION.

      The liability of the Guarantor under this Guarantee shall be absolute,
direct, immediate, irrevocable and unconditional. The obligations of the
Guarantor under this Guarantee and the rights of the holders of the Notes to
enforce such obligations by any proceedings, whether by action at law, suit in
equity or otherwise, shall not be subject to any reduction, limitation,
impairment or termination, whether by reason of any claim of any character
whatsoever or otherwise, including, without limitation, claims of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense, set-off, counterclaim (other than any compulsory counterclaim),
recoupment or termination whatsoever.

10.5  WAIVER OF SUBROGATION AND CONTRIBUTION.

      The Guarantor hereby irrevocably waives, at all times prior to the payment
in full of the Notes and all other amounts payable hereunder, any claim or other
rights which it may now or hereunder acquire against the Company that arise from
the existence, payment, performance or enforcement of the Guarantor's
obligations under this Guarantee or any other agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, or any right to participate in any claim or remedy of any
holder of the Notes against the Company, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including
without limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to the Guarantor in violation of the preceding sentence at any
time prior to the payment in full of the Notes and all other amounts payable
hereunder, such amount shall be deemed to have been paid to the Guarantor for
the benefit of, and held in trust for the benefit of, the holders of the Notes
and shall forthwith be paid to the holders of the Notes to be credited and
applied pro rata upon the Notes whether matured or unmatured.

10.6  PREFERENCE.

      The Guarantor agrees that to the extent the Company or the Guarantor makes
any payment on the Notes or under this Guarantee, as the case may be, which
payment or any part thereof is subsequently invalidated, voided, declared to be
fraudulent or preferential, set aside, recovered, rescinded or is required to be
retained by or repaid to a trustee, receiver or any other Person under any
bankruptcy code, common law, or equitable cause, then and to the extent of such
payment, the obligation or the part thereof intended to be satisfied shall be
revived and continued in full force and effect with respect to the Guarantor's
obligation hereunder, as if said payment had not been made.

11.   LIMITED PUT RIGHT.

      Within thirty (30) days from the date on which the Company mails notice
pursuant to Section 8.10(f), each holder of Notes shall have the right to put
all or a portion of its Notes to the Company (the "FUNDAMENTAL CHANGE PUT"), and
the Company shall be obligated to repurchase

<PAGE>
                                                                              49


such Notes, on the date which is sixty (60) days after the notice was mailed for
an amount equal to the outstanding principal amount of such Notes plus accrued
and unpaid interest thereon to the date of repurchase.

12.   EVENTS OF DEFAULT.

      An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:

      (a) the Company defaults in the payment of any principal, Prepayment
Premium, Make-Whole Amount, if any, or payment on account of a Fundamental
Change Put on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

      (b) the Company defaults in the payment of any interest on any Note or
fails to make any deposit required by Section 8.15, in each case for more than
five (5) Business Days after the same becomes due and payable; or

      (c) (i) the General Partner, the Guarantor or the Company or any of its
Subsidiaries defaults in the performance of or compliance with any term
applicable to it contained in clause (i) or (ii) of Section 8.4, Section
8.10(a), Section 8.12, Section 8.16 or Section 9 of this Agreement or Sections
4.4 and 4.6(b) of the Security Agreement or (ii) an "Event of Default" under and
as defined in any Mortgage shall have occurred and be continuing; or

      (d) a failure (i) to keep in force insurance required by Section 8.5(b),
or (ii) to comply with and conform to all provisions and requirements of the
insurance policies and the insurers thereunder which would affect the Company's
or its Subsidiaries' ability to keep in force the insurance required by Section
8.5(b) or to collect any proceeds therefrom, or (iii) to comply with any
provision of Section 8.5(c); or

      (e) the General Partner, the Guarantor or the Company or any of its
Subsidiaries defaults in the performance of or compliance with any term
applicable to it contained herein (other than those referred to in paragraphs
(a), (b), (c) or (d) of this Section 12) or any other Note Purchase Document and
such default is not remedied within thirty (30) days (or, in the case of any
other Note Purchase Document, such shorter grace period as is expressly provided
therein) after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Guarantor, the Company or any of its
Subsidiaries receiving written notice of such default from the Required Holders
(any such written notice to be identified as a "notice of default" and to refer
specifically to this paragraph (e) of Section 12); or

      (f) any representation or warranty made in writing by or on behalf of the
General Partner, the Guarantor or the Company or any of its Subsidiaries or by
any officer of the General Partner, the Guarantor or the Company or any of its
Subsidiaries in this Agreement, any Note Purchase Document or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or

<PAGE>
                                                                              50


      (g) the General Partner, the Guarantor or the Company or any of its
Subsidiaries shall (i) default in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Notes) on
the scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided, that a
default, event or condition described in clause (i), (ii) or (iii) of this
paragraph (g) shall not at any time constitute an Event of Default unless, at
such time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (g) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $10,000,000; or

      (h) (i) the General Partner, the Guarantor or any Subsidiary of the
Guarantor, including the Company or any of its Subsidiaries, shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
General Partner, the Guarantor or any Subsidiary of the Guarantor, including the
Company or any of its Subsidiaries, shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the General
Partner, the Guarantor or any Subsidiary of the Guarantor, including the Company
or any of its Subsidiaries, any case, proceeding or other action of a nature
referred to in clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (iii) there shall
be commenced against the General Partner, the Guarantor or any Subsidiary of the
Guarantor, including the Company or any of its Subsidiaries, any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets that results in the entry of an order for any such relief that shall
not have been vacated, discharged, or stayed or bonded pending appeal within
sixty (60) days from the entry thereof; or (iv) the General Partner, the
Guarantor or any Subsidiary of the Guarantor, including the Company or any of
its Subsidiaries, shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) the General Partner, the Guarantor or any
Subsidiary of the Guarantor, including the Company or any of its Subsidiaries,
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or

      (i) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated

<PAGE>
                                                                              51


funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the General Partner, the Guarantor, the Company or
any Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Holders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
General Partner, the Guarantor, the Company or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Required Holders is likely to, incur
any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could, in the reasonable judgment of the Required
Holders, reasonably be expected to have a Material Adverse Effect; or

      (j) one or more judgments or decrees shall be entered against the General
Partner, the Guarantor or the Company or any of its Subsidiaries involving in
the aggregate a liability (not paid or fully covered by insurance as to which
the relevant insurance company has acknowledged coverage) of $10,000,000 or
more, and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within thirty (30) days from the entry thereof;
or

      (k) any of the Security Documents shall cease, for any reason, to be in
full force and effect, or the Company or any Affiliate thereof shall so assert,
or any Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created thereby;
or

      (l) the Guarantee or any guarantee entered into by a Subsidiary pursuant
to Section 8.13(c)(iii)(C) shall cease, for any reason, to be in full force and
effect or the General Partner, the Guarantor, the Company, any Subsidiary or any
Affiliate thereof shall so assert.

13.   REMEDIES ON DEFAULT, ETC.

13.1  ACCELERATION.

      (a) If an Event of Default described in paragraph (h) of Section 12 has
occurred, the outstanding Commitments, if any, shall immediately terminate and
all Notes then outstanding shall automatically become immediately due and
payable.

      (b) If any other Event of Default has occurred, the Required Holders, by
notice to the Company, may take either or both of the following actions: (i)
declare the outstanding Commitments, if any, to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) declare all
Notes (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Note Purchase Documents to be due and payable forthwith,
whereupon all Notes and other such amounts shall immediately become due and
payable.

<PAGE>
                                                                              52


      (c) If any Event of Default described in paragraph (a) or (b) of Section
12 has occurred and is continuing, any holder of Notes affected by such Event of
Default may at any time, at its option, by notice to the Company, declare all
the Notes held by it to be immediately due and payable.

      Any notice delivered by the Required Holders pursuant to this Section 13.1
shall also be provided to the Collateral Agent.

      Upon any Notes becoming automatically due and payable under this Section
13.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of the Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Prepayment Premium, in the case of the
Series A Notes, and the Make-Whole Amount, in the case of the Series B Notes,
determined in respect of such principal amount and in accordance with Section
7.3 (to the full extent permitted by applicable law), shall all be immediately
due and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. The Company acknowledges, and
the parties hereto agree, that each holder of a Note has the right to maintain
its investment in the Notes free from repayment by the Company (except as herein
specifically provided for) and that the provision for payment of a Prepayment
Premium, in the case of the Series A Notes, or a Make-Whole Amount, in the case
of the Series B Notes, by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

13.2  OTHER REMEDIES.

      If any Default or Event of Default has occurred and is continuing, and
irrespective of whether the Notes have become or have been declared immediately
due and payable under Section 13.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

      If any Default or Event of Default has occurred and is continuing, the
Collateral Agent and the holders may exercise the remedies provided in the
Security Documents.

13.3  NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

      No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 16, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 13, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.

<PAGE>
                                                                              53


13.4  NO GENERAL PARTNER'S LIABILITY.

      Notwithstanding any other provision contained in the Note Purchase
Documents to the contrary, the Purchasers agree for themselves and any
subsequent holder of any Note by acceptance of a Note registered in its name (or
the name of its nominee) shall be deemed to have agreed, that any claim against
the Company which may arise under this Agreement, any Note or any other Note
Purchase Document shall be made only against and shall be limited to the assets
of the Company and the Guarantor, and that no judgment, order or execution
entered in any suit, action or proceeding, whether legal or equitable, on this
Agreement, such Note or any of the other Note Purchase Documents shall be
obtained or enforced against the General Partner or its assets for the purpose
of obtaining satisfaction and payment of such Note, the Indebtedness evidenced
thereby or any claims arising thereunder or under this Agreement or any other
Note Purchase Document, any right to proceed against the General Partner
individually or its respective assets being hereby expressly waived, renounced
and remitted by the holders of the Notes. Nothing in this Section 13.4, however,
shall be construed so as to prevent any holder of any Note from commencing any
action, suit or proceeding with respect to or causing legal papers to be served
upon the General Partner for the purpose of obtaining jurisdiction over the
Guarantor or the Company or enforcing the obligations of the General Partner or
the Company hereunder.

14.   REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

14.1  REGISTRATION OF NOTES.

      The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor, promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.

14.2  TRANSFER AND EXCHANGE OF NOTES.

      Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) of the same series in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit A, in the case of a new Series A Note, or Exhibit B, in the case of a
new Series B Note. Each such new Note shall be dated and bear interest from the
date to which interest shall

<PAGE>
                                                                              54


have been paid on the surrendered Note or dated the date of the surrendered Note
if no interest shall have been paid thereon. The Company may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $1,000,000, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes, one Note
may be in a denomination of less than $1,000,000. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee), shall
be deemed to have made the representation set forth in Section 6.2.

      Upon registration of transfer in accordance with this Section 14.2, (i)
the transferee shall be deemed a "holder" hereunder with respect to the
transferred Notes and shall become a party to this Agreement and shall have all
of the rights and obligations of a holder hereunder (except for purposes of the
representation contained in Section 6.1) and under the other Note Purchase
Documents and (ii) except as otherwise provided therein, the transferor shall
relinquish its rights and be released from its obligations under the Note
Purchase Documents to the extent of the interests so transferred.

14.3  REPLACEMENT OF NOTES.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

      (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $100,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or

      (b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of the same series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.

15.   PAYMENTS ON NOTES.

      So long as each Purchaser or its nominee shall be the holder of any Note,
the Company will pay all sums becoming due on such Note for principal, the
Prepayment Premium and Make-Whole Amount, if any, and interest by the method and
at the address specified for such purpose below its name in Schedule A-1 and
Schedule A-2, or by such other method or at such other address as it shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender its Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office. Prior to any
sale or other disposition of any Note held by any Purchaser or its

<PAGE>
                                                                              55


nominee it will, at its election, either endorse thereon the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes pursuant
to Section 14.2. The Company will afford the benefits of this Section 15 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by any Purchaser under this Agreement and that has made the same
agreement relating to such Note as such Purchaser has made in this Section 15.

16.   EXPENSES, ETC.

      Whether or not the transactions contemplated hereby are consummated, the
Company agrees (a) to pay or reimburse all out-of-pocket costs and expenses
(including the fees of special and local counsel to the Purchasers) incurred by
each Purchaser, each holder of Notes, the Collateral Agent and the Cash Escrow
Agent in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, or waivers or consents in respect of,
this Agreement and the other Note Purchase Documents and any other documents
prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
the reasonable fees and disbursements of the Cash Escrow Agent and the
Collateral Agent and filing and recording fees and expenses, with statements
with respect to the foregoing to be submitted to the Company prior to each
Closing Date (in the case of amounts to be paid on a Closing Date) and from time
to time thereafter on a quarterly basis or such other periodic basis as the
Collateral Agent, the Cash Escrow Agent or the Required Holders shall deem
appropriate, (b) to pay or reimburse each holder, the Collateral Agent and the
Cash Escrow Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of (or determining whether or how to enforce or
preserve) any rights under this Agreement, the other Note Purchase Documents and
any such other documents, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each holder
or to the Collateral Agent or the Cash Escrow Agent, (c) to pay, indemnify, and
hold each holder harmless from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Note Purchase Documents and any such other documents
and (d) to pay, indemnify, and hold each holder and their respective officers,
directors, employees, affiliates, agents and controlling persons (each, an
"INDEMNITEE") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Note Purchase Documents and any such other documents,
including any of the foregoing relating to the use of proceeds of the Notes or
the violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Company or any of its Subsidiaries or any of
the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against the
Guarantor or the Company or any of its Subsidiaries under any Note Purchase
Document (all the foregoing in this clause (d), collectively, the "INDEMNIFIED
LIABILITIES"), provided, that the Company and its Subsidiaries shall have no
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities
to the extent such Indemnified Liabilities are found by a final and
nonappealable

<PAGE>
                                                                              56


decision of a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and to the extent permitted by applicable law, each of the General
Partner, the Guarantor and the Company agrees not to assert, and to cause each
Subsidiary of the Company not to assert, and hereby waives, and agrees to cause
each Subsidiary of the Company to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
16 shall be payable not later than ten (10) days after written demand therefor.
The agreements in this Section 16 shall survive: transfer or sale of Notes by a
holder and repayment of the Notes and all other amounts payable hereunder; the
enforcement, amendment or waiver of any provision of this Agreement, any Note
Purchase Document or the Notes; and the termination of this Agreement or any
Note Purchase Document.

17.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

      All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the other Note Purchase Documents,
the purchase or transfer by any Purchaser of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at any time by
or on behalf of any Purchaser or any other holder of a Note. All statements
contained in any other Note Purchase Document, any certificate or any other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the other Note
Purchase Documents embody the entire agreement and understanding between the
Purchasers and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.

18.   AMENDMENT AND WAIVER.

18.1  REQUIREMENTS.

      This Agreement, the Mortgages, the Security Agreement, the Collateral
Agency Agreement and the Notes may be amended, and the observance of any term
thereof may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Guarantor, the Company and each of its
Subsidiaries (in each case, to the extent a party thereto) and the Required
Holders and, with respect to the Mortgages and the Security Agreement, the
Collateral Agent, and, with respect to the Collateral Agency Agreement, the
Collateral Agent and the Cash Escrow Agent, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6, 10, 16, 21 or 23
hereof, or any defined term (as it is used therein), will be effective as to any
holder of Notes unless consented to by such holder of Notes in writing, (b) no
amendment or waiver may release any material portion of the Collateral, release
the Guarantor from its obligations under Section 10, or release any Subsidiary
from its guarantee obligations undertaken pursuant to Section 8.13(c)(iii)(C),
in each case without the written consent of all holders of the Notes, (c) no
amendment or waiver may reduce any percentage specified in the definition of
Required Holders without the consent of all holders of the Notes and (d) no such

<PAGE>
                                                                              57


amendment or waiver may, without the written consent of the holder of each Note
at the time outstanding affected thereby, (i) subject to the provisions of
Section 13 relating to acceleration, change the amount or time of any prepayment
or payment of principal of, or reduce the rate or change the time of payment or
method of computation of interest or of the Prepayment Premium or Make-Whole
Amount on, the Notes or (ii) amend any of Sections 7, 12(a), 12(b), 13, 18 or
22.

18.2  SOLICITATION OF HOLDERS OF NOTES.

      (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Mortgages, the Security Agreement or the Notes. The Company
will deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 18 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.

      (b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes or any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.

18.3  BINDING EFFECT, ETC.

      Any amendment or waiver consented to as provided in this Section 18
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company, the Guarantor and the General
Partner without regard to whether such Note has been marked to indicate such
amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between or among the Company, the Guarantor and the General Partner and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

18.4  NOTES HELD BY COMPANY, ETC.

      Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement, the Notes, the Mortgages or the Security Agreement, or have directed
the taking of any action provided herein or in the Notes to be taken upon the
direction of the holders of a specified percentage of the aggregate principal

<PAGE>
                                                                              58


amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.

18.5  RELEASES OF GUARANTEES AND LIENS.

      (a) Notwithstanding anything to the contrary contained herein or in any
other Note Purchase Document, the Collateral Agent shall be irrevocably
authorized by each holder of Notes (without requirement of notice to or consent
of any holder of Notes except as expressly required by Section 18.1) to take any
action requested by the Company or any of its Subsidiaries having the effect of
releasing any Collateral (i) to the extent necessary to permit consummation of
any transaction not prohibited by any Note Purchase Document or that has been
consented to in accordance with Section 18.1 or (ii) under the circumstances
described in paragraph (b) below.

      (b) At such time as the Notes and the other Obligations under the Note
Purchase Documents shall have been paid in full, the Collateral shall be
released from the Liens created by the Security Documents, and the Security
Documents and all obligations (other than those expressly stated to survive such
termination) of the Collateral Agent and the Company or any of its Subsidiaries
under the Security Documents shall terminate, all without delivery of any
instrument or performance of any act by any Person.

19.   NOTICES.

      All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:

      (i) if to any Purchaser or its nominee, to such Purchaser or its nominee
      or it at the address specified for such communications in Schedule A-1 and
      Schedule A-2, or at such other address as such Purchaser or its nominee
      shall have specified to the Company in writing,

      (ii) if to any other holder of any Note, to such holder at such address as
      such other holder shall have specified to the Company in writing, or

      (iii) if to the Company, to the Company, One Williams Center, MD 35-1,
      Tulsa, Oklahoma 74172 or at such other address as the Company shall have
      specified to the holder of each Note in writing.

      Notices under this Section 19 will be deemed given only when actually
received.

20.   REPRODUCTION OF DOCUMENTS.

      This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any holder of Notes, may

<PAGE>
                                                                              59


be reproduced by such holder by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and any holder may
destroy any original document so reproduced. Each of the Company, the Guarantor
and the General Partner agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by any
holder in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 20 shall not prohibit the Company or any other holder of
Notes from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy
of any such reproduction.

21.   CONFIDENTIAL INFORMATION.

      For the purposes of this Section 21, "CONFIDENTIAL INFORMATION" means
information delivered to any Purchaser by or on behalf of the General Partner,
the Guarantor, or the Company in connection with the transactions contemplated
by or otherwise pursuant to this Agreement or any other Note Purchase Document
that is proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by such Purchaser as being
confidential information of the General Partner, the Guarantor or the Company,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any person acting on such Purchaser's behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by the General Partner, the
Guarantor or the Company or (d) constitutes financial statements delivered to
such Purchaser under Section 8.1 that are otherwise publicly available. Each
Purchaser in receipt of Confidential Information will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by it in good faith to protect confidential information of third parties
delivered to it provided that each Purchaser may deliver or disclose
Confidential Information to (i) its directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by the Notes), (ii) its
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 21, (iii) any other holder of any Note, (iv) any
Institutional Investor to which such Purchaser sells or offers to sell such Note
or any part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 21), (v) any Person from which such Purchaser offers
to purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 21), (vi) any federal or state regulatory authority
having jurisdiction over such Purchaser, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser's investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or

<PAGE>
                                                                              60


appropriate in the enforcement or for the protection of the rights and remedies
under such Purchaser's Notes and this Agreement; provided that prior to
disclosing any such Confidential Information pursuant to clauses (viii)(w) and
(x), such Purchaser shall use reasonable efforts to give prior notice to the
General Partner, the Guarantor and the Company. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 21 as though it were a party to this
Agreement.

22.   SUBSTITUTION OF PURCHASER.

      Each Purchaser shall have the right to substitute any one of its
Affiliates as the purchaser of the Notes that it has agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both such Purchaser and its Affiliate, shall contain such Affiliate's agreement
to be bound by this Agreement and shall contain a confirmation by such Affiliate
of the accuracy with respect to it of the representations set forth in Section
6. Upon receipt of such notice, wherever the word "Purchaser" is used in this
Agreement (other than in this Section 22), such word shall be deemed to refer to
such Affiliate in lieu of the Purchaser. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers to
the original Purchaser all of the Notes then held by such Affiliate, upon
receipt by the Company of notice of such transfer, wherever the word "Purchaser"
is used in this Agreement (other than in this Section 22), such word shall no
longer be deemed to refer to such Affiliate, but shall refer to the original
Purchaser, and such Purchaser shall have all the rights of an original holder of
the Notes under this Agreement.

23.   MISCELLANEOUS.

23.1  SUCCESSORS AND ASSIGNS.

      All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.

23.2  SEVERABILITY.

      Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

23.3  CONSTRUCTION.

      Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.

<PAGE>
                                                                              61


23.4  COUNTERPARTS.

      This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

23.5  GOVERNING LAW.

      This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

23.6  SUBMISSION TO JURISDICTION.

      Each of the General Partner, the Guarantor and the Company agree that, if
judicial proceedings are brought by any holder of Notes to enforce any right or
remedy under this Agreement, any Note or any other Note Purchase Document, no
immunity from such proceedings will be claimed by or on behalf of the General
Partner, the Guarantor or the Company, as the case may be, or with respect to
its property. With respect to any such suit, action or proceeding which may be
brought by any holder of Notes, each of the General Partner, the Guarantor and
the Company hereby consents to submit to the jurisdiction of any state or
federal court of competent jurisdiction sitting within the area comprising the
Southern District of New York on the date of this Agreement and waives any
objection which it may have to the venue of any such suit, action or proceeding
in any such court and any claim or defense of inconvenient forum. Each of the
General Partner, the Guarantor and the Company irrevocably appoints CT
Corporation, with offices at 111 Eighth Avenue, New York, New York 10011, from
the Initial Closing Date to and including October 7, 2008, as its authorized
agent upon which process may be served in any such suit, action or proceeding
and CT Corporation hereby accepts such appointment. The General Partner, the
Guarantor and the Company will take any and all action, including the execution
and filing of all such documents and instruments, as may be necessary to effect
and continue the appointment of such agent in full force and effect, or if
necessary by reason of any fact or condition relating to such agent, to replace
such agent (but only after having given notice thereof to each holder of Notes)
during the period in which any Notes are outstanding. Each of the General
Partner, the Guarantor and the Company agrees that service of process upon such
agent and written notice of such service given to the General Partner, the
Guarantor or the Company, as the case may be, shall be deemed in every respect
effective service of process upon the General Partner, the Guarantor or the
Company in any such suit, action or proceeding in any such court. In making the
foregoing appointment and submission to jurisdiction, each of the General
Partner, the Guarantor and the Company expressly waives the benefit of any
contrary provisions of law. Nothing in this Section 23.6 shall affect the right
of any holder of Notes to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the General Partner,
the Guarantor or the Company in any court in which the General Partner, the
Guarantor or the Company is subject to suit.

<PAGE>
                                                                              62


23.7  JUDGMENT CURRENCY.

      In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "JUDGMENT CURRENCY")
other than U.S. dollars, the General Partner, the Guarantor and the Company,
severally, will indemnify each Purchaser against any material loss incurred by
it as a result of any variation between (i) the rate of exchange at which the
U.S. dollar amount is converted into the Judgment Currency for the purpose of
such judgment or order and (ii) the rate of exchange at which such Purchaser is
able to purchase U.S. dollars with the amount of judgment currency actually
received by such Purchaser. The foregoing indemnity shall constitute a separate
and independent obligation of the General Partner, the Guarantor and the Company
and shall continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "rate of exchange" shall include any premiums and
costs of exchange payable in connection with the purchase or conversion into
U.S. dollars.

23.8  EFFECTIVENESS OF SECURITY DOCUMENTS.

      Notwithstanding anything contained in this Agreement or any other Note
Purchase Document, no Obligation of the Borrower and no obligation of the
Guarantor pursuant to the Guarantee shall be entitled to the benefits of the
Security Documents until the Initial Closing Date.

                                    * * * * *

<PAGE>

      Each Purchaser in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between such
Purchaser, the General Partner, the Guarantor and the Company.

                                Very truly yours,

                                WILLIAMS GP LLC

                                By:   ____________________________
                                      Name:
                                      Title:


                                WILLIAMS ENERGY PARTNERS L.P.

                                   By: WILLIAMS GP LLC, its General Partner

                                         By  ____________________________
                                             Name:
                                             Title:


                                WILLIAMS PIPE LINE COMPANY, LLC

                                   By: WILLIAMS ENERGY PARTNERS L.P.,
                                       its Sole Member

                                   By: WILLIAMS GP LLC, its General Partner

                                         By: ____________________________
                                             Name:
                                             Title:
<PAGE>

                                                                    SCHEDULE A-1

                                 INITIAL CLOSING

                       INFORMATION RELATING TO PURCHASERS

<TABLE>
<CAPTION>
PURCHASER NAME                             GENERAL ELECTRIC CAPITAL CORPORATION
<S>                                        <C>
Name in Which Note is Registered           GENERAL ELECTRIC CAPITAL CORPORATION

Principal Amount                           $156,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               Bankers Trust Company,
                                           New York, NY
                                           ABA# 021-001-033
                                           Account Name: GECC/T&I Depository Account
                                           Acct# 50-205-784
                                           Ref: Williams Pipeline Loan

                                           Attn: PD Fortmann

Accompanying information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AA 7 ISIN No.: US96949XAA72

Address for Notices Related to Payments    GE Structured Finance
                                           120 Long Ridge Road
                                           Stamford, CT 06927

                                           Attn: Manager - Operations
                                                 Energy Portfolio

Address for all other Notices              GE Structured Finance
                                           120 Long Ridge Road
                                           Stamford, CT 06927

                                           Attn: Manager - Operations
                                                 Energy Portfolio

Other Instructions                         GENERAL ELECTRIC CAPITAL CORPORATION


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          GE Structured Finance
                                           120 Long Ridge Road
                                           Stamford, CT 06927
                                           Attn: Ms. Anne Pace, 3D39

Tax identification number                  13-1500700
</TABLE>

                            NOTE PURCHASE AGREEMENT

<PAGE>
                                                                               2


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           METROPOLITAN LIFE INSURANCE COMPANY

Principal Amount                           $39,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               JP Morgan Chase Bank
                                           New York, New York
                                           ABA# 021000021
                                           Acct# 002-2-410591
                                           Ref A/C: With reference to PPN#

Accompanying information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Metropolitan Life Insurance Company
                                           Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506

Address for all other Notices              Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director
                                           Fax:  973-355-4250

                                           with a copy to:

                                           Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           Metropolitan Life Insurance Company
                                           Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506
</TABLE>

<PAGE>
                                                                               3


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Other Instructions                         METROPOLITAN LIFE INSURANCE COMPANY


                                                 By:___________________________________
                                                 Name:
                                                 Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.

Tax identification number                  13-558-1829
</TABLE>

<PAGE>
                                                                               4


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           METROPOLITAN LIFE INSURANCE COMPANY

Principal Amount                           $3,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               JP Morgan Chase Bank
                                           New York, New York
                                           ABA# 021000021
                                           Acct# 002-2-410591

                                           Ref A/C:  With reference to PPN#

Accompanying information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Metropolitan Life Insurance Company
                                           Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506

Address for all other Notices              Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director
                                           Fax:  973-355-4250

                                           with a copy to:

                                           Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           Metropolitan Life Insurance Company
                                           Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506
</TABLE>

<PAGE>
                                                                               5


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Other Instructions                         METROPOLITAN LIFE INSURANCE COMPANY


                                                 By:___________________________________
                                                 Name:
                                                 Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.

Tax identification number                  13-558-1829
</TABLE>

<PAGE>
                                                                               6


<TABLE>
<CAPTION>
PURCHASER NAME                             NEW ENGLAND LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           NEW ENGLAND LIFE INSURANCE COMPANY

Principal Amount                            $5,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               Citibank
                                           New York, New York
                                           ABA# 021000089
                                           DDA# 36858201
                                           Security Acct.# 846116

Accompany  information                     Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    New England Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director

                                           Fax:  973-355-4250

                                           with a copy to:

                                           New England Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           New England Life Insurance Company
                                           c/o Metropolitan Life Insurance Company Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506
</TABLE>

<PAGE>
                                                                               7


<TABLE>
<CAPTION>
PURCHASER NAME                             NEW ENGLAND LIFE INSURANCE COMPANY
<S>                                        <C>
Address for all other Notices              New England Life Insurance Company
                                           c/o
Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director

                                           Fax:  973-355-4250

                                           with a copy to:

                                           New England Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           New England Life Insurance Company
                                           c/o Metropolitan Life Insurance Company Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506

Other Instructions                         NEW ENGLAND LIFE INSURANCE COMPANY

                                           By:   Metropolitan Life Insurance Company, as Investment Advisor


                                                 By:___________________________________
                                                 Name:
                                                 Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.

Tax identification number                  04-2708937
</TABLE>

<PAGE>
                                                                               8


<TABLE>
<CAPTION>
PURCHASER NAME                             TEXAS LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           TEXAS LIFE INSURANCE COMPANY

Principal Amount                           $2,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               JP Morgan Chase Bank
                                           New York, New York
                                           ABA# 021000021
                                           SSG Private Income Processing
                                           Acct.# 900-9-000200

                                           Texas Life Insurance Company

                                           Account Number G06748

                                           With reference to PPN#

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Texas Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director

                                           Fax:  973-355-4250

                                           with a copy to:

                                           Texas Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           Texas Life Insurance Company
                                           c/o Metropolitan Life Insurance Company Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo
                                           Fax:  813-801-2506
</TABLE>

<PAGE>
                                                                               9


<TABLE>
<CAPTION>
PURCHASER NAME                             TEXAS LIFE INSURANCE COMPANY
<S>                                        <C>
Address for All other Notices              Texas Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director

                                           Fax:  973-355-4250

                                           with a copy to:

                                           Texas Life Insurance Company
                                           c/o Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           Texas Life Insurance Company
                                           c/o Metropolitan Life Insurance Company Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo
                                           Fax:  813-801-2506

Other Instructions                         TEXAS LIFE INSURANCE COMPANY

                                           By:   Metropolitan Life Insurance Company, as Investment Advisor


                                                 By:___________________________________
                                                 Name:
                                                 Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.

Tax Identification Number                  74-0940890
</TABLE>

<PAGE>
                                                                              10


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN INSURANCE AND ANNUITY COMPANY
<S>                                        <C>
Name in Which Note is Registered           METROPOLITAN INSURANCE AND ANNUITY COMPANY

Principal Amount                           $5,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               JP Morgan Chase Bank
                                           New York, New York
                                           ABA# 021000021
                                           Acct.# 002-1-072301

                                           With reference to PPN#

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Metropolitan Insurance and Annuity Company
                                           c/o Metropolitan Life Insurance Company Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo
                                           Fax:  813-801-2506

Address for All other Notices              Metropolitan Insurance and Annuity Company
                                           c/o Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director

                                           Fax:  973-355-4250

                                           with a copy to:

                                           Metropolitan Insurance and Annuity Company
                                           c/o Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

                                           and a copy to:

                                           Metropolitan Insurance and Annuity Company
                                           c/o Metropolitan Life Insurance Company Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo
                                           Fax:  813-801-2506
</TABLE>

<PAGE>
                                                                              11


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN INSURANCE AND ANNUITY COMPANY
<S>                                        <C>
Other Instructions                         METROPOLITAN INSURANCE AND ANNUITY COMPANY


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.

Tax Identification Number                  13-2876440
</TABLE>

<PAGE>
                                       12


<TABLE>
<CAPTION>
PURCHASER NAME                             ING LIFE INSURANCE AND ANNUITY COMPANY
<S>                                        <C>
Name in Which Note is Registered           ING LIFE INSURANCE AND ANNUITY COMPANY

Principal Amount                           $50,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           BFN: 10C566
                                           Attention: P&I Department
                                           Reference: ING Life & Annuity Company
                                           Acct.# 216101 and Series B-1: 96949X AB 5 ISIN No.: US96949XAB55

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    ING Investment Management LLC
                                           5780 Powers Ferry Road, NW, Suite 300
                                           Atlanta, GA 30327-4943
                                           Attn: Securities Accounting

                                           Fax:  770-690-5057

Address for All other Notices              ING Investment Management LLC
                                           5780 Powers Ferry Road, NW, Suite 300
                                           Atlanta, GA 30327-4943
                                           Attn: Private Placements

                                           Fax:  770-690-5057

Other Instructions                         ING LIFE INSURANCE AND ANNUITY COMPANY

                                           By:   ING Investment Management LLC, as Agent


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          The Bank of New York
                                           Free Receipt/Delivery Window
                                           Window A - 3rd Floor
                                           One Wall Street, New York 10288

                                           with a copy to:

                                           ING Investment Management LLC
                                           5780 Powers Ferry Road, N.W., Suite 300
                                           Atlanta, GA 30327-4349

                                           Attn: Joyce Resnick, Esq.

Tax Identification Number                  71-0294708
</TABLE>

<PAGE>
                                                                              13


<TABLE>
<CAPTION>
PURCHASER NAME                             THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Name in Which Note is Registered           THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Principal Amount                           $39,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           Account No.: 890-0304-391

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

                                           !INV 8086!

Address for Notices Related to Payments    The Prudential Insurance Company of America
                                           c/o  Investment Operations Group
                                           Gateway Center Two, 10th Floor
                                           100 Mulberry Street
                                           Newark, New Jersey 07102-4077

                                           Attn: Manager

                                           and to:

                                           Manager, Trade Management Group
                                           Telephone: 973-367-3141
                                           Facsimile: 800-802-4925

Address for All other Notices              The Prudential Insurance Company of America
                                           c/o Prudential Capital Group
                                           2200 Ross Avenue, Suite 4200E
                                           Dallas, TX 75201

                                           Attn: Managing Director

                                           Fax:  214-720-6299

Other Instructions                         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA


                                           By:___________________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                              14


<TABLE>
<CAPTION>
PURCHASER NAME                             THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Instructions re Delivery of Notes          The Prudential Insurance Company of America
                                           c/o Prudential Capital Group
                                           2200 Ross Avenue, Suite 4200E
                                           Dallas, TX 75201

                                           Attention: William H. Bulmer, Esq.

Tax Identification Number                  22-1211670
</TABLE>

<PAGE>
                                                                              15


<TABLE>
<CAPTION>
PURCHASER NAME                             PRUCO LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           PRUCO LIFE INSURANCE COMPANY

Principal Amount                           $1,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           Account No.: 890-0304-421

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

                                           !INV 8086!

Address for Notices Related to Payments    Pruco Life Insurance Company
                                           c/o  Investment Operations Group
                                           Gateway Center Two, 10th Floor
                                           100 Mulberry Street
                                           Newark, New Jersey 07102-4077

                                           Attn: Manager

                                           and to:

                                           Manager, Trade Management Group
                                           Telephone: 973-367-3141
                                           Facsimile: 800-224-2278

Address for All other Notices              Pruco Life Insurance Company
                                           c/o Prudential Capital Group
                                           2200 Ross Avenue, Suite 4200E
                                           Dallas, TX 75201

                                           Attn: Managing Director
                                           Fax:  214-720-6299

Other Instructions                         PRUCO LIFE INSURANCE COMPANY


                                           By:___________________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                              16


<TABLE>
<CAPTION>
PURCHASER NAME                             PRUCO LIFE INSURANCE COMPANY
<S>                                        <C>
Instructions re Delivery of Notes          Pruco Life Insurance Company
                                           c/o Prudential Capital Group
                                           2200 Ross Ave. Suite 4200E
                                           Dallas, TX 75201

                                           Attention: William H. Bulmer, Esq.

Tax Identification Number                  22-1944557
</TABLE>

<PAGE>
                                                                              17


<TABLE>
<CAPTION>
PURCHASER NAME                             ING LIFE INSURANCE & ANNUITY COMPANY
<S>                                        <C>
Name in Which Note is Registered           ING LIFE INSURANCE & ANNUITY COMPANY

Principal Amount                           $10,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           BNF: 111566
                                           Attention: P&I Department
                                           Reference: ING Life & Annuity Company, Account No. 216101
                                           and PPN ________ with sufficient information to identify the source and
                                           application of such funds

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    ING Investment Management LLC
                                           5780 Powers Ferry Road, NW, Suite 300
                                           Atlanta, GA 30327-4943
                                           Attn: Securities Accounting

                                           Fax:  770-690-5057

                                           and to:

                                           Manager, Trade Management Group
                                           Telephone: 973-802-8107
                                           Facsimile: 800-224-2278

Address for All other Notices              Prudential Private Placements Investors, L.P.
                                           Four Gateway Center
                                           100 Mulberry Street
                                           Newark, New Jersey 07102

                                           Attn: Albert Trank, Senior Vice President

                                           Tel:  973-802-8608

                                           Fax:  973-624-6432
</TABLE>

<PAGE>
                                                                              18


<TABLE>
<CAPTION>
PURCHASER NAME                             ING LIFE INSURANCE & ANNUITY COMPANY
<S>                                        <C>
Other Instructions                         ING LIFE INSURANCE AND ANNUITY COMPANY

                                           By: Prudential Private Placement Investors, L.P.
                                           (as Investment Advisor)

                                               By: Prudential Private Placement Investors, Inc.
                                               (as its General Partner)


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          ING Life Insurance and Annuity Company
                                           c/o Prudential Capital Group
                                           2200 Ross Ave., Suite 4200E
                                           Dallas, TX 75201

                                           Attention: William H. Bulmer, Esq.

Tax Identification Number                  71-0294708
</TABLE>

<PAGE>
                                                                              19


<TABLE>
<CAPTION>
PURCHASER NAME                             NEW YORK LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           NEW YORK LIFE INSURANCE COMPANY

Principal Amount                           $4,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, NY  10019
                                           ABA# 021-000-021
                                           Credit: New York Life Insurance Company
                                           General Account No.: 008-9-00687

                                           With sufficient information (including issuer, PPN number, interest rate,
                                           maturity and whether payment is of principal, premium, or interest) to
                                           identify the source and application of such funds

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    New York Life Insurance Company
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010-1603

                                           Attn: Financial Management and Operations Group Securities Operations
                                                 2nd Floor

                                           Fax:  212-447-4160

Address for All other Notices              New York Life Insurance Company
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010

                                           Attn: Securities Investment Group
                                                 Private Finance
                                                 2nd Floor

                                           Fax:  212-447-4122

Other Instructions                         NEW YORK LIFE INSURANCE COMPANY


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes

Tax Identification Number                  13-5582869
</TABLE>

<PAGE>
                                                                              20


<TABLE>
<CAPTION>
PURCHASER NAME                             NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
<S>                                        <C>
Name in Which Note is Registered           NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

Principal Amount                           $12,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021-000-021
                                           Credit: New York Life Insurance Annuity Corporation
                                           General Account No.: 323-8-47382

                                           With sufficient information (including issuer, PPN number, interest rate,
                                           maturity and whether payment is of principal, premium, or interest) to
                                           identify the source and application of such funds

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    New York Life Insurance and Annuity Corporation
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010-1603

                                           Attn: Financial Management and Operations Group Securities Operations
                                                 2nd Floor

                                           Fax:  212-447-4160

Address for All other Notices
                                           New York Life Insurance and Annuity Corporation
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010-1603

                                           Attn: Securities Investment Group
                                                 Private Finance
                                                 2nd Floor

                                           Fax:  212-447-4122

Other Instructions                         NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

                                           By: New York Life Investment Management LLC, It's Investment Manager


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes

Tax Identification Number                  13-3044743
</TABLE>

<PAGE>
                                                                              21


<TABLE>
<CAPTION>
PURCHASER NAME                             SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           OKGBD & Co.

Principal Amount                           $16,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Bankers Trust Company
                                           New York, New York
                                           ABA# 021-001-033
                                           Re: SunAmerica Life Insurance Company
                                           Acct.# 99-911-145
                                           FFC: A/C 099530

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Deutsche Bank
                                           648 Grassmere Business Park, MS 7204
                                           Nashville, TN 37211

                                           Attn: James Germaine

                                           Tel:  615-835-2465

                                           Fax:  615-835-2493

Address for All other Notices              AIG Global Investment Corporation
                                           P.O. Box 3247
                                           Houston, TX 77253-3247

                                           Overnight Mail Address: 2929 Allen Parkway, A36-04
                                                                   Houston, Texas 77019-2155

                                           Fax:  713-831-1072

                                           with a copy to:

                                           AIG Global Investments Corporation
                                           Legal Department - Investment Management
                                           2929 Allen Parkway, Suite A36-01
                                           Houston, TX 77019-2155
                                           Fax: 713-831-2328
</TABLE>

<PAGE>
                                                                              22


<TABLE>
<CAPTION>
PURCHASER NAME                             SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Other Instructions                         SUNAMERICA LIFE INSURANCE COMPANY

                                           FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                           By:   AIG Global Investment Corp., investment adviser


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Note           Bankers Trust Company
                                           14 Wall Street, 4th Floor, Window 43
                                           New York, New York 10005
                                           Attn: Lorraine Squires

                                           Reference: SunAmerica Life Insurance Company

                                           Account# 099530

Tax Identification Number                  13-3020293

                                           Tax ID# for SunAmerica Life Insurance Company 52-0502540
</TABLE>

<PAGE>
                                                                              23


<TABLE>
<CAPTION>
PURCHASER NAME                             FIRST SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           OKGBD & Co.

Principal Amount                           $0

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information
                                           Bankers Trust Company
                                           New York, New York
                                           ABA# 021-001-033
                                           Re: First SunAmerica Life Insurance Company
                                           Acct.# 99-911-145
                                           FFC: A/C 099537

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Deutsche Bank
                                           648 Grassmere Business Park, MS 7204
                                           Nashville, TN 37211

                                           Attn: James Germaine

                                           Tel:  615-835-2465

                                           Fax:  615-835-2493

Address for All other Notices              AIG Global Investment Corporation
                                           P.O. Box 3247
                                           Houston, TX 77253-3247

                                           Overnight Mail Address: 2929 Allen Parkway, A36-04
                                                                   Houston, Texas 77019-2155

                                           Fax:  713-831-1072

                                           with a copy to:

                                           AIG Global  Investments Corporation
                                           Legal Department - Investment Management
                                           2929 Allen Parkway, Suite A36-01
                                           Houston, TX 77019-2155
                                           Fax: 713-831-2328
</TABLE>

<PAGE>
                                                                              24


<TABLE>
<CAPTION>
PURCHASER NAME                             SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Other Instructions                         SUNAMERICA LIFE INSURANCE COMPANY

                                           FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                           By:   AIG Global Investment Corp., investment adviser


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Bankers Trust Company
                                           14 Wall Street, 4th Floor, Window 43
                                           New York, New York 10005
                                           Attn: Lorraine Squires

                                           Reference: First SunAmerica Life Insurance Company/Main

                                           Account# 099537

                                           Euroclear# 22650

Tax Identification Number                  13-3020293

                                           Tax ID# for First SunAmerica Life Insurance Company: 06-0992729
</TABLE>

<PAGE>
                                                                              25


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Name in Which Note is Registered           CUDD & CO.

Principal Amount                           $5,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G05978, Guardian Life

                                           And the name and CUSIP for which payment is being made

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza, Ground Floor Receive Window
                                           New York, New York 10004
                                           Reference A/C# G05978, Guardian Life

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              26


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Name in Which Note is Registered           CUDD & CO.

Principal Amount                           $5,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G05978, Guardian Life

                                           And the name and CUSIP for which payment is being made

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza, Ground Floor Receive Window
                                           New York, New York 10004
                                           Reference A/C# G05978, Guardian Life

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              27


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Name in Which Note is Registered           CUDD & CO.

Principal Amount                           $2,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G05978, Guardian Life

                                           And the name and CUSIP for which payment is being made

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza, Ground Floor Receive Window
                                           New York, New York 10004
                                           Reference A/C# G05978, Guardian Life

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              28


<TABLE>
<CAPTION>
PURCHASER NAME                             FORT DEARBORN LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           STRAFE & CO.

Principal Amount                           $1,600,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Bank One
                                           ABA# 044000037
                                           For further credit to Bank One
                                           Account# 980401787
                                           Attn: A/C# 2600218703 FT. Dearborn Life Insurance Company - Guardian MVA

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Fort Dearborn Life Insurance Company
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              Fort Dearborn Life Insurance Company
                                           c/o Guardian Investor Services LLC
                                           Fixed Income Securities
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         FORT DEARBORN LIFE INSURANCE COMPANY
                                           By: Guardian Investor Services LLC


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          C/O Bank One
                                           Attn: Trade Processing
                                           1900 Polaris Parkway
                                           Columbus, Ohio 43240

                                           F/A/O A/C 2600218703 FDL - MVA
</TABLE>

<PAGE>
                                                                              29


<TABLE>
<CAPTION>
PURCHASER NAME                             FORT DEARBORN LIFE INSURANCE COMPANY
<S>                                        <C>
Tax Identification Number                  31-0649116
</TABLE>

<PAGE>
                                                                              30


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.

                                           GUARDIAN TRADITION
<S>                                        <C>
Name in Which Note is Registered           Cudd & Co.

Principal Amount                           $1,600,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information
                                           The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G53637, GIAC - Guardian Tradition
                                           And the name and CUSIP for which payment is being made

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza - Ground Floor Receive Window
                                           New York, NY 10004
                                           Reference A/C# G53637, GIAC - Guardian Tradition

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              31


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. - FIXED INCOME OPTION D
<S>                                        <C>
Name in Which Note is Registered           CUDD & Co

Principal Amount                           $800,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G53638, GIAC FIXED INCOME OPTION D

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza - Ground Floor Receive Window
                                           New York, NY 10004
                                           Reference A/C# G53638, GIAC - GIAC Fixed Income Option D

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              32


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Name in which Note is Registered           teachers insurance and annuity association of america

Principal Amount                           $54,250,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021000021
                                           Attn: Teachers Insurance and Annuity Association of America
                                           Acct#:  900-9-000200
                                           For Further Credit to TIAA Account Number: G07040
                                           Reference: PPN# /Issuer /Mat.Date / Coupon Rate /P&I Breakdown

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Accounting Division

                                           Tel:  212-916-6004
                                           Fax:  212-916-6955

                                           with a copy to:

                                           Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush

                                           Tel:  212-916-6372
                                           Fax:  212-916-6580

Address for All other Notices              Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Division, Private Placements
                                           Fax:  212-490-9000

Signature Block Format                     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA


                                           By:  ____________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes
</TABLE>

<PAGE>
                                                                              33


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Tax identification number                  13-1624203
</TABLE>

<PAGE>
                                                                              34


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Name in which Note is Registered           teachers insurance and annuity association of america

Principal Amount                           $3,875,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021000021
                                           Attn: Teachers Insurance and Annuity Association of America Personal
                                           Annuity Private Placements
                                           Acct#:  900-9-000200
                                           For Further Credit to TIAA Account Number: G07320
                                           Reference: PPN# /Issuer /Mat.Date / Coupon Rate /P&I Breakdown

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Accounting Division

                                           Tel:  212-916-6004
                                           Fax:  212-916-6955

                                           with a  copy to:
                                           Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush
                                                 Securities Division - Domestic Private Placements

                                           Tel:  212-916-6372

                                           Fax:  212-916-6580

Address for All other Notices              Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush

                                           Fax:  212-916-6580

Signature Block Format                     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA


                                           By:  ____________________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                              35


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Instructions re Delivery of Notes          13-1624203
</TABLE>

<PAGE>
                                                                              36


<TABLE>
<CAPTION>
PURCHASER NAME                             TIAA CREF LIFE INSURANCE COMPANY
<S>                                        <C>
Name in which Note is Registered           TIAA CREF LIFE INSURANCE COMPANY

Principal Amount                           $3,875,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021000021
                                           Attn: TIAA-CREF Life PA Select Private Placements
                                           Acct#:  900-9-000200
                                           For Further Credit to TIAA Account Number: G08045

                                           Reference: PPN# /Issuer /Mat.Date / Coupon Rate /P&I Breakdown

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN: 96949X AB 5 ISIN No.: US96949XAB55

Address for Notices Related to Payments    Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Accounting Division

                                           Tel:  212-916-6004
                                           Fax:  212-916-6955

                                           with a  copy to:

                                           Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush
                                                 Securities Division - Domestic Private Placements

                                           Tel:  212-916-6372

                                           Fax:  212-916-6580

Address for All other Notices              Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush -Domestic Private Placements

                                           Fax:  212-916-6580
</TABLE>

<PAGE>
                                                                              37


<TABLE>
<CAPTION>
PURCHASER NAME                             TIAA CREF LIFE INSURANCE COMPANY
<S>                                        <C>
Signature Block Format                     TIAA-CREF LIFE INSURANCE COMPANY

                                           By:   TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, as
                                                 Investment Manager


                                           By: ____________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes

Tax identification number                  13-1624203
</TABLE>

<PAGE>

                                                                    SCHEDULE A-2

                               SUBSEQUENT CLOSING

                       INFORMATION RELATING TO PURCHASERS

<TABLE>
<CAPTION>
PURCHASER NAME                             GENERAL ELECTRIC CAPITAL CORPORATION
<S>                                        <C>
Name in Which Note is Registered           GENERAL ELECTRIC CAPITAL CORPORATION

Principal Amount                           Up to $44,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               Bankers Trust Company,
                                           New York, NY
                                           ABA# 021-001-033
                                           Account Name: GECC/T&I Depository Account
                                           Acct# 50-205-784
                                           Ref: Williams Pipeline Loan

                                           Attn: PD Fortmann

Accompanying information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    GE Structured Finance
                                           120 Long Ridge Road
                                           Stamford, CT 06927
                                           Attn: Manager - Operations
                                                 Energy Portfolio

Address for all other Notices              GE Structured Finance
                                           120 Long Ridge Road
                                           Stamford, CT 06927
                                           Attn: Manager - Operations
                                                 Energy Portfolio

Other Instructions                         GENERAL ELECTRIC CAPITAL CORPORATION


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          GE Structured Finance
                                           120 Long Ridge Road
                                           Stamford, CT 06927

                                           Attn: Ms. Anne Pace, 3D39

Tax identification number                  13-1500700
</TABLE>

<PAGE>
                                                                               2


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           METROPOLITAN LIFE INSURANCE COMPANY

Principal Amount                           Up to $14,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               JP Morgan Chase Bank
                                           New York, New York
                                           ABA# 021000021
                                           Acct# 002-2-410591

                                           Ref A/C:  With reference to PPN#

Accompanying information                   Name of Company:

                                           Description of Security:
                                           PPN:

Address for Notices Related to Payments    Metropolitan Life Insurance Company
                                           Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506

Address for all other Notices              Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director
                                           Fax:  973-355-4250

                                           with a copy to:

                                           Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

Other Instructions                         METROPOLITAN LIFE INSURANCE COMPANY


                                                 By:___________________________________
                                                 Name:
                                                 Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.
</TABLE>

<PAGE>
                                                                               3


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Tax identification number                  13-558-1829
</TABLE>

<PAGE>
                                                                               4


<TABLE>
<CAPTION>
PURCHASER NAME                             METROPOLITAN LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           METROPOLITAN LIFE INSURANCE COMPANY

Principal Amount                           $2,000,000

Payment on account of Note

         Method                            Federal Funds Wire Transfer

         Account information               JP Morgan Chase Bank
                                           New York, New York
                                           ABA# 021000021
                                           Acct# 002-2-410591

                                           Ref A/C:  With reference to PPN#

Accompanying information                   Name of Company:

                                           Description of Security:

                                           PPN:

Address for Notices Related to Payments    Metropolitan Life Insurance Company
                                           Securities Accounting
                                           4100 Boyscout Boulevard
                                           Tampa, Florida 33607

                                           Attn: Desiree Di Salvo

                                           Fax:  813-801-2506

Address for all other Notices              Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Director
                                           Fax:  973-355-4250

                                           with a copy to:

                                           Metropolitan Life Insurance Company
                                           Investments, Private Placements
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902

                                           Attn: Chief Counsel - Securities Investments (PRIV)

                                           Fax:  973-355-4338

Other Instructions                         METROPOLITAN LIFE INSURANCE COMPANY


                                                 By:___________________________________
                                                 Name:
                                                 Title:

Instructions re Delivery of Notes          Metropolitan Life Insurance Company
                                           10 Park Avenue, P.O. Box 1902
                                           Morristown, New Jersey 07962-1902
                                           Attn: Kim Liou, Esq.

Tax identification number                  13-558-1829
</TABLE>

<PAGE>
                                                                               5


<TABLE>
<CAPTION>
PURCHASER NAME                             ING LIFE INSURANCE AND ANNUITY COMPANY
<S>                                        <C>
Name in Which Note is Registered           ING LIFE INSURANCE AND ANNUITY COMPANY

Principal Amount                           Up to $15,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           BFN: 10C566
                                           Attention: P&I Department
                                           Reference: ING Life & Annuity Company
                                           Acct.# 216101 and [insert Cusip No.]

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    ING Investment Management LLC
                                           5780 Powers Ferry Road, NW, Suite 300
                                           Atlanta, GA 30327-4943
                                           Attn: Securities Accounting

                                           Fax:  770-690-5057

Address for All other Notices              ING Investment Management LLC
                                           5780 Powers Ferry Road, NW, Suite 300
                                           Atlanta, GA 30327-4943
                                           Attn: Private Placements

                                           Fax:  770-690-5057

Other Instructions                         ING LIFE INSURANCE AND ANNUITY COMPANY

                                           By:   ING Investment Management LLC, as Agent


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          The Bank of New York
                                           Free Receipt/Delivery Window
                                           Window A - 3rd Floor
                                           One Wall Street, New York 10288

                                           with a copy to:

                                           ING Investment Management LLC
                                           5780 Powers Ferry Road, N.W., Suite 300
                                           Atlanta, GA 30327-4349

                                           Attn: Joyce Resnick, Esq.

Tax Identification Number                  71-0294708
</TABLE>

<PAGE>
                                                                               6


<TABLE>
<CAPTION>
PURCHASER NAME                             THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Name in Which Note is Registered           THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Principal Amount                           $11,700,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           Account No.: 890-0304-391

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

                                           !INV       !

Address for Notices Related to Payments    The Prudential Insurance Company of America
                                           c/o  Investment Operations Group
                                           Gateway Center Two, 10th Floor
                                           100 Mulberry Street
                                           Newark, New Jersey 07102-4077

                                           Attn: Manager

                                           and to:

                                           Manager, Trade Management Group
                                           Telephone: 973-367-3141
                                           Facsimile: 800-224-2278

Address for All other Notices              The Prudential Insurance Company of America
                                           c/o Prudential Capital Group
                                           2200 Ross Avenue, Suite 4200E
                                           Dallas, TX 75201

                                           Attn: Managing Director

                                           Fax:  214-720-6299

Other Instructions                         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA


                                           By:___________________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                               7


<TABLE>
<CAPTION>
PURCHASER NAME                             THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Instructions re Delivery of Notes          The Prudential Insurance Company of America
                                           c/o Prudential Capital Group
                                           2200 Ross Ave., Suite 4200E
                                           Dallas, TX 75201

                                           Attention: William H. Bulmer, Esq.

Tax Identification Number                  22-1211670
</TABLE>

<PAGE>
                                                                               8


<TABLE>
<CAPTION>
PURCHASER NAME                             PRUCO LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           PRUCO LIFE INSURANCE COMPANY

Principal Amount                           $300,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           Account No.: 890-0304-421

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN:

                                           !INV    !

Address for Notices Related to Payments    Pruco Life Insurance Company
                                           c/o  Investment Operations Group
                                           Gateway Center Two, 10th Floor
                                           100 Mulberry Street
                                           Newark, New Jersey 07102-4077

                                           Attn: Manager

                                           and to:

                                           Manager, Trade Management Group
                                           Telephone: 973-367-3141
                                           Facsimile: 800-224-2278

Address for All other Notices              Pruco Life Insurance Company
                                           c/o Prudential Capital Group
                                           2200 Ross Avenue, Suite 4200E
                                           Dallas, TX 75201

                                           Attn: Managing Director

                                           Fax:  214-720-6299

Other Instructions                         PRUCO LIFE INSURANCE COMPANY


                                           By:___________________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                               9


<TABLE>
<CAPTION>
PURCHASER NAME                             PRUCO LIFE INSURANCE COMPANY
<S>                                        <C>
Instructions re Delivery of Notes          The Prudential Insurance Company of America
                                           c/o Prudential Capital Group
                                           2200 Ross Ave., Suite 4200E
                                           Dallas, TX 75201

                                           Attention: William H. Bulmer, Esq.

Tax Identification Number                  22-1944557
</TABLE>

<PAGE>
                                                                              10


<TABLE>
<CAPTION>
PURCHASER NAME                             ING LIFE INSURANCE & ANNUITY COMPANY
<S>                                        <C>
Name in Which Note is Registered           ING LIFE INSURANCE & ANNUITY COMPANY

Principal Amount                           $3,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Bank of New York
                                           New York, New York
                                           ABA# 021-000-018
                                           BNF: 111566
                                           Attention: P&I Department
                                           Reference: ING Life & Annuity Company, Account No. 216101
                                           and PPN ________ with sufficient information to identify the source and
                                           application of such funds

                                           Each such wire transfer shall set forth the name of the Company, a
                                           reference to "7.67% Senior Secured Notes due October 7, 2007," and the due
                                           date and application (as among principal, interest and Make-Whole Amount)
                                           of the payment being made.

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN:

Address for Notices Related to Payments    ING Investment Management LLC
                                           5780 Powers Ferry Road, NW, Suite 300
                                           Atlanta, GA 30327-4943
                                           Attn: Securities Accounting

                                           Fax:  770-690-5057

                                           and to:

                                           Manager, Trade Management Group
                                           Telephone: 973-802-8107
                                           Facsimile: 800-224-2278

Address for All other Notices              Prudential Private Placements Investors, L.P.
                                           Four Gateway Center
                                           100 Mulberry Street
                                           Newark, New Jersey 07102

                                           Attn: Albert Trank, Senior Vice President

                                           Tel:  973-802-8608

                                           Fax:  973-624-6432

Other Instructions                         ING LIFE INSURANCE AND ANNUITY COMPANY

                                           By:  Prudential Private Placement Investors, L.P.
                                           (as Investment Advisor)

                                               By: Prudential Private Placement Investors, Inc.
                                               (as its General Partner)


                                           By______________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                              11


<TABLE>
<CAPTION>
PURCHASER NAME                             ING LIFE INSURANCE & ANNUITY COMPANY
<S>                                        <C>
Instructions re Delivery of Notes          ING Life Insurance and Annuity Company
                                           c/o Prudential Capital Group
                                           2200 Ross Ave., Suite 4200E
                                           Dallas, TX 75201

                                           Attention: William H. Bulmer, Esq.

Tax Identification Number                  71-0294708
</TABLE>

<PAGE>
                                        2                                     13


<TABLE>
<CAPTION>
PURCHASER NAME                             NEW YORK LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           NEW YORK LIFE INSURANCE COMPANY

Principal Amount                           Up to $1,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, NY  10019
                                           ABA# 021-000-021
                                           Credit: New York Life Insurance Company
                                           General Account No.: 008-9-00687

                                           With sufficient information (including issuer, PPN number, interest rate,
                                           maturity and whether payment is of principal, premium, or interest) to
                                           identify the source and application of such funds

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    New York Life Insurance Company
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010-1603

                                           Attn: Financial Management and Operations Group Securities Operations
                                                 2nd Floor

                                           Fax:  212-447-4160

Address for All other Notices              New York Life Insurance Company
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010

                                           Attn: Securities Investment Group
                                                 Private Finance
                                                 2nd Floor

                                           Fax:  212-447-4122

Other Instructions                         NEW YORK LIFE INSURANCE COMPANY


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes

Tax Identification Number                  13-5582869
</TABLE>

<PAGE>
                                                                              13


<TABLE>
<CAPTION>
PURCHASER NAME                             NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
<S>                                        <C>
Name in Which Note is Registered           NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

Principal Amount                           Up to $3,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021-000-021
                                           Credit: New York Life Insurance Annuity Corporation
                                           General Account No.: 323-8-47382

                                           With sufficient information (including issuer, PPN number, interest rate,
                                           maturity and whether payment is of principal, premium, or interest) to
                                           identify the source and application of such funds

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    New York Life Insurance and Annuity Corporation
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010-1603

                                           Attn: Financial Management and Operations Group Securities Operations
                                                 2nd Floor

                                           Fax:  212-447-4160

Address for All other Notices              New York Life Insurance and Annuity Corporation
                                           c/o New York Life Investment Management LLC
                                           51 Madison Avenue
                                           New York, New York 10010-1603

                                           Attn: Securities Investment Group
                                                 Private Finance
                                                 2nd Floor

                                           Fax:  212-447-4122

Other Instructions                         NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

                                           By: New York Life Investment Management LLC, It's Investment Manager


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes

Tax Identification Number                  13-3044743
</TABLE>

<PAGE>
                                                                              14


<TABLE>
<CAPTION>
PURCHASER NAME                             SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           OKGBD & Co.

Principal Amount                           $0

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Bankers Trust Company
                                           New York, New York
                                           ABA# 021-001-033
                                           Re: SunAmerica Life Insurance Company
                                           Acct.# 99-911-145
                                           FFC: A/C 099530

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    Deutsche Bank
                                           648 Grassmere Business Park, MS 7204
                                           Nashville, TN 37211

                                           Attn: James Germaine

                                           Tel:  615-835-2465

                                           Fax:  615-835-2493

Address for All other Notices              AIG Global Investment Corporation
                                           P.O. Box 3247
                                           Houston, TX 77253-3247

                                           Overnight Mail Address: 2929 Allen Parkway, A36-04
                                                                   Houston, Texas 77019-2155

                                           Fax:  713-831-1072

                                           with a copy to:

                                           AIG Global  Investments Corporation
                                           Legal Department - Investment Management
                                           2929 Allen Parkway, Suite A36-01
                                           Houston, TX 77019-2155
                                           Fax: 713-831-2328
</TABLE>

<PAGE>
                                                                              15


<TABLE>
<CAPTION>
PURCHASER NAME                             SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Other Instructions                         SUNAMERICA LIFE INSURANCE COMPANY

                                           FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                           By:   AIG Global Investment Corp., investment adviser


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Note           Bankers Trust Company
                                           14 Wall Street, 4th Floor, Window 43
                                           New York, New York 10005
                                           Attn: Lorraine Squires

                                           Reference: SunAmerica Life Insurance Company

                                           Account# 099530

Tax Identification Number                  13-3020293

                                           Tax ID# for SunAmerica Life Insurance Company 52-0502540
</TABLE>

<PAGE>
                                                                              16


<TABLE>
<CAPTION>
PURCHASER NAME                             FIRST SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           OKGBD & Co.

Principal Amount                           Up to $4,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Bankers Trust Company
                                           New York, New York
                                           ABA# 021-001-033
                                           Re: First SunAmerica Life Insurance Company
                                           Acct.# 99-911-145
                                           FFC: A/C 099537

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    Deutsche Bank
                                           648 Grassmere Business Park, MS 7204
                                           Nashville, TN 37211

                                           Attn: James Germaine

                                           Tel:  615-835-2465

                                           Fax:  615-835-2493

Address for All other Notices              AIG Global Investment Corporation
                                           P.O. Box 3247
                                           Houston, TX 77253-3247

                                           Overnight Mail Address: 2929 Allen Parkway, A36-04
                                                                   Houston, Texas 77019-2155

                                           Fax:  713-831-1072

                                           with a copy to:

                                           AIG Global  Investments Corporation
                                           Legal Department - Investment Management
                                           2929 Allen Parkway, Suite A36-01
                                           Houston, TX 77019-2155
                                           Fax: 713-831-2328
</TABLE>

<PAGE>
                                                                              17


<TABLE>
<CAPTION>
PURCHASER NAME                             FIRST SUNAMERICA LIFE INSURANCE COMPANY
<S>                                        <C>
Other Instructions                         SUNAMERICA LIFE INSURANCE COMPANY
                                           FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                           By:   AIG Global Investment Corp., investment adviser


                                           By:___________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Bankers Trust Company
                                           14 Wall Street, 4th Floor, Window 43
                                           New York, New York 10005
                                           Attn: Lorraine Squires

                                           Reference: First SunAmerica Life Insurance Company/Main

                                           Account# 099537

                                           Euroclear# 22650

Tax Identification Number                  13-3020293

                                           Tax ID# for First SunAmerica Life Insurance Company: 06-0992729
</TABLE>

<PAGE>
                                                                              18


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
<S>                                        <C>
Name in Which Note is Registered           CUDD & CO.

Principal Amount                           $4,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9000200
                                           Reference A/C# G05978, Guardian Life

                                           And the name and CUSIP for which payment is being made

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza, Ground Floor Receive Window
                                           New York, New York 10004
                                           Reference A/C# G05978, Guardian Life

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              19


<TABLE>
<CAPTION>
PURCHASER NAME                             FORT DEARBORN LIFE INSURANCE COMPANY
<S>                                        <C>
Name in Which Note is Registered           STRAFE & CO.

Principal Amount                           $

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Bank One
                                           ABA# 044000037
                                           For further credit to Bank One
                                           Account# 980401787

                                           Attn: A/C# 2600218703 FT. Dearborn Life Insurance Company - Guardian MVA

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    Fort Dearborn Life Insurance Company
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              Fort Dearborn Life Insurance Company
                                           Guardian Life Investor Services LLC
                                           Fixed Income Securities
                                           7 Hanover Square - 20D
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         FORT DEARBORN LIFE INSURANCE COMPANY

                                           By: Guardian Investor Services LLC


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          C/O Bank One
                                           Attn: Trade Processing
                                           1900 Polaris Parkway
                                           Columbus, Ohio 43240
                                           F/A/O A/C 2600218703 FDL - MVA
</TABLE>

<PAGE>
                                                                              20


<TABLE>
<CAPTION>
PURCHASER NAME                             FORT DEARBORN LIFE INSURANCE COMPANY
<S>                                        <C>
Tax Identification Number                  31-0649116
</TABLE>

<PAGE>
                                                                              21


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.

                                           GUARDIAN TRADITION
<S>                                        <C>
Name in Which Note is Registered           Cudd & Co.

Principal Amount                           $

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information
                                           The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G53637, GIAC - Guardian Tradition

                                           And the name and CUSIP for which payment is being made

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN:

Address for Notices Related to Payments    The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square - 20D
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. - SPDA


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza - Ground Floor Receive Window
                                           New York, NY 10004
                                           Reference A/C# G53637, GIAC - Guardian Tradition

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              22


<TABLE>
<CAPTION>
PURCHASER NAME                             THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. - FIXED INCOME OPTION D
<S>                                        <C>
Name in Which Note is Registered           CUDD & Co

Principal Amount                           $

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               The Chase Manhattan Bank
                                           FED ABA# 021000021
                                           Chase/NYC/CTR/BNF
                                           A/C 900-9-000200
                                           Reference A/C# G53638, GIAC FIXED INCOME OPTION D

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN:

Address for Notices Related to Payments    The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square
                                           New York, NY 10004-2616

                                           Attn: Investment Accounting Dept 17B

                                           Fax: 212-919-2906

Address for All other Notices              The Guardian Insurance & Annuity Company, Inc.
                                           c/o The Guardian Life Insurance Company of America
                                           7 Hanover Square - 20D
                                           New York, NY 10004-2616

                                           Attn: Brian Keating
                                           Investment Department 20-D

                                           Fax: 212-919-2656/2658

Other Instructions                         THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. - FIXED
                                           INCOME OPTION D


                                           By______________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes          Chase Manhattan Bank
                                           4 New York Plaza - Ground Floor Receive Window
                                           New York, NY 10004
                                           Reference A/C# G53637, GIAC - Guardian Tradition

Tax Identification Number                  13-6022143
</TABLE>

<PAGE>
                                                                              23


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Name in which Note is Registered           TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Principal Amount                           Up to $18,000,000

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021000021
                                           Attn: Teachers Insurance and Annuity Association of America
                                           Acct#:  900-9-000200
                                           For Further Credit to TIAA Account Number: G07040

                                           Reference: PPN# /Issuer /Mat.Date / Coupon Rate /P&I Breakdown

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Accounting Division

                                           Tel:  212-916-6004

                                           Fax:  212-916-6955

                                           with a  copy to:
                                           Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush

                                           Tel:  212-916-6372

                                           Fax:  212-916-6580

Address for All other Notices              Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Division, Private Placements

                                           Fax:  212-490-9000

Signature Block Format                     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA


                                           By:  ____________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes
</TABLE>

<PAGE>
                                                                              24


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Tax identification number                  13-1624203
</TABLE>

<PAGE>
                                                                              25


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Name in which Note is Registered           TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Principal Amount                           $

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021000021
                                           Attn: Teachers Insurance and Annuity Association of America Personal
                                           Annuity Private Placements
                                           Acct#:  900-9-000200
                                           For Further Credit to TIAA Account Number: G07320

                                           Reference: PPN# /Issuer /Mat.Date / Coupon Rate /P&I Breakdown

Accompanying Information                   Name of Company:

                                           Description of  Security:

                                           PPN:

Address for Notices Related to Payments    Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Accounting Division

                                           Tel:  212-916-6004

                                           Fax:  212-916-6955

                                           with a  copy to:

                                           Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush
                                                 Securities Division - Domestic Private Placements

                                           Tel:  212-916-6372

                                           Fax:  212-916-6580

Address for All other Notices              Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush

                                           Fax:  212-916-6580

Signature Block Format                     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA


                                           By:  ____________________________________
                                           Name:
                                           Title:
</TABLE>

<PAGE>
                                                                              26


<TABLE>
<CAPTION>
PURCHASER NAME                             TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
<S>                                        <C>
Instructions re Delivery of Notes          13-1624203
</TABLE>

<PAGE>
                                                                              27


<TABLE>
<CAPTION>
PURCHASER NAME                             TIAA CREF LIFE INSURANCE COMPANY
<S>                                        <C>
Name in which Note is Registered           TIAA CREF LIFE INSURANCE COMPANY

Principal Amount                           $

Payment on Account of Note

         Method                            Federal Funds Wire Transfer

         Account Information               Chase Manhattan Bank
                                           New York, New York
                                           ABA# 021000021
                                           Attn: TIAA-CREF Life PA Select Private Placements
                                           Acct#:  900-9-000200
                                           For Further Credit to TIAA Account Number: G08045

                                           Reference: PPN# /Issuer /Mat.Date / Coupon Rate /P&I Breakdown

Accompanying Information                   Name of Company:

                                           Description of Security:

                                           PPN:

Address for Notices Related to Payments    Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Securities Accounting Division

                                           Tel:  212-916-6004

                                           Fax:  212-916-6955

                                           with a  copy to:

                                           Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush
                                                 Securities Division - Domestic Private Placements

                                           Tel:  212-916-6372

                                           Fax:  212-916-6580

Address for All other Notices              Teachers Insurance and Annuity Association of America
                                           730 Third Avenue
                                           New York, NY 10017

                                           Attn: Cynthia Bush -Domestic Private Placements

                                           Fax:  212-916-6580
</TABLE>

<PAGE>
                                                                              28


<TABLE>
<CAPTION>
PURCHASER NAME                             TIAA CREF LIFE INSURANCE COMPANY
<S>                                        <C>
Signature Block Format                     TIAA-CREF LIFE INSURANCE COMPANY

                                           By:   TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, as
                                                 Investment Manager


                                           By: ____________________________________
                                           Name:
                                           Title:

Instructions re Delivery of Notes

Tax identification number                  13-1624203
</TABLE>

<PAGE>

                                                                      SCHEDULE B

                                  DEFINED TERMS

      As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:

      "ACQUISITION" has the meaning set forth in Section 4.3(a)(i).

      "ACQUISITION DOCUMENTATION" means, collectively, the Asset Purchase
Agreement, dated August 23, 2002, by and between Tesoro and the Company relating
to the purchase and sale of the Tesoro Northern Great Plains Product System, and
all schedules, exhibits and annexes thereto and all side letters and agreements
affecting the terms thereof or entered into in connection therewith, as amended,
supplanted or otherwise modified from time to time.

      "AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of such
first Person or any corporation of which such first Person beneficially owns or
holds, in the aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.

      "AGREEMENT, THIS" has the meaning set forth in Section 18.3.

      "BENEFITTED HOLDER" has the meaning set forth in Section 7.8.

      "BOARD" means the Board of Governors of the Federal Reserve System of the
United States (or any successor).

      "BUSINESS" has the meaning set forth in Section 5.16.

      "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or authorized to be closed.

      "CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

      "CAPITAL LEASE OBLIGATIONS" means, as to any Person, 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, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.

<PAGE>

      "CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.

      "CASH EQUIVALENTS" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Purchaser or by any commercial bank organized under
the laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
Investors Service, Inc. ("MOODY'S"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six (6) months from the date of acquisition; (d) repurchase obligations
of any holder of Notes or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than thirty (30) days,
with respect to securities issued or fully guaranteed or insured by the United
States government; (e) securities with maturities of one (1) year or less from
the date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority
of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six (6) months or less
from the date of acquisition backed by standby letters of credit issued by any
holder of Notes or any commercial bank satisfying the requirements of clause (b)
of this definition; (g) money market mutual or similar funds that invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition; or (h) money market funds that (i) comply with the criteria set
forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended,
(ii) are rated AAA by S&P and Aaa by Moody's and (iii) have portfolio assets of
at least $5,000,000,000.

      "CASH ESCROW ACCOUNT" means the cash escrow account maintained with the
Collateral Agent in accordance with Section 4 of the Collateral Agency
Agreement.

      "CASH ESCROW AGENT" means State Street Bank and Trust Company in its
capacity as cash escrow agent under Section 4 of the Collateral Agency
Agreement.

      "CHANGE OF CONTROL" means (a) the acquisition of greater than 50% of the
voting or economic interests in the General Partner by any Person unless such
Person (i) has long term unsecured debt rated investment grade by both Moody's
Investors Service, Inc. and Standard & Poor's Rating Service and (ii) has a
Consolidated Net Worth of greater than $500,000,000; or (b) the Guarantor ceases
to own 100% of the voting or economic interests in the Company.

      "CLOSING" has the meaning set forth in Section 3.

<PAGE>

      "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

      "COLLATERAL" means all property of the Guarantor, the Company and its
Subsidiaries, now owned or hereafter acquired, upon which a Lien is purported to
be created by any Security Document.

      "COLLATERAL AGENT" means State Street Bank and Trust Company in its
capacity as collateral agent under the Security Documents.

      "COLLATERAL AGENCY AGREEMENT" means the Collateral Agency Agreement to be
entered into between the Collateral Agent, the General Partner, the Guarantor,
the Company and the Purchasers substantially in the form of Exhibit E.

      "COMMITMENT" has the meaning set forth in Section 2.

      "COMMONLY CONTROLLED ENTITY" means an entity, whether or not incorporated,
that is under common control with the Company within the meaning of Section 4001
of ERISA or is part of a group that includes the Company and that is treated as
a single employer under Section 414 of the Code.

      "COMPANY" has the meaning set forth in Section 1.

      "COMPANY LLC AGREEMENT" means the Amended and Restated Limited Liability
Company Agreement of Williams Pipe Line Company, LLC, dated as of April 11,
2002, as amended, supplanted or otherwise modified from time to time.

      "COMPLIANCE CERTIFICATE" means a certificate executed by a Responsible
Officer substantially in the form of Exhibit K.

      "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 21.

      "CONFLICTS COMMITTEE" means a committee of the Board of Directors of the
General Partner composed entirely of three or more directors who are neither (i)
security holders, officers, nor employees of the General Partner nor (ii)
security holders, officers, directors or employees of any Affiliate of the
General Partner; provided, that such directors may be (x) directors of the
Guarantor or the Company, (y) hold securities of the Guarantor and (z) in the
case of members of the Conflicts Committee on the date hereof, hold those
securities of The Williams Companies owned by them on the date hereof.

      "CONSOLIDATED EBITDA" means for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization or writeoff of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Notes), (c) depreciation and
amortization expense, (d) amortization of intangibles and organization costs,
(e) any extraordinary non-cash expenses or losses and (f) any extraordinary,
unusual or non-recurring cash income or gains to the extent not included in
Consolidated Net Income, and

<PAGE>

minus, (a) to the extent included in the statement of such Consolidated Net
Income for such period, any extraordinary, unusual or non-recurring non-cash
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business) and (b) any cash
payments made during such period in respect of items described in clause (e)
above subsequent to the fiscal quarter in which the relevant non-cash expenses
or losses were reflected as a charge in the statement of Consolidated Net
Income, all as determined on a consolidated basis. For purposes of calculating
Consolidated EBITDA for the third and fourth quarters of 2002 and the first
quarter of 2003, adjustments shall be made to income and expenses that resulted
from the acquisition of the Company by the Guarantor in the second quarter of
2002, as set forth on Schedule D. For the purposes of calculating Consolidated
EBITDA for any period of four (4) consecutive fiscal quarters (each, a
"REFERENCE PERIOD") pursuant to any determination of compliance with Section
9.1(a), (i) if at any time during such Reference Period the Guarantor or the
Company or any of their respective Subsidiaries shall have made any Disposition
other than in the ordinary course, the Consolidated EBITDA of the Guarantor or
Company, as applicable, for such Reference Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property that
is the subject of such Disposition for such Reference Period or increased by an
amount equal to the Consolidated EBITDA (if negative) attributable thereto for
such Reference Period and (ii) if during such Reference Period the Guarantor or
the Company or any of their respective Subsidiaries shall have made an asset
acquisition other than in the ordinary course, Consolidated EBITDA of the
Guarantor or the Company, as applicable, for such Reference Period shall be
calculated after giving pro forma effect thereto as if such asset acquisition
occurred on the first day of such Reference Period.

      "CONSOLIDATED INTEREST EXPENSE" means for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of the
Guarantor and its Subsidiaries or the Company and its Subsidiaries, as
applicable, for such period with respect to all outstanding Indebtedness of the
Guarantor and its Subsidiaries or the Company and its Subsidiaries, as
applicable (including all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Swap Agreements in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP).

      "CONSOLIDATED NET INCOME" means for any period, the consolidated net
income (or loss) of the Guarantor and its Subsidiaries or the Company and its
Subsidiaries, as applicable, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary of the Guarantor or
the Company, or is merged into or consolidated with the Guarantor or any of its
Subsidiaries or the Company or any of its Subsidiaries, as applicable, (b) the
income (or deficit) of any Person (other than a Subsidiary of the Guarantor or
Company, as applicable) in which the Guarantor or any of its Subsidiaries or the
Company or any of its Subsidiaries, as applicable, has an ownership interest,
except to the extent that any such income is actually received by the Guarantor
or any of its Subsidiaries or the Company or any of its Subsidiaries, as
applicable, in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of the Guarantor or the Company, to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time

<PAGE>

permitted by the terms of any Contractual Obligation (other than under any Note
Purchase Document) or Requirement of Law applicable to such Subsidiary.

      "CONSOLIDATED NET WORTH" at any date, all amounts that would, in
conformity with GAAP, be included on a consolidated balance sheet of such Person
and its Subsidiaries under stockholders' equity at such date.

      "CONSOLIDATED TOTAL DEBT" means at any date, the aggregate principal
amount of all Indebtedness of the Guarantor and its Subsidiaries or the Company
and its Subsidiaries, as applicable, at such date, determined on a consolidated
basis in accordance with GAAP.

      "CONTRACTUAL OBLIGATION" means as to any Person, any provision of any
security issued by such Person or of any material agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

      "DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

      "DEFAULT RATE" means a rate of interest that is equal to 2.0% per annum
above (i) in the case of the Series A Notes, the rate of interest applicable to
principal stated in the second paragraph of the Series A Notes and (ii) in the
case of the Series B Notes, the rate of interest applicable to principal stated
in the first paragraph of the Series B Notes.

      "DISPOSE" means with respect to any property, to sell, lease, engage in a
sale and leaseback with respect thereto, assign, convey, transfer or other
dispose thereof. The term "DISPOSITION" shall have a correlative meaning.

      "ENVIRONMENTAL LAWS" means any and all statutes, laws (including without
limitation common law), regulations, ordinances, rules, judgments, orders,
decrees, permits, licenses, agreements, governmental restrictions or any other
legally enforceable requirements of any Governmental Authority relating to
pollution, protection of the environment, or human health as affected by
pollution or exposure to any materials in the indoor or outdoor environment.

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

      "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with The Williams
Companies under Section 414 of the Code.

      "EVENT OF DEFAULT" has the meaning set forth in Section 12.

      "EVENT OF LOSS" means the loss, destruction or damage of the use of a
portion of the Company's or any of its Subsidiaries' pipeline facilities so as
to render such pipeline facility unable to operate at substantially its designed
level of output, and (a) such affected portion, in the reasonable opinion of an
Independent Engineer, can be feasibly restored, rebuilt or replaced and (b) in
the reasonable opinion of the Company or the Subsidiary, sufficient funds are or
will be

<PAGE>

available to restore, rebuild or replace the affected portion of the pipeline so
that the pipeline will be able to operate at substantially its designed level of
output prior to the earlier of (i) 180 days from the date of such loss,
destruction or damage or (ii) the Maturity Date.

      "EXCESS PROCEEDS AMOUNT" has the meaning set forth in Section 8.6(b).

      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      "FAIRNESS OPINION" has the meaning set forth in Section 5.29.

      "FORMATION AGREEMENT" means the General Partner LLC Agreement, the
Guarantor Partnership Agreement and the Company LLC Agreement.

      "FORMATION AGREEMENT AMENDMENTS" has the meaning set forth in Section
4.2(c).

      "FUNDAMENTAL CHANGE PUT" has the meaning set forth in Section 11.

      "FUTURE ACQUISITION" means an acquisition of assets on arm's length terms,
including acquisitions from Affiliates, not representing an ordinary course
extension or enlargement of the Company's or any of its Subsidiaries' pipeline
systems; provided, that the Acquisition shall not be deemed a Future Acquisition
for purposes of this definition.

      "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

      "GENERAL PARTNER" has the meaning set forth in Section 1.

      "GENERAL PARTNER BANK ACCOUNT" has the meaning set forth in Section
4.1(k).

      "GENERAL PARTNER LLC AGREEMENT" means the Third Amended and Restated
Limited Liability Company Agreement of Williams GP LLC, dated as of September
30, 2002, as amended, supplanted or otherwise modified from time to time.

      "GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

      "GUARANTEE" has the meaning set forth in Section 1.

      "GUARANTEE OBLIGATION" means, as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent,

<PAGE>

(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable pursuant to
the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Company in good
faith.

      "GUARANTOR" has the meaning set forth in Section 1.

      "GUARANTOR PARTNERSHIP AGREEMENT" means the Second Amended and Restated
Agreement of Limited Partnership of Williams Energy Partnership L.P. dated as of
September 27, 2002, as amended, supplanted or otherwise modified from time to
time.

      "HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
14.1.

      "INDEBTEDNESS" of any Person at any date means, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations
of such Person in respect of obligations of the kind referred to in clauses (a)
through (g) above, (i) all obligations of the kind referred to in clauses (a)
through (h) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation, and
(j) for the purposes of Section 12(g) only, all obligations of such Person in
respect of Swap Agreements. 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

<PAGE>

in or other relationship with such entity, except to the extent the terms of
such Indebtedness expressly provide that such Person is not liable therefor.

      "INDEPENDENT DIRECTOR" means, with respect to a director of the General
Partner, a Person who qualifies as an "Independent Director" as such term is
defined in Section 303A of the New York Stock Exchange's Listed Company Manual,
as amended from time to time.

      "INDEPENDENT ENGINEER" means such independent engineering firm which may
be engaged by the Collateral Agent and reasonably satisfactory to the Required
Holders with the consent of the Company, which consent may not be unreasonably
withheld, at the reasonable cost and expense of the Company.

      "INSOLVENCY" means with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

      "INSOLVENT" means pertaining to a condition of Insolvency.

      "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5% of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

      "INTELLECTUAL PROPERTY" means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

      "INVESTMENT" has the meaning set forth in Section 9.7.

      "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).

      "MAKE-WHOLE AMOUNT" has the meaning set forth in Section 7.3.

      "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, condition (financial or otherwise) or prospects of the
General Partner, the Guarantor and its Subsidiaries taken as a whole or the
Company and its Subsidiaries taken as a whole, or (b) the ability of the General
Partner, the Guarantor, the Company or any Subsidiary to perform its obligations
under this Agreement, the Notes and the other Note Purchase Documents to which
it is a party, or (c) the validity or enforceability of this Agreement or any of
the other Note Purchase Documents.

<PAGE>

      "MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or petroleum
(including crude oil or any fraction thereof), petroleum products, asbestos,
polychlorinated biphenyls, urea-formaldehyde insulation, and any other
substances, materials or wastes, defined or regulated as such in or that could
result in liability under any applicable Environmental Law.

      "MATURITY DATE" has the meaning set forth in Section 7.1.

      "MORTGAGED PROPERTIES" means the real properties listed on Schedule C, as
to which the Collateral Agent for the benefit of the holders of the Notes shall
be granted a Lien pursuant to the Mortgages.

      "MORTGAGES" means each of the mortgages and deeds of trust made by the
Company in favor of, or for the benefit of, the Collateral Agent for the benefit
of the holders of the Notes, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded).

      "MULTIEMPLOYER PLAN" means a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

      "NET CASH PROCEEDS" means (a) in connection with any Recovery Event, the
proceeds thereof in the form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) of such Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Recovery Event (other than any Lien
pursuant to a Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (b) in connection
with any issuance or sale of Capital Stock, the cash proceeds received from such
issuance, net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.

      "NOTE PURCHASE DOCUMENTS" means this Agreement, the Security Documents,
the Collateral Agency Agreement and the Notes.

      "NOTES" has the meaning set forth in Section 1.

      "OBLIGATIONS" means the unpaid principal of and interest on (including
interest accruing after the maturity of the Notes and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Notes, the Prepayment Premium, the Make-Whole Amount, the Fundamental Change
Put and all other obligations and liabilities of the Company to any holder of
Notes, whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Note Purchase Document or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees,

<PAGE>

indemnities, costs, expenses (including all fees, charges and disbursements of
counsel to any holder of Notes that are required to be paid by the Company
pursuant hereto) or otherwise.

      "OFFICER'S CERTIFICATE" means a certificate of a Responsible Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

      "OMNIBUS AGREEMENT" means the Omnibus Agreement among The Williams
Companies, Williams Energy Services, LLC, Williams Natural Gas Liquids, Inc.,
Williams Pipe Line Company, LLC, Williams Information Services Corporation,
Williams Energy Partners L.P., Williams OLP, L.P. and Williams GP LLC, as
amended, supplanted or otherwise modified from time to time.

      "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

      "PERMITTED LIENS" means, with respect to the Company, those Liens not
prohibited by Section 9.3.

      "PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

      "PLAN" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by The Williams Companies, any ERISA
Affiliate, the Company or any Commonly Controlled Entity or with respect to
which The Williams Companies, any ERISA Affiliate, the Company or any Commonly
Controlled Entity may have any liability.

      "PLEDGED STOCK" has the meaning set forth in the Security Agreement.

      "PROJECTIONS" has the meaning set forth in Section 8.2(c).

      "PROPERTIES" has the meaning set forth in Section 5.16.

      "PURCHASERS" has the meaning set forth in Section 2.

      "RECOVERY EVENT" means any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of the Company or any of its Subsidiaries.

      "REORGANIZATION" means with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

      "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
Section 4043.

<PAGE>

      "REQUIRED HOLDERS" means, at any time, (a) with respect to Sections 12 and
13, holders of more than 50% in principal amount of the Notes at the time
outstanding and (b) with respect to any other provision of the Note Purchase
Documents, holders of at least 66?% in principal amount of the Notes at the time
outstanding unless otherwise provided therein, and in each case exclusive of
Notes then owned by the Company or any of its Affiliates.

      "REQUIREMENT OF LAW" means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any material law, treaty, rule or regulation or final determination
of an arbitrator pursuant to binding arbitration or a court of competent
jurisdiction or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.

      "RESPONSIBLE OFFICER" means any of the chief financial officer, principal
accounting officer, treasurer or comptroller.

      "SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.

      "SECURITY AGREEMENT" means the Security Agreement to be executed and
delivered by the Collateral Agent, the Guarantor and the Company, substantially
in the form of Exhibit C.

      "SECURITY DOCUMENTS" means the collective reference to the Security
Agreement, the Mortgages and all other security documents hereafter delivered to
the Collateral Agent granting a Lien on the Collateral to secure the obligations
and liabilities of the Guarantor or the Company under any Note Purchase
Document.

      "SERVICES AGREEMENT" has the meaning set forth in Section 4.1(h).

      "SINGLE EMPLOYER PLAN" means any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.

      "SOLVENT" when used with respect to any Person, means that, as of any date
of determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
<PAGE>

      "SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Company.

      "SUPPLIED CONFIDENTIAL INFORMATION" has the meaning set forth in Section
6.1.

      "SWAP AGREEMENT" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Company shall be a "Swap Agreement."

      "TESORO" means Tesoro Refining and Marketing Company, a Delaware
corporation.

      "THE WILLIAMS COMPANIES" means The Williams Companies, Inc., a Delaware
corporation.

      "THE WILLIAMS COMPANIES OFFICER CERTIFICATE" has the meaning set forth in
Section 4.2(o).

      "WHOLLY OWNED SUBSIDIARY" means as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.

      "WHOLLY OWNED SUBSIDIARY GUARANTOR" means any Subsidiary that is a Wholly
Owned Subsidiary of the Company.

<PAGE>

                                                                       EXHIBIT A

                                 [FORM OF NOTE]

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
THIS NOTE MAY NOT BE SOLD OR TRANSFERRED, IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

                         WILLIAMS PIPE LINE COMPANY, LLC

         FLOATING RATE SERIES A SENIOR SECURED NOTE DUE OCTOBER 7, 2007

No. [_____]                                              ______________ __, 2002
$[_______]                                                 CUSIP[______________]

      FOR VALUE RECEIVED, the undersigned, Williams Pipe Line Company, LLC
(herein called the "Company"), a limited liability company organized and
existing under the laws of the State of Delaware, hereby promises to pay to [ ],
or registered assigns, the principal sum of [        ] DOLLARS on October 7,
2007, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the Interest Rate (as defined
below) from the date hereof, payable semiannually, on the 7th day of April and
October in each year (the "Interest Payment Date"), commencing with the April 7
or October 7 next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Prepayment Premium (as
defined in the Note Purchase Agreement referred to below) or other Obligation
(as defined in the Note Purchase Agreement), payable on the applicable Interest
Payment Date (or, at the option of the registered holder hereof, on demand), at
the Default Rate (as defined in the Note Purchase Agreement). On each of October
7, 2005 and October 7, 2006, the Company promises to pay to the undersigned, or
its registered assigns, five percent (5%) of the principal amount of this Series
A Note then outstanding at par in accordance with the Note Purchase Agreement
referred to below.

      The rate at which interest shall be payable on the Series A Notes (the
"Interest Rate") shall be a floating rate, which for each interest period shall
be the Six-Month LIBOR Rate determined for that interest period plus _____ basis
points (____%) [this will be the greater of (a) 425 basis points (4.25%) or (b)
such margin as is necessary so that the Interest Rate shall equal the swap
adjusted equivalent of the weighted average interest rate on the Series B Notes
issued on the same date]. The Interest Rate for the initial interest period
shall be ______% (the "Initial Interest Rate"), which was calculated with
reference to the Six-Month LIBOR Rate on the Interest Determination Date (as
defined below) for the initial interest period, plus ___ basis points (____%)
[this will be equal to the spread to be set forth above].

      The Company will reset the rate of interest on each Interest Payment Date.
The Company shall determine the applicable Interest Rate on the Series A Notes
for the succeeding interest period on the date that is two (2) London Business
Days prior to the next Interest

<PAGE>

Payment Date (each an "Interest Determination Date"). The Interest Determination
Date for the Initial Interest Rate was November ___, 2002. [this date will be
two (2) London Business Days prior to the issue date]

      The Interest Rate determined on an Interest Determination Date for the
Series A Notes (a) shall become effective on and as of the next succeeding
Interest Payment Date and (b) shall be the rate at which interest is payable on
the Series A Notes for the interest period from and including the Interest
Payment Date on which that Interest Rate becomes effective to but excluding the
succeeding Interest Payment Date. The calculations of the Company in determining
the Interest Rate will, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of the Series A Notes.

      "London Business Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.

      "Six-Month LIBOR Rate" means, with respect to any Interest Payment Date,
the rate for deposits in U.S. dollars having a six-month maturity which appears
on the Dow Jones Page 3750 (as defined below) as of 11:00 a.m., London time, on
the Interest Determination Date immediately preceding such Interest Payment
Date; provided, that if on any Interest Determination Date the applicable London
interbank offered rate for deposits in U.S. dollars having a six-month maturity
does not appear on Dow Jones Page 3750, or if Dow Jones Page 3750 is not
available, then the Six-Month LIBOR Rate will be determined on the basis of the
rates at which deposits in U.S. dollars are offered by four major banks in the
London interbank market (which banks are to be selected by the Company and shall
be reasonably acceptable to the Purchaser) at approximately 11:00 a.m., London
time, on such Interest Determination Date to prime banks in the London interbank
market for deposits in U.S. dollars and having a six-month maturity and in a
principal amount equal to at least $1,000,000 and in a principal amount that is
representative for a single transaction in U.S. dollars in such market at such
time. The Company will request the principal London office of each of such banks
to provide a quotation of its rate for such deposits. If at least two such
quotations are provided, the rate in respect of such Interest Determination Date
will be the arithmetic mean of the quotations provided to the Company. If fewer
than two such quotations are provided, the Six-Month LIBOR Rate in respect of
such Interest Determination Date will be determined on the basis of the rates
quoted by three (3) major banks in the Borough of Manhattan, The City of New
York (which banks are to be selected by the Company and shall be reasonably
acceptable to the Purchaser), at approximately 11:00 a.m., New York City time,
on such Interest Determination Date for loans in U.S. dollars to leading
European banks and having a six-month maturity and in a principal amount equal
to an amount of at least $1,000,000 and in a principal amount that is
representative for a single transaction in U.S. dollars in such market at such
time. If at least two (2) such quotations are provided, the rate in respect of
such Interest Determination Date will be at the arithmetic mean of the
quotations provided; provided, however, that if none of the banks selected as
aforesaid by the Company are quoting as described in the immediately preceding
sentence, the Interest Rate will be the interest rate on the Series A Notes in
effect on such Interest Determination Date.

      "Dow Jones Page 3750" means the display page designated as page 3750 on
the Dow Jones Market Screen, formerly known as the Bridge Telerate, Inc. (or any
successor service or

<PAGE>

such other page as may replace page 3750 on that service for the purpose of
displaying London interbank offered rates).

      The Interest Rate on the Series A Notes will in no event be higher than
the maximum rate permitted by the laws of the State of New York, as the same may
be modified by the laws of the United States of general application.

      At the request of the holder hereof, the Company will provide to such
holder the Interest Rate then in effect for this Series A Note, if available,
and, if different, the Interest Rate to be in effect as a result of a
determination made on the most recent Interest Determination Date with respect
to this Series A Note.

      Interest payments hereon will include the amount of interest accrued from
and including the most recent Interest Payment Date to which interest has been
paid to but excluding the applicable Interest Payment Date.

      Unless otherwise specified herein, all percentages resulting from any
calculation of the rate of interest on this Series A Note will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 2.102545% (or
..02102545) will be rounded upward to 2.10255% (or .0210255)), and all U.S.
dollar amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one-half cent being rounded upward).

      Payments of principal of, interest on and any Prepayment Premium with
respect to this Series A Note are to be made in lawful money of the United
States of America as provided in the Note Purchase Agreement referred to below.

      This Series A Note is one of a series of Floating Rate Series A Senior
Secured Notes (herein called a "Series A Note") issued pursuant to the Note
Purchase Agreement, dated as of October 1, 2002 (as from time to time amended,
the "Note Purchase Agreement"), between the Company, Williams Energy Partners
L.P., as guarantor (the "Guarantor") and the Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Series A Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 21 of the Note Purchase Agreement and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreement. Payments of principal of, interest on and any Prepayment Premium with
respect to this Series A Note are guaranteed by the Guarantor pursuant to the
terms of the Note Purchase Agreement.

      This Series A Note is a registered Series A Note as provided in the Note
Purchase Agreement and, upon surrender of this Series A Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's attorney duly
authorized in writing, a new Series A Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Series A Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

<PAGE>

      This Series A Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.

      If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Series A Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Prepayment Premium) and with the effect provided in the Note Purchase
Agreement.

<PAGE>

      This Series A Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                        WILLIAMS PIPE LINE COMPANY, LLC

                                           By: WILLIAMS ENERGY PARTNERS L.P.,
                                           its Sole Member

                                           By: WILLIAMS GP LLC, its General
                                           Partner

                                           By _______________________________
                                           Title:


Accepted and Acknowledged:

WILLIAMS ENERGY PARTNERS L.P.

   By: WILLIAMS GP LLC, its General Partner


   By ____________________________
   Title:
<PAGE>

                                                                       EXHIBIT B

                                 [FORM OF NOTE]

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
THIS NOTE MAY NOT BE SOLD OR TRANSFERRED, IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

                         WILLIAMS PIPE LINE COMPANY, LLC

           FIXED RATE SERIES B SENIOR SECURED NOTE DUE OCTOBER 7, 2007

No. [_____]                                               _____________ __, 2002
$[_______]                                                 CUSIP[______________]

      FOR VALUE RECEIVED, the undersigned, Williams Pipe Line Company, LLC
(herein called the "Company"), a limited liability company organized and
existing under the laws of the State of Delaware, hereby promises to pay to [ ],
or registered assigns, the principal sum of [        ] DOLLARS on October 7,
2007, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of [____]% per annum from
the date hereof, payable semiannually, on the 7th day of April and October in
each year (the "Interest Payment Date"), commencing with the April 7 or October
7 next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreement referred to below) or other Obligation (as defined in the
Note Purchase Agreement), payable on the applicable Interest Payment Date (or,
at the option of the registered holder hereof, on demand), at the Default Rate
(as defined in the Note Purchase Agreement). On each of October 7, 2005 and
October 7, 2006, the Company promises to pay to the undersigned, or its
registered assigns, five percent (5%) of the principal amount of this Series B
Note then outstanding at par in accordance with the Note Purchase Agreement
referred to below.

      Payments of principal of, interest on and any Make-Whole Amount with
respect to this Series B Note are to be made in lawful money of the United
States of America as provided in the Note Purchase Agreement referred to below.

      This Series B Note is one of a series of Fixed Rate Series B Senior
Secured Notes (herein called a "Series B Note") issued pursuant to the Note
Purchase Agreement, dated as of October 1, 2002 (as from time to time amended,
the "Note Purchase Agreement"), between the Company, Williams Energy Partners
L.P., as guarantor (the "Guarantor") and the Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Series B Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 21 of the Note Purchase Agreement and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreement. Payments of principal of, interest on and any

<PAGE>

Make-Whole Amount with respect to this Series B Note are guaranteed by the
Guarantor pursuant to the terms of the Note Purchase Agreement.

      This Series B Note is a registered Series B Note as provided in the Note
Purchase Agreement and, upon surrender of this Series B Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's attorney duly
authorized in writing, a new Series B Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Series B Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

      This Series B Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.

      If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Series B Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
<PAGE>

      This Series B Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                        WILLIAMS PIPE LINE COMPANY, LLC

                                           By: WILLIAMS ENERGY PARTNERS L.P.,
                                           its Sole Member

                                           By: WILLIAMS GP LLC, its General
                                           Partner

                                           By ________________________________
                                           Title:


Accepted and Acknowledged:

WILLIAMS ENERGY PARTNERS L.P.

   By: WILLIAMS GP LLC, its General Partner

   By _____________________________
   Title:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>9
<FILENAME>d01268exv10w7.txt
<DESCRIPTION>NOTE PURCHASE AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.7

                                                                  EXECUTION COPY

===============================================================================

                               SECURITY AGREEMENT

                                     made by

                          WILLIAMS ENERGY PARTNERS L.P.

                                       and

                         WILLIAMS PIPE LINE COMPANY, LLC

                                   in favor of

                      STATE STREET BANK AND TRUST COMPANY,
                               as Collateral Agent

                           Dated as of October 1, 2002


===============================================================================


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----

<S>            <C>                                                                         <C>
SECTION 1.     DEFINED TERMS............................................................     1
     1.1       Definitions..............................................................     1
     1.2       Other Definitional Provisions............................................     4

SECTION 2.     GRANT OF SECURITY INTEREST...............................................     4

SECTION 3.     REPRESENTATIONS AND WARRANTIES...........................................     5
     3.1       Title; No Other Liens....................................................     5
     3.2       Perfected First Priority Liens...........................................     5
     3.3       Jurisdiction of Organization; Chief Executive Office.....................     6
     3.4       Inventory and Equipment..................................................     6
     3.5       Investment Property......................................................     6
     3.6       Receivables..............................................................     6
     3.7       Intellectual Property....................................................     6

SECTION 4.     COVENANTS................................................................     7
     4.1       Delivery of Instruments, Certificated Securities and Chattel Paper.......     7
     4.2       Maintenance of Insurance.................................................     7
     4.3       Payment of Obligations...................................................     7
     4.4       Maintenance of Perfected Security Interest; Further Documentation........     7
     4.5       Changes in Locations, Name, etc..........................................     8
     4.6       Notices..................................................................     8
     4.7       Investment Property......................................................     8
     4.8       Receivables..............................................................     9
     4.9       Intellectual Property....................................................     9

SECTION 5.     REMEDIAL PROVISIONS......................................................    11
     5.1       Certain Matters Relating to Receivables..................................    11
     5.2       Communications with Obligors; Company Remains Liable.....................    11
     5.3       Pledged Stock............................................................    12
     5.4       Proceeds to be Turned Over To Collateral Agent...........................    12
     5.5       Application of Proceeds..................................................    13
     5.6       Code and Other Remedies..................................................    13
     5.7       Registration Rights......................................................    14
     5.8       Deficiency...............................................................    14

SECTION 6.     THE COLLATERAL AGENT.....................................................    14
     6.1       Collateral Agent's Appointment as Attorney-in-Fact, etc..................    14
     6.2       Duty of Collateral Agent.................................................    16
     6.3       Execution of Financing Statements........................................    16
     6.4       Authority of Collateral Agent............................................    16

SECTION 7.     MISCELLANEOUS............................................................    17
     7.1       Amendments in Writing....................................................    17
     7.2       Notices..................................................................    17
     7.3       No Waiver by Course of Conduct; Cumulative Remedies......................    17
</TABLE>


                                       i
<PAGE>


<TABLE>
<S>            <C>                                                                          <C>
     7.4       Enforcement Expenses; Indemnification....................................    17
     7.5       Successors and Assigns...................................................    18
     7.6       Set-Off..................................................................    18
     7.7       Counterparts.............................................................    18
     7.8       Severability.............................................................    18
     7.9       Section Headings.........................................................    18
     7.10      Integration..............................................................    18
     7.11      GOVERNING LAW............................................................    19
     7.12      Submission To Jurisdiction; Waivers......................................    19
     7.13      Acknowledgements.........................................................    19
     7.14      Releases.................................................................    19
     7.15      WAIVER OF JURY TRIAL.....................................................    20
</TABLE>

SCHEDULES

Schedule 1     Notice Addresses
Schedule 2     Investment Property
Schedule 3     Perfection Matters
Schedule 4     Jurisdictions of Organization and Chief Executive Offices
Schedule 5     Inventory and Equipment Locations
Schedule 6     Intellectual Property



<PAGE>

                               SECURITY AGREEMENT

            SECURITY AGREEMENT, dated as of October 1, 2002, made by Williams
Pipe Line Company, LLC, (the "Company") and Williams Energy Partners L.P. (the
"Guarantor"; together with the Company, the "Grantors") in favor of State Street
Bank and Trust Company, as Collateral Agent (in such capacity, the "Collateral
Agent") for the financial institutions or entities (the "Purchasers") from time
to time parties to the Note Purchase Agreement, dated as of October 1, 2002 (as
amended, supplemented or otherwise modified from time to time, the "Note
Purchase Agreement"), among Williams Pipe Line Company, LLC, (the "Company"),
Williams Energy Partners L.P. (the "Guarantor") and Williams GP LLC (the
"General Partner") and the Purchasers.

                              W I T N E S S E T H:
                              - - - - - - - - - -

            WHEREAS, the Purchasers have severally agreed to purchase, and the
Guarantor has agreed to guarantee, Notes to be issued by the Company upon the
terms and subject to the conditions set forth in the Note Purchase Agreement;

            WHEREAS, the proceeds of the sale of Notes under the Note Purchase
Agreement will be used in part to enable the Company to make valuable transfers
to Guarantor in connection with the operation of its business;

            WHEREAS, the Company and the Guarantor are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the sale of Notes under the Note Purchase Agreement; and

            WHEREAS, it is a condition precedent under the Note Purchase
Agreement that the Grantors shall have executed and delivered this Agreement to
the Collateral Agent for the ratable benefit of the holders of the Notes;

            NOW, THEREFORE, in consideration of the premises and to induce the
Collateral Agent and the Purchasers to enter into the Note Purchase Agreement
and to induce the Purchasers to fulfill their obligations thereunder, each
Grantor hereby agrees with the Collateral Agent, for the ratable benefit of the
holders of the Notes, as follows:

                            Section 1. DEFINED TERMS

      1.1 Definitions. (a). Unless otherwise defined herein, terms defined in
the Note Purchase Agreement and used herein shall have the meanings given to
them in the Note Purchase Agreement, and the following terms are used herein as
defined in the New York UCC: Accounts, Certificated Security, Chattel Paper,
Commercial Tort Claims, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Letter-of-Credit Rights and Supporting
Obligations.

      (b) The following terms shall have the following meanings:

            "Agreement": this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.

            "Collateral": as defined in Section 2(b).


<PAGE>
                                                                               2


            "Collateral Account": any collateral account established by the
Collateral Agent as provided in Section 5.1 or 5.4.

            "Collateral Agency Agreement": the Collateral Agency Agreement,
dated as of October 1, 2002, among the Collateral Agent, the Grantors and the
Purchasers.

            "Company Obligations": the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and liabilities
of the Company (including, without limitation, interest accruing at the then
applicable rate provided in the Note Purchase Agreement after the maturity of
the Notes and interest accruing at the then applicable rate provided in the Note
Purchase Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Company, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to the Collateral Agent or any holder of Notes,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Note Purchase Agreement, this Agreement, the other Note Purchase
Documents, or any other document made, delivered or given in connection with any
of the foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise.

            "Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.

            "Copyright Licenses": any written agreement naming the Company as
licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.

            "Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.

            "Guarantor Obligations": with respect to the Guarantor, all
obligations and liabilities of the Guarantor which may arise under or in
connection with this Agreement or the Note Purchase Agreement (including,
without limitation, Section 10 of the Note Purchase Agreement) or any other Note
Purchase Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise.

            "Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.

            "Intercompany Note": any promissory note evidencing loans made by
the Company to the Guarantor.


<PAGE>
                                                                               3


            "Investment Property": the collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49) of the New
York UCC and (ii) whether or not constituting "investment property" as so
defined, all Pledged Notes and all Pledged Stock.

            "Issuers": the collective reference to each issuer of any Investment
Property including, in the case of the Pledged Stock, the Company.

            "New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.

            "Obligations": (i) in the case of the Company, the Company
Obligations, and (ii) in the case of the Guarantor, the Guarantor Obligations.

            "Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without limitation,
any of the foregoing referred to in Schedule 6, (ii) all applications for
letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to in Schedule 6, and (iii) all rights to obtain
any reissues or extensions of the foregoing.

            "Patent License": all agreements, whether written or oral, providing
for the grant by or to the Company of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.

            "Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to the Company and all other promissory
notes issued to or held by the Company (other than promissory notes issued in
connection with extensions of trade credit by the Company in the ordinary course
of business).

            "Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of the Company that may
be issued or granted to, or held by, the Guarantor while this Agreement is in
effect.

            "Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.

            "Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).

            "Securities Act": the Securities Act of 1933, as amended.

            "Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights


<PAGE>
                                                                               4


related thereto, including, without limitation, any of the foregoing referred to
in Schedule 6, and (ii) the right to obtain all renewals thereof.

            "Trademark License": any agreement, whether written or oral,
providing for the grant by or to the Company of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule 6.

      1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.

      (b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

      (c) Where the context requires, terms relating to the Collateral or any
part thereof, when used in relation to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof.

                     SECTION 2. GRANT OF SECURITY INTEREST

      (a) The Company hereby assigns and transfers to the Collateral Agent, and
hereby grants to the Collateral Agent, for the ratable benefit of the holders of
the Notes, a security interest in, all of the following property now owned or at
any time hereafter acquired by the Company or in which the Company now has or at
any time in the future may acquire any right, title or interest as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Company's
Obligations,:

      (i)     all Accounts;

      (ii)    all Chattel Paper;

      (iii)   all Deposit Accounts;

      (iv)    all Documents (other than title documents with respect to
              Vehicles);

      (v)     all Equipment;

      (vi)    all General Intangibles;

      (vii)   all Instruments;

      (viii)  all Intellectual Property;

      (ix)    all Inventory;

      (x)     all Investment Property;

      (xi)    all Letter-of-Credit Rights;

      (xii)   all other property not otherwise described above;


<PAGE>
                                                                               5


      (xiii) all books and records pertaining to the property referenced in
clauses (i) through (xii); and

      (xiv) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing.

      (b) The Guarantor hereby assigns and transfers to the Collateral Agent,
and hereby grants to the Collateral Agent, for the ratable benefit of the
holders of the Notes, a security interest in, the Pledged Stock now owned or at
any time hereafter acquired by the Guarantor or in which the Guarantor now has
or at any time in the future may acquire any right, title or interest (together
with the security interests granted pursuant to clause (a), the "Collateral"),
as collateral security for the prompt and complete payment and performance of
the Guarantor Obligations.

      (c) Notwithstanding any of the other provisions set forth in this Section
2, this Agreement shall not constitute a grant of a security interest in any
property to the extent that such grant of a security interest is prohibited by
any Requirements of Law of a Governmental Authority, requires a consent not
obtained of any Governmental Authority pursuant to such Requirement of Law or is
prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Stock or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement
providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law.

                   SECTION 3. REPRESENTATIONS AND WARRANTIES

            To induce the Purchasers to enter into the Note Purchase Agreement
and to induce the Purchasers to fulfill their obligations to the Company
thereunder, each Grantor hereby represents and warrants to the Collateral Agent
and each Purchaser that:

      3.1 Title; No Other Liens. Except for the security interest granted to the
Collateral Agent for the ratable benefit of the holders of the Notes pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Note Purchase Agreement, such Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. No financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any public office, except such as have been filed in favor of the
Collateral Agent, for the ratable benefit of the holders of the Notes, pursuant
to this Agreement or as are permitted by the Note Purchase Agreement. For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part of
its business, grant licenses to third parties to use Intellectual Property owned
or developed by a Grantor. For purposes of this Agreement and the other Note
Purchase Documents, such licensing activity shall not constitute a "Lien" on
such Intellectual Property. Each of the Collateral Agent and each Purchaser
understands that any such licenses may be exclusive to the applicable licensees,
and such exclusivity provisions may limit the ability of the Collateral Agent to
utilize, sell, Lease or transfer the related Intellectual Property or otherwise
realize value from such Intellectual Property pursuant hereto.

      3.2 Perfected First Priority Liens. Upon completion of the filings and
other actions specified in Schedule 3, the security interests granted pursuant
to this Agreement (a) to the extent that the filings and actions specified on
Schedule 3 are a permissible method of perfection, constitute valid perfected


<PAGE>
                                                                               6


security interests in all of the Collateral in favor of the Collateral Agent,
for the ratable benefit of the holders of Notes, as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Liens expressly permitted
by Section 9.3 of the Note Purchase Agreement.

      3.3 Jurisdiction of Organization; Chief Executive Office. On the date
hereof, such Grantor's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of such Grantor's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 4. Such Grantor has furnished to the
Collateral Agent a certified charter, certificate of incorporation or other
organization document and long-form good standing certificate as of a date which
is recent to the date hereof.

      3.4 Inventory and Equipment. On the date hereof, the Company's Inventory
and the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.

      3.5. Investment Property. (a) The shares of Pledged Stock pledged by the
Guarantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of the Company.

      (b) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.

      (c) Each of the Pledged Notes pledged by the Company constitutes the
legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

      (d) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.

      3.6 Receivables. (a) No amount payable to the Company or in connection
with any Receivable is evidenced by any Instrument or Chattel Paper which has
not been delivered to the Collateral Agent.

      (b) None of the obligors on any Receivables is a Governmental Authority.

      (c) The amounts represented by such Grantor to the holders of Notes from
time to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.

      3.7 Intellectual Property. (a) Schedule 6 lists all Intellectual Property
owned by such Grantor in its own name on the date hereof.

      (b) On the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned and does not
infringe the intellectual property rights of any other Person.


<PAGE>
                                                                               7


      (c) Except as set forth in Schedule 6, on the date hereof, none of the
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which the Company is the licensor or franchisor.

      (d) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or the
Company's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.

      (e) No action or proceeding is pending, or, to the knowledge of the
Company, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or the Company's ownership interest
therein, or (ii) which, if adversely determined, would have a material adverse
effect on the value of any Intellectual Property.

                              SECTION 4. COVENANTS

            Each Grantor covenants and agrees with the Collateral Agent and the
holders of Notes that, from and after the date of this Agreement until the
Obligations shall have been paid in full:

      4.1 Delivery of Instruments, Certificated Securities and Chattel Paper. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Collateral Agent, duly indorsed in a manner satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Agreement.

      4.2 Maintenance of Insurance. Such Grantor will maintain the insurance
required by Section 8.5 of the Note Purchase Agreement which shall, among other
things, name the Collateral Agent as insured party or loss payee.

      (b) The Company shall deliver to the Collateral Agent a report of a
nationally recognized insurance broker with respect to such insurance
substantially concurrently with each delivery of the Company's audited annual
financial statements and such supplemental reports with respect thereto as the
Collateral Agent may from time to time reasonably request.

      4.3 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.

      4.4 Maintenance of Perfected Security Interest; Further Documentation. (a)
So long as any of the Obligations remain outstanding, the Collateral Agent
covenants and agrees to file such continuation statements and to make such other
filings or recordings permitted to be made by it (at the expense of the
Grantors) as are specified in an opinion of counsel (obtained at the Grantor's
expense) or (when received) the written instructions of the Required Holders.
Upon receipt of any such opinion or written instruction by the Required Holders,
the Collateral Agent shall (at the expense of the Grantors) execute, procure,
acknowledge, deliver and record, or cause to be executed, procured,
acknowledged, delivered or recorded,


<PAGE>
                                                                               8


all such further instruments, deeds, conveyances, mortgages, financing
statements, continuation statements and assurances as are necessary to subject
to the Lien of the Security Documents, and to preserve, continue and protect the
Lien of the Security Documents on, all or any portion of the Collateral.

      (b) Each Grantor shall defend the security interest created by this
Agreement against the claims and demands of all Persons whomsoever, subject to
the rights of such Grantor under the Note Purchase Documents to dispose of the
Collateral.

      (c) Such Grantor will furnish to the Collateral Agent and the holders of
the Notes from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection therewith as the Collateral Agent or such holder may reasonably
request, all in reasonable detail. At the Grantors' option, the Grantors shall
either provide an opinion of internal counsel or permit the Collateral Agent (at
the Grantors' expense) to obtain an opinion of outside counsel addressing the
creation and perfection of security interests in such assets and property.

      (d) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.

      4.5 Changes in Locations, Name, etc. Such Grantor will not, except upon 15
days' prior written notice to the Collateral Agent and delivery to the
Collateral Agent of (a) all additional executed financing statements and other
documents reasonably requested by the Collateral Agent to maintain the validity,
perfection and priority of the security interests provided for herein:

      (i) change its jurisdiction of organization or the location of its chief
executive office or sole place of business or principal residence from that
referred to in Section 3.3; or

      (ii) change its name.

      4.6 Notices. Such Grantor will advise the Collateral Agent and the holders
of the Notes promptly, in reasonable detail, of:

      (a) any Lien (other than security interests created hereby or Liens
permitted under the Note Purchase Agreement) on any of the Collateral which
would adversely affect the ability of the Collateral Agent to exercise any of
its remedies hereunder; and

      (b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.

      4.7 Investment Property. (a) If the Guarantor shall become entitled to
receive or shall receive any certificate (including, without limitation, any
certificate representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of the Company, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise
in respect thereof, the Guarantor shall accept the same as the agent of the
Collateral Agent and the holders of the Notes, hold the same in trust for the
Collateral Agent and the holders of the Notes and deliver the same forthwith to
the Collateral Agent in the exact form received, duly indorsed by the Guarantor
to the Collateral Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by the Guarantor and with, if
the Collateral Agent so


<PAGE>
                                                                               9


requests, signature guaranteed, to be held by the Collateral Agent, subject to
the terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Investment Property upon the liquidation or
dissolution of the Company shall be paid over to the Collateral Agent to be held
by it hereunder as additional collateral security for the Obligations, and in
case any distribution of capital shall be made on or in respect of the
Investment Property or any property shall be distributed upon or with respect to
the Investment Property pursuant to the recapitalization or reclassification of
the capital of the Company or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Collateral Agent, be delivered to the Collateral Agent
to be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in respect
of the Investment Property shall be received by the Guarantor, the Guarantor
shall, until such money or property is paid or delivered to the Collateral
Agent, hold such money or property in trust for the Collateral Agent and the
holders of the Notes, segregated from other funds of the Guarantor, as
additional collateral security for the Obligations.

      (b) Without the prior written consent of the Collateral Agent (such
consent to be given only at the direction of the Required Holders), the
Guarantor will not vote to enable, or take any other action to permit, the
Company to issue any Capital Stock of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any Capital Stock of any nature of the Company.

      (c) (i) Without the prior written consent of the Collateral Agent (such
consent to be given only at the direction of the Required Holders), such Grantor
will not sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Investment Property or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Note Purchase Agreement) or
(ii) create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Investment Property or Proceeds
thereof, or any interest therein, except for the security interests created by
this Agreement or (iii) enter into any agreement or undertaking restricting the
right or ability of the Guarantor or the Collateral Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.

      (d) The Company agrees that (i) it will be bound by the terms of this
Agreement relating to the Investment Property issued by it and will comply with
such terms insofar as such terms are applicable to it, (ii) it will notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 4.7(a) with respect to the Investment Property issued by it
and (iii) the terms of Sections 5.3(c) and 5.7 shall apply to it, mutatis
mutandis, with respect to all actions that may be required of it pursuant to
Section 5.3(c) or 5.7 with respect to the Investment Property issued by it.

      4.8 Receivables (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.

      (b) Such Grantor will deliver to the Collateral Agent and the holders of
the Notes a copy of each material demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of more than 5% of
the aggregate amount of the then outstanding Receivables.

      4.9 Intellectual Property. (a) The Company (either itself or through
licensees) will (i) continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (ii) maintain as
in the past the


<PAGE>
                                                                              10


quality of products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, (iv) not adopt or use any
mark which is confusingly similar or a colorable imitation of such Trademark
unless the Collateral Agent, for the ratable benefit of the holders of the
Notes, shall obtain a perfected security interest in such mark pursuant to this
Agreement, and (v) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.

      (b) The Company (either itself or through licensees) will not do any act,
or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.

      (c) The Company (either itself or through licensees) (i) will employ each
material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise impaired.
The Company will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may fall into the public domain.

      (d) The Company (either itself or through licensees) will not do any act
that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.

      (e) The Company will notify the Collateral Agent and the holders of the
Notes immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding the Company's ownership of, or the validity of, any
material Intellectual Property or the Company's right to register the same or to
own and maintain the same.

      (f) Whenever the Company, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, the Company shall report such
filing to the Collateral Agent within five Business Days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the Collateral
Agent, the Company shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Collateral Agent may
request to evidence the Collateral Agent's and the holders' security interest in
any Copyright, Patent or Trademark and the goodwill and general intangibles of
the Company relating thereto or represented thereby.

      (g) The Company will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

      (h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, the Company shall (i) take such
actions as the Company shall reasonably deem appropriate under the circumstances
to protect such Intellectual Property and (ii) if such Intellectual Property is
of material economic value, promptly notify the Collateral Agent after it learns
thereof and


<PAGE>
                                                                              11


sue for infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for such infringement,
misappropriation or dilution.

                         SECTION 5. REMEDIAL PROVISIONS

      5.1 Certain Matters Relating to Receivables. (a) The Collateral Agent
shall have the right but not the obligation to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and the Company shall furnish all such assistance and information as
the Collateral Agent may require in connection with such test verifications. At
any time and from time to time, upon the Collateral Agent's request and at the
expense of the Company, the Company shall cause independent public accountants
or others satisfactory to the Collateral Agent to furnish to the Collateral
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables. During any period in which no Default or
Event of Default shall exist and be continuing, any requests made by the
Collateral Agent pursuant to the next preceding sentence shall be made at
reasonable intervals.

      (b) The Collateral Agent hereby authorizes the Company to collect its
Receivables, and the Collateral Agent may curtail or terminate said authority at
any time after the occurrence and during the continuance of an Event of Default.
If required by the Collateral Agent at any time after the occurrence and during
the continuance of an Event of Default, any payments of Receivables, when
collected by the Company, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by the Company in the exact form received, duly
indorsed by the Company to the Collateral Agent if required, in a Collateral
Account maintained under the sole dominion and control of the Collateral Agent,
subject to withdrawal by the Collateral Agent for the account of the holders of
the Notes only as provided in Section 5.5, and (ii) until so turned over, shall
be held by the Company in trust for the Collateral Agent and the holders of the
Notes, segregated from other funds of the Company. Each such deposit of Proceeds
of Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.

      (c) At the Collateral Agent's request, the Company shall deliver to the
Collateral Agent all original and other documents evidencing, and relating to,
the agreements and transactions which gave rise to the Receivables, including,
without limitation, all original orders, invoices and shipping receipts.

      5.2 Communications with Obligors; Company Remains Liable. (a) The
Collateral Agent in its own name or in the name of others may at any time after
the occurrence and during the continuance of an Event of Default communicate
with obligors under the Receivables to verify with them to the Collateral
Agent's satisfaction the existence, amount and terms of any Receivables.

      (b) Upon the request of the Collateral Agent at any time after the
occurrence and during the continuance of an Event of Default, the Company shall
notify obligors on the Receivables that the Receivables have been assigned to
the Collateral Agent for the ratable benefit of the holders of the Notes and
that payments in respect thereof shall be made directly to the Collateral Agent.

      (c) Anything herein to the contrary notwithstanding, the Company shall
remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Collateral Agent nor any holder of Notes shall have any obligation or liability
under any Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Collateral Agent or any
holder of Notes of any payment relating thereto, nor shall the Collateral Agent
or any holder of Notes be obligated in any manner to perform any of the
obligations of the Company under

<PAGE>
                                                                              12


or pursuant to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

      5.3 Pledged Stock. (a) Unless an Event of Default shall have occurred and
be continuing and the Collateral Agent shall have given notice to the Company of
the Collateral Agent's intent to exercise its corresponding rights pursuant to
Section 5.3(b), the Guarantor shall be permitted to receive all cash dividends
paid in respect of the Pledged Stock and the Company shall be permitted to
receive all payments made in respect of the Pledged Notes, in each case paid in
the normal course of business of the relevant Issuer and consistent with past
practice, to the extent permitted in the Note Purchase Agreement, and to
exercise all voting and corporate or other organizational rights with respect to
the Investment Property; provided, however, that no vote shall be cast or
corporate or other organizational right exercised or other action taken which
would impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Note Purchase Agreement, this Agreement or any
other Note Purchase Document.

      (b) If an Event of Default shall occur and be continuing and the
Collateral Agent shall give notice of its intent to exercise such rights to the
Guarantor and Company, (i) the Collateral Agent shall have the right to receive
any and all cash dividends, payments or other Proceeds paid in respect of the
Investment Property and make application thereof to the Obligations in the order
provided in the Collateral Agency Agreement, and (ii) any or all of the
Investment Property shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter exercise (x)
all voting, corporate and other rights pertaining to such Investment Property at
any meeting of shareholders of the relevant Issuer or Issuers or otherwise and
(y) any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Investment Property as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Investment Property upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate or other organizational structure of any Issuer, or upon
the exercise by any Grantor or the Collateral Agent of any right, privilege or
option pertaining to such Investment Property, and in connection therewith, the
right to deposit and deliver any and all of the Investment Property with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Collateral Agent may determine), all without
liability except to account for property actually received by it, but the
Collateral Agent shall have no duty to any Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.

      (c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Collateral Agent in writing that states that
an Event of Default has occurred and is continuing without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Collateral Agent.

      5.4 Proceeds to be Turned Over To Collateral Agent. In addition to the
rights of the Collateral Agent and the holders of Notes specified in Section 5.1
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing, all Proceeds received by any Grantor consisting of cash, checks
and other near-cash items shall be held by such Grantor in trust for the
Collateral Agent and the holders of the Notes, segregated from other funds of
such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over
to the Collateral Agent in the exact form received


<PAGE>
                                                                              13


by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if
required). All Proceeds received by the Collateral Agent hereunder shall be held
by the Collateral Agent in a Collateral Account maintained under its sole
dominion and control. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Collateral Agent and the
holders of the Notes) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 5.5.

      5.5 Application of Proceeds. At such intervals as may be agreed upon by
the Grantor and the Collateral Agent, or, if an Event of Default shall have
occurred and be continuing, the Collateral Agent shall apply all or any part of
Proceeds constituting Collateral, whether or not held in any Collateral Account,
in payment of the Obligations in the order provided in the Collateral Agency
Agreement, and any part of such funds which the Collateral Agent elects not so
to apply and deems not required as collateral security for the Obligations shall
be paid over from time to time by the Collateral Agent to the Grantor or to
whomsoever may be lawfully entitled to receive the same. Any balance of such
Proceeds remaining after the Obligations shall have been paid in full shall be
paid over to the Company or to whomsoever may be lawfully entitled to receive
the same.

      5.6 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent, on behalf of the holders of the Notes, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Collateral Agent or any holder of
Notes or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Agent or any holder of
Notes shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall reasonably select, whether at such Grantor's premises or
elsewhere. The Collateral Agent shall apply the net proceeds of any action taken
by it pursuant to this Section 5.6, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Collateral Agent and the holders of Notes
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in
accordance with the Collateral Agency Agreement, and only after such application
and after the payment by the Collateral Agent of any other amount required by
any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Collateral Agent account for the surplus, if any, to any
Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Collateral Agent or any
holder of Notes arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

<PAGE>
                                                                              14


      5.7 Registration Rights. (a) If the Collateral Agent shall determine to
exercise its right to sell any or all of the Pledged Stock pursuant to Section
5.6, and if in the opinion of the Required Holders it is necessary or advisable
to have the Pledged Stock, or that portion thereof to be sold, registered under
the provisions of the Securities Act, the Guarantor will cause the Company to
(i) execute and deliver, and cause the directors and officers of the Company to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Required Holders,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Required Holders, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Guarantor agrees to
cause the Company to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Required Holders shall designate and
to make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.

      (b) The Guarantor recognizes that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Gurantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Company thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Company would agree to do so.

      (c) The Guarantor agrees to use its best efforts to do or cause to be done
all such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this Section 5.7 valid and binding and
in compliance with any and all other applicable Requirements of Law. The
Guarantor further agrees that a breach of any of the covenants contained in this
Section 5.7 will cause irreparable injury to the Collateral Agent and the
holders of the Notes, that the Collateral Agent and the holders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 5.7 shall be specifically enforceable
against the Guarantor, and the Guarantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Note Purchase
Agreement. 5.8 Deficiency. Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Collateral Agent or any holder of Notes to collect
such deficiency.

                        SECTION 6. THE COLLATERAL AGENT

      6.1 Collateral Agent's Appointment as Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any
officer or agent thereof, with full power

<PAGE>
                                                                              15


of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Collateral Agent the power and right,
on behalf of such Grantor, without notice to or assent by such Grantor, to do
any or all of the following:

            (i) in the name of the Company or its own name, or otherwise, take
      possession of and indorse and collect any checks, drafts, notes,
      acceptances or other instruments for the payment of moneys due under any
      Receivable or Contract or with respect to any other Collateral and file
      any claim or take any other action or proceeding in any court of law or
      equity or otherwise deemed appropriate by the Collateral Agent for the
      purpose of collecting any and all such moneys due under any Receivable or
      Contract or with respect to any other Collateral whenever payable;

            (ii) in the case of any Intellectual Property, execute and deliver,
      and have recorded, any and all agreements, instruments, documents and
      papers as the Collateral Agent may request to evidence the Collateral
      Agent's and the holders' security interest in such Intellectual Property
      and the goodwill and general intangibles of the Company relating thereto
      or represented thereby;

            (iii) pay or discharge taxes and Liens levied or placed on or
      threatened against the Collateral, effect any repairs or any insurance
      called for by the terms of this Agreement and pay all or any part of the
      premiums therefor and the costs thereof;

            (iv) execute, in connection with any sale provided for in Section
      5.6 or 5.7, any indorsements, assignments or other instruments of
      conveyance or transfer with respect to the Collateral; and

            (v) (1) direct any party liable for any payment under any of the
      Collateral to make payment of any and all moneys due or to become due
      thereunder directly to the Collateral Agent or as the Collateral Agent
      shall direct; (2) ask or demand for, collect, and receive payment of and
      receipt for, any and all moneys, claims and other amounts due or to become
      due at any time in respect of or arising out of any Collateral; (3) sign
      and indorse any invoices, freight or express bills, bills of lading,
      storage or warehouse receipts, drafts against debtors, assignments,
      verifications, notices and other documents in connection with any of the
      Collateral; (4) commence and prosecute any suits, actions or proceedings
      at law or in equity in any court of competent jurisdiction to collect the
      Collateral or any portion thereof and to enforce any other right in
      respect of any Collateral; (5) defend any suit, action or proceeding
      brought against such Grantor with respect to any Collateral; (6) settle,
      compromise or adjust any such suit, action or proceeding and, in
      connection therewith, give such discharges or releases as the Collateral
      Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark
      (along with the goodwill of the business to which any such Copyright,
      Patent or Trademark pertains), throughout the world for such term or
      terms, on such conditions, and in such manner, as the Collateral Agent
      shall in its sole discretion determine; and (8) generally, sell, transfer,
      pledge and make any agreement with respect to or otherwise deal with any
      of the Collateral as fully and completely as though the Collateral Agent
      were the absolute owner thereof for all purposes, and do, at the
      Collateral Agent's option and such Grantor's expense, at any time, or from
      time to time, all acts and things which the Collateral Agent deems
      necessary to protect, preserve or realize upon the Collateral and the
      Collateral Agent's and the holders' security interests therein and to
      effect the intent of this Agreement, all as fully and effectively as such
      Grantor might do.

<PAGE>
                                                                              16


      Anything in this Section 6.1(a) to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 6.1(a) unless an Event of Default shall
have occurred and be continuing.

      (b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.

      (c) The expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 6.1, together with interest
thereon at a rate per annum equal to the highest rate per annum at which
interest would then be payable on any category of Obligations under the Note
Purchase Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.

      (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

      6.2 Duty of Collateral Agent. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral Agent, any holder of Notes
nor any of their respective officers, directors, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Collateral Agent and the holders of Notes
hereunder are solely to protect the Collateral Agent's and the holders'
interests in the Collateral and shall not impose any duty upon the Collateral
Agent or any holder of Notes to exercise any such powers. The Collateral Agent
and the holders of the Notes shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.

      6.3 Execution of Financing Statements. Pursuant to any applicable law,
each Grantor authorizes the Collateral Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of such Grantor in such form and in such
offices as the Collateral Agent determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. The Company authorizes
the Collateral Agent to use the collateral description "all personal property"
in any such financing statements. The Guarantor authorizes the Collateral Agent
to use the collateral description "any and all shares, stock certificates,
options, ownership interests or rights of any nature in Williams Pipe Line
Company, LLC presently owned or acquired in the future by the debtor." Each
Grantor hereby ratifies and authorizes the filing by the Collateral Agent of any
financing statement with respect to the Collateral made prior to the date
hereof.

      6.4 Authority of Collateral Agent. Each Grantor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the holders of
the Notes, be governed by the Collateral Agency Agreement and by such other
agreements with respect thereto as may exist from time

<PAGE>
                                                                              17


to time among them, but, as between the Collateral Agent and the Grantors, the
Collateral Agent shall be conclusively presumed to be acting as agent for the
holders of the Notes with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.

                            SECTION 7. MISCELLANEOUS

      7.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 18 of the Note Purchase Agreement.

      7.2 Notices. All notices and communications provided for hereunder shall
be in writing and sent to the recipient's address listed in Schedule A or at
such other address as the recipient shall have specified in writing, (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by
a recognized overnight delivery service (charges prepaid), or (b) by registered
or certified mail with return receipt requested (postage prepaid), or (c) by a
recognized overnight delivery service (with charges prepaid). Notice under this
Section 7.2 will be deemed given only when actually received.

      7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Agent nor any Purchaser shall by any act (except by a written
instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Collateral Agent or any holder of Notes, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by the Collateral Agent or any holder of Notes of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Collateral Agent or such holder of Notes would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.

      7.4 Enforcement Expenses; Indemnification. (a) Each Grantor agrees to pay
or reimburse the Collateral Agent for all its costs and expenses incurred in
enforcing or preserving any rights under this Agreement and the other Note
Purchase Documents to which such Grantor is a party, including, without
limitation, the fees and disbursements of counsel (including the allocated fees
and expenses of in-house counsel) to the Collateral Agent.

      (b) Each Grantor agrees to pay, and to save the Collateral Agent harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.

      (c) Each Grantor agrees to pay, and to save the Collateral Agent and the
holders of Notes harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent such
Grantor would be required to do so pursuant to Section 5.1 of the Collateral
Agency Agreement.

      (d) Each Grantor's obligation to reimburse any holder of Notes for costs
and expenses and to indemnify such holder for all liabilities with respect to
this Agreement and any of the Collateral shall be as provided in Section 16 of
the Note Purchase Agreement.

<PAGE>
                                                                              18


      (e) The agreements in this Section 7.4 shall survive repayment of the
Obligations and all other amounts payable under the Note Purchase Agreement and
the other Note Purchase Documents.

      7.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and the holders of Notes and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent.

      7.6 Set-Off. Each Grantor hereby irrevocably authorizes the Collateral
Agent and each holder of Notes at any time and from time to time while an Event
of Default shall have occurred and be continuing, without notice to such Grantor
or any other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Collateral Agent or such holder of Notes to or for the credit or
the account of such Grantor, or any part thereof in such amounts as the
Collateral Agent or such holder of Notes may elect, against and on account of
the obligations and liabilities of such Grantor to the Collateral Agent or such
holder of Notes hereunder and claims of every nature and description of the
Collateral Agent or such holder of Notes against such Grantor, in any currency,
whether arising hereunder, under the Note Purchase Agreement, any other Note
Purchase Document or otherwise, as the Collateral Agent or such holder of Notes
may elect, whether or not the Collateral Agent or any holder of Notes has made
any demand for payment and although such obligations, liabilities and claims may
be contingent or unmatured. The Collateral Agent and each holder of Notes shall
notify such Grantor promptly of any such set-off and the application made by the
Collateral Agent or such holder of Notes of the proceeds thereof, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Collateral Agent and each holder of Notes
under this Section 7.6 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Collateral Agent or such
holder of Notes may have.

      7.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

      7.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

      7.9 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

      7.10 Integration. This Agreement and the other Note Purchase Documents
represent the agreement of the Grantors, the Collateral Agent and the Purchasers
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Collateral Agent or
any Purchaser relative to subject matter hereof and thereof not expressly set
forth or referred to herein or in the other Note Purchase Documents.

<PAGE>
                                                                              19


      7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

      7.12 Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably
and unconditionally:

      (a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Note Purchase Documents to which it is
a party, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;

      (b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

      (c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 7.2 or at such other address of which the
Collateral Agent shall have been notified pursuant thereto;

      (d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

      (e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

      7.13 Acknowledgements. Each Grantor hereby acknowledges that:

      (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Note Purchase Documents to which it is
a party;

      (b) neither the Collateral Agent nor any holder of Notes has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Note Purchase Documents, and the relationship
between the Grantors, on the one hand, and the Collateral Agent and holders of
Notes, on the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and

      (c) no joint venture is created hereby or by the other Note Purchase
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the holders of the Notes or among the Grantors and the holders of the
Notes.

      7.14 Releases. (a) At such time as the Notes and the other Obligations
shall have been paid in full, the Collateral shall be released from the Liens
created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent and each
Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Collateral Agent shall deliver to such Grantor any
Collateral held by

<PAGE>
                                                                              20


the Collateral Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.

      (b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Note Purchase
Agreement, then such Collateral shall automatically be released from the Lien of
this Security Agreement without delivery or any instrument or performance of any
further act by any Person and, upon such release, the Collateral Agent, at the
request and sole expense of such Grantor, shall execute and deliver to such
Grantor all releases or other documents reasonably necessary or desirable for
the release of the Liens created hereby on such Collateral.

      7.15 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER NOTE PURCHASE DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

<PAGE>
                                                                              21


      IN WITNESS WHEREOF, each of the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first above written.

                                    WILLIAMS ENERGY PARTNERS L.P.

                                        By: WILLIAMS GP LLC, its General Partner


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


                                    WILLIAMS PIPE LINE COMPANY, LLC

                                        By: WILLIAMS ENERGY PARTNERS, L.P.,
                                               its Sole Member


                                        By: WILLIAMS GP LLC, its General Partner


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



                                    STATE STREET BANK AND TRUST COMPANY,
                                    as Collateral Agent


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

<PAGE>

                                                                      Schedule 1

                                NOTICE ADDRESSES


Williams Pipe Line Company, L.L.C.

Attn: Chief Financial Officer
One Williams Center, MD 35-1
Tulsa, OK  74172
(918) 573-3864 fax

With a copy to: General Counsel
One Williams Center, MD 35-1
Tulsa, OK  74172
(918) 573-8024 fax

Williams Energy Partners L.P.

Attn: Chief Financial Officer
One Williams Center, MD 35-1
Tulsa, OK  74172
(918) 573-3864 fax

With a copy to:  General Counsel
One Williams Center, MD 35-1
Tulsa, OK  74172
(918) 573-8024 fax

State Street Bank and Trust Company

Attn: Corporate Trust Department
2 Avenue de Lafayette - LCC 6
Boston, Massachusetts 02111


<PAGE>


                                                                      Schedule 2

                       DESCRIPTION OF INVESTMENT PROPERTY

PLEDGED STOCK:

All of the limited liability company interests of Williams Pipe Line Company,
LLC, a Delaware limited liability company.


PLEDGED NOTES:

<TABLE>
<CAPTION>
          Issuer                       Payee               Principal Amount
----------------------------    -------------------    -------------------------
<S>                             <C>                    <C>

None.
</TABLE>


<PAGE>


                                                                      Schedule 3

                            FILINGS AND OTHER ACTIONS
                     REQUIRED TO PERFECT SECURITY INTERESTS

                         Uniform Commercial Code Filings

Guarantor - central filing in the Office of the Secretary of State, State of
            Delaware

Company   - central filing in the Office of the Secretary of State, State of
            Delaware

                          Patent and Trademark Filings

None.

                      Actions with respect to Pledged Stock

Guarantor - central filing in the Office of the Secretary of State, State of
            Delaware

                                  Other Actions

None.


<PAGE>


                                                                      Schedule 4

       LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE

<TABLE>
<CAPTION>
             Grantor                  Jurisdiction of     Location of Chief Executive
             -------                  ---------------     ---------------------------
                                        Organization                 Office
                                        ------------                 ------

<S>                                   <C>                 <C>
Williams Pipe Line Company, L.L.C.        Delaware             One Williams Center
                                                                 Tulsa, OK 74172
  Williams Energy Partners L.P.           Delaware             One Williams Center
                                                                Tulsa, OK 74172
</TABLE>


<PAGE>

                                                                      Schedule 5

                                    FINANCING

                                COUNTY RECORDERS

ARKANSAS (1)

Sebastian County Clerk
35 South 6th
Fort Smith, AR 72902
479-782-5065
479-784-1567 (FAX)

ILLINOIS (23)

Cass County Clerk & Recorder
County Courthouse
100 E. Springfield St.
Virginia, IL  62691
217-452-7217
217-452-7219 (FAX)

Christian County Clerk & Recorder
101 S. Main
Taylorville, IL  62568
217-824-4969
217-824-5105 (FAX)

Cook County Recorder of Deeds
118 North Clark Street
Chicago, IL  60602
312-603-5050

DeKalb County Recorder of Deeds
110 East Sycamore St.
Sycamore, IL  60178
815-895-7149
815-895-7148 (FAX)

DeWitt County Clerk & Recorder
County Courthouse
201 W. Washington
Clinton, IL  61727
217-935-2119


<PAGE>

DuPage County Recorder of Deeds
Administration Building
421 N. County Farm Rd.
Wheaton, IL  60189
630-682-7200
630-682-7204 (FAX)

Fayette County Clerk & Recorder
County Courthouse
221 S. 7th Street
Vandalia, IL  62471
618-283-5000

Grundy County Recorder
111 E. Washington
Morris, IL  60450
815-942-9024, ext. 224
815-942-2222 (FAX)

Kane County Recorder of Deeds
719 S. Batavia Ave.
Geneva, IL  60134
630-232-5935

Kankakee County Recorder of Deeds
189 E. Court St.
Kankakee, IL  60901
815-937-2990

Lee County Clerk & Recorder
112 E. 2nd St.
Dixon, IL  61021
815-288-3309
815-288-6492 (FAX)

Livingston County Recorder of Deeds
112 West Madison Street
Pontiac, IL  61764
815-844-2006
815-842-1844 (FAX)

Logan County Clerk & Recorder
County Courthouse
601 Broadway
Lincoln, IL  62656
217-732-4148
217-732-6064 (FAX)


<PAGE>

Macon County Recorder of Deeds
141 S. Main, Room 201
Decatur, IL  62523
217-424-1305

Marion County Clerk
County Courthouse, Room 201
100 E. Main
Salem, IL  62881
618-548-3400

McLean County Recorder
104 W. Front
Bloomington, IL  61702
309-888-5360
309-888-5434 (FAX)

Menard County Clerk & Recorder
County Courthouse
6th & Douglas
Petersburg, IL  62675
217-632-2415
217-632-4301 (FAX)

Morgan County Clerk & Recorder
300 W. State St.
Jacksonville, IL  62651
217-243-8581

Pike County Clerk
County Courthouse
100 E. Washington
Pittsfield, IL  62363
217-285-6812
217-285-5820 (FAX)

Rock Island County Recorder of Deeds
County Courthouse
210 15th St.
Rock Island, IL  61201
309-786-4451
309-786-3049 (FAX)

Shelby County Clerk & Recorder
County Courthouse
301 East Main
Shelbyville, IL  62565
217-774-4421


<PAGE>

Whiteside County Recorder of Deeds
County Office Building
200 E. Knox
Morrison, IL  61720
815-772-5192
815-772-7673 (FAX)

Will County Recorder of Deeds
58 E. Clinton St., Suite 100
Joliet, IL  60434
815-740-4637
815-740-4697 ( FAX)

IOWA (35)

Black Hawk Recorder of Deeds
County Courthouse
316 E. 5th
Waterloo, IA  50703
319-833-3012
319-833-3170 (FAX)

Cedar County Recorder
County Courthouse
400 Cedar St.
Tipton, IA  52722
563-886-2230
563-886-2120 (FAX)

Cerro Gordo County Recorder
220 North Washington
Mason City, IA  50401
641-421-3058
641-421-3154 (FAX)

Cherokee County Recorder
520 W. Main
Cherokee, IA  51012
712-225-6735

Clarke County Recorder
County Courthouse
100 South Main
Osceola, IA  50213
641-342-3313


<PAGE>


Clay County Recorder
300 W. 4th St., #3
Spencer, IA  51301
712-262-1081

Decatur County Recorder
County Courthouse
207 N. Main St.
Leon, IA  50144
641-446-4322

Dickinson County Recorder
1802 Hill Ave.
Spirit Lake, IA  51360
712-336-1495
712-336-2677 (FAX)

Dubuque County Recorder of Deeds
720 Central Ave.
Dubuque, IA  52001
563-589-4434
563-589-4484 (FAX)

Franklin County Recorder
12 First Ave.,  N.W.
Hampton, IA  50441
641-456-5675
641-456-6009 (FAX)

Hamilton County Recorder
County Courthouse
2300 Superior Street
Webster City, IA  50595
515-832-9535
515-832-8620 (FAX)

Hardin County Recorder
1215 Edgington Avenue
Eldora, IA  50627
641-858-3461
641-939-8245 (FAX)

Iowa County Recorder of Deeds
County Courthouse
901 Court Ave.
Marengo, IA  52301
319-642-5562


<PAGE>


Jasper County Recorder
County Courthouse, Room 205
101 1st Street North
Newton, IA  50208
641-792-5442
641-791-3680 (FAX)

Johnson County Recorder
913 S. Dubuque Street
Iowa City, IA  52240
319-356-6093
319-339-6181 (FAX)

Jones County Recorder
500 W. Main, Room 116
Anamosa, IA  52205
319-462-2477

Linn County Recorder
930 1st St. SW
Cedar Rapids, IA  52404
319-892-5420

Lyon County Recorder
County Courthouse
206 S. 2nd Ave.
Rock Rapids, IA  51246
712-472-2381
712-472-2829 (FAX)

Madison County Recorder
County Courthouse
112 N. John Wayne Drive
Winterset, IA  50273
515-462-3771

Monona County Recorder
610 Iowa Avenue
Onawa, IA  51040
712-423-2575
712-423-3034 (FAX)

O'Brien County Recorder
155 S. Hayes Ave.
Primghar, IA  51245
712-957-3045

Plymouth County Recorder
215 4th Avenue SE
Le Mars, IA  51031
712-546-4020
712-546-7304 (FAX)


<PAGE>

Polk County Recorder
County Administration Bldg.
111 Court Avenue
Des Moines, IA  50309
515-286-3160
515-323-5393 (FAX)

Pottawatomie County Recorder
227 South 6th Street
Council Bluffs, IA  51501
712-328-5612
712-328-4738 (FAX)

Poweshiek County Recorder
302 E. Main
Montezuma, IA  50171
641-623-5434
641-623-2928 (FAX)

Ringgold County Recorder of Deeds
Ringgold County Courthouse
109 W. Madison
Mont Ayr, IA  50854
641-464-3231
641-464-2568 (FAX)

Scott County Recorder
416 West Fourth Street
Davenport, IA  52801
563-326-8621
563-328-3225 (FAX)

Sioux County Recorder
210 Central Ave. S.W.
Orange City, IA  51041
712-737-2229
712-737-2230 (FAX)

Story County Recorder
900 6th St.
Nevada, IA  50201
515-382-7230
515-382-7326 (FAX)

Tama County Recorder
County Courthouse
104 W. State St.
Toledo, IA  52342
641-484-3320


<PAGE>


Union County Recorder
County Courthouse
300 N. Pine
Creston, IA  50801
641-782-7616

Warren County Recorder
301 N. Buxton, Ste. 109
Indianola, IA  50125
515-961-1089

Webster County Recorder
County Courthouse
701 Central Avenue
Ft. Dodge, IA  50501
515-576-2401
515-574-3723 (FAX)

Woodbury County Recorder
Courthouse, Room 106
620 Douglas Street
Sioux City, IA  51101
712-279-6528
712-233-8946 (FAX)

Worth County Recorder
County Courthouse
1000 Central Ave.
Northwood, IA  50459
641-324-2734
641-324-3682 (FAX)

KANSAS (31)

Allen County Register of Deeds
1 N. Washington
Iola, KS  66749
620-365-1412
620-365-1414 (FAX)


<PAGE>


Anderson County Register of Deeds
Anderson County Courthouse
100 E. 4th Ave.
Garnett, KS  66032
785-448-6841
785-448-5621 (FAX)

Atchison County Register of Deeds
423 N. 5th
Atchison, KS  66002
913-367-2568
913-367-0227 (FAX)

Bourbon County Register of Deeds
210 South National
Ft. Scott, KS  66701
620-223-3800

Brown County Register of Deeds
601 Oregon Street
Hiawatha, KS  66434
785-742-3741

Butler County Register of Deeds
205 W. Central
El Dorado, KS  67042
316-322-4239

Chase County Register of Deeds
Courthouse Plaza
Pearl and Broadway
Cottonwood Falls, KS  66845
620-273-6398
620-273-6617 (FAX)

Chautauqua County Register of Deeds
County Courthouse
215 N. Chautauqua
Sedan, KS  67361
620-725-5830
620-725-5831 (FAX)

Cherokee County Register of Deeds
110 W.  Maple
Columbus, KS  66725
620-429-3777
620-429-1362 (FAX)

Cowley County Register of Deeds
311 E. 9th Ave.
Winfield, KS  67156
620-221-5400
620-221-5498 (FAX)


<PAGE>


Crawford County Register of Deeds
Girard Square
111 E. Forest
Girard, KS  66743
620-724-6115
620-724-6007 (FAX)

Doniphan County Register of Deeds
County Courthouse
120 E. Chestnut
Troy, KS  66087
785-985-3513
785-985-3723 (FAX)

Douglas County Register of Deeds
Douglas County Courthouse
1100 Massachusetts St.
Lawrence, KS  66044
785-841-7700
785-841-4036 (FAX)

Greenwood County Register of Deeds
County Courthouse
311 N. Main
Eureka, KS  67045
620-583-8121
620-583-8124 (FAX)

Jackson County Register of Deeds
County Courthouse
400 New York Ave.
Holton, KS  66436
785-364-2891
785-364-4204 (FAX)

Jefferson County Register of Deeds
County Courthouse
300 Jefferson St.
Oskaloosa, KS  66066
785-863-2272
785-863-2602 (FAX)

Johnson County Register of Deeds
111 South Cherry, Suite 1300
Olathe, KS  66061
913-715-2300
913-715-2310 (FAX)


<PAGE>


Labette County Register of Deeds
County Courthouse
510 Merchant
Oswego, KS  67356
620-795-2138

Leavenworth County Register of Deeds
300 Walnut
Leavenworth, KS  66048
913-684-0400

Linn County Register of Deeds
County Courthouse
315 Main
Mounds City, KS  66056
913-795-2668
913-795-2889 (FAX)

Lyon County Register of Deeds
430 Commercial St.
Emporia, KS  66801
620-342-4950
620-341-3438 (FAX)

Miami County Register of Deeds
201 S. Pearl
Paola, KS  66071
913-294-3976
913-294-9544 (FAX)

Montgomery County Register of Deeds
County Courthouse
5th and Main
Independence, KS  67301
620-330-1140
620-330-1144 (FAX)

Nemaha County Register of Deeds
602 Nemaha
Seneca, KS  66538
785-336-2120

Neosho County Register of Deeds
County Courthouse
100 S. Main
Erie, KS  66733
620-244-3858
620-244-3860 (FAX)


<PAGE>


Osage County Register of Deeds
County Courthouse
717 Topeka Blvd.
Lyndon, KS  66451
785-828-4523
785-828-4749 (FAX)

Shawnee County Register of Deeds
Courthouse, Room 108
200 S. E. 7th  St.
Topeka, KS  66603
785-233-8200
785-291-4912 (FAX)

Wabaunsee County Register of Deeds
215 Kansas
Alma, KS  66401
785-765-3822

Wilson County Register of Deeds
County Courthouse
615 Madison
Fredonia, KS  66736
620-378-3662
620-378-4762 (FAX)

Woodson County Register of Deeds
105 W. Rutledge
Yates Center, KS  66783
620-625-8635
620-625-8670 (FAX)

Wyandotte County Register of Deeds
710 North 7th Street
Kansas City, KS  66101
913-573-2841
913-321-3075 (FAX)

MINNESOTA (36)

Anoka County Register of Deeds
County Courthouse
2100 3rd Avenue
Anoka, MN  55303
763-323-5400

Blue Earth County Recorder
410 E. Jackson St.
Mankato, MN  56001
507-389-8251


<PAGE>


Carlton County Recorder
County Courthouse
301 Walnut St.
Carlton, MN  55718
218-384-9122
218-384-9157 (FAX)

Carver County Recorder
Administration Bldg.
600 East 4th St.
Chaska, MN  55318
952-361-1930
952-361-1931 (FAX)

Chippewa County Recorder
County Courthouse
629 N. 11th Street
Montevideo, MN  56265
320-269-9431
320-269-7168 (FAX)

Chisago County Recorder
Government Center
313 N. Main, Room 277
Center City, MN  55012
651-213-0438
651-213-0454 (FAX)

Clay County Recorder
County Courthouse
807 11th Street North
Moorehead, MN  56560
218-299-5031
218-299-7500 (FAX)

Dakota County Recorder
Dakota County Administrative Center
1590 Highway 55
Hastings, MN  55033
651-438-4355
651-438-8176 (FAX)


<PAGE>


Douglas County Recorder
305 8th Avenue West
Alexandria, MN  56308
320-762-3877
320-762-2389 (FAX)

Faribault County Recorder
County Courthouse
415 N. Main St.
Blue Earth, MN  56013
507-526-6252
507-526-5272 (FAX)

Freeborn County Register of Deeds
County Courthouse
411 South Broadway
Albert Lea, MN  56007
507-377-5130
507-377-5265 (FAX)

Goodhue County Recorder
509 W. 5th St.
Red Wing, MN  55066
651-385-3148

Grant County Recorder
County Courthouse
10 2nd Street N.E.
Elbow Lake, MN  56531
218-685-4133
218-685-4521 (FAX)

Hennepin County Recorder
803A Government Center
300 South 6th Street
Minneapolis, MN  55487
612-348-3050

Kandiyohi County Recorder
County Courthouse
400 Benson Ave. SW
Willmar, MN  56201
320-231-6223
320-231-6284 (FAX)

Lincoln County Recorder
319 N. Rebecca
Ivanhoe, MN  56142
507-694-1360
507-694-1198 (FAX)


<PAGE>


Lyon County Recorder
607 West Main Street
Marshall, MN  56258
507-537-6722
507-537-7988 (FAX)

McLeod County Recorder
2389 Hennepin Ave. North
Glencoe, MN  55336
320-864-1216
320-864-1295 (FAX)

Meeker County Recorder
325 N. Sibley Ave.
Litchfield, MN  55355
320-693-5440
320-693-5444 (FAX)

Olmsted County Recorder
151 4th Street SE
Rochester, MN  55904
507-285-8191
507-287-7186 (FAX)

Otter Tail County Recorder
County Courthouse
121 W. Junius Ave.
Fergus Falls, MN  56537
218-739-2271
218-739-3721 (FAX)
Pine County Recorder

Pine County Courthouse
315 Main Street South, Suite 3
Pine City, MN  55063
320-629-5662
320-629-5604 (FAX)

Pipestone County Recorder
416 Hiawatha Ave. South
Pipestone, MN  56164
507-825-4646
507-825-6767 (FAX)

Pope County Recorder
130 E. Minnesota Ave.
Glenwood, MN  56334
320-634-5723
320-634-5717 (FAX)


<PAGE>


Ramsey County Recorder
County Government Center West, 8th Fl.
50 Kellogg Blvd. West
St. Paul, MN  55102
651-266-2060
651-266-2022 (FAX)

Renville County Recorder
County Courthouse, 2nd Floor
500 East DePue Ave.
Olivia, MN  56277
320-523-3669
320-523-3679 (FAX)

Rice County Recorder
Government Services Building
320 N.W. 3rd Street
Faribault, MN  55021
507-332-6100

St. Louis County Recorder
County Courthouse, Room 101
100 N. 5th Ave. West
Duluth, MN  55802
218-726-2677

Scott County Recorder
200 4th Ave. West
Shakopee, MN  55379
952-445-7750

Steele County Recorder
630 Florence Ave.
Owatonna, MN  55060
507-444-7450
507-444-7470 (FAX)

Swift County Recorder
301 14th St. N.
Benson, MN  56215
320-843-3377

Wabasha County Recorder
County Courthouse
625 Jefferson Ave.
Wabasha, MN  55981
651-565-3623

Waseca County Recorder
County Courthouse
307 N. State St.
Waseca, MN  56093
507-835-0670


<PAGE>

Washington County Recorder
14949 N. 62nd St.
Stillwater, MN  55082
651-430-6755

Wilkin County Recorder
County Courthouse, 1st Floor
300 South 5th St.
Breckenridge, MN  56520
218-643-7164
218-643-7170 (FAX)

Yellow Medicine County Recorder
415 9th Avenue
Granite Falls, MN  56241
320-564-2529
320-564-3670 (FAX)

MISSOURI (31)

Andrew County Recorder
411 Court Street
Savannah, MO  64485
816-324-4221

Audrain County Recorder of Deeds
County Courthouse, Room 105
101 N. Jefferson St.
Mexico, MO  65625
573-473-5830
573-581-8087 (FAX)

Barton County Recorder of Deeds
County Courthouse
1004 Gulf Street
Lamar, MO  64759
417-682-2110

Benton County Recorder of Deeds
316 Van Buren
Warsaw, MO  65355
660-438-5732

Boone County Recorder of Deeds
801 E. Walnut, #132
Columbia, MO  65201
573-886-4345
573-886-4359 (FAX)


<PAGE>


Callaway County Recorder of Deeds
County Courthouse
10 E. 5th St.
Fulton, MO  65251
573-642-0787
573-642-7929 (FAX)

Cedar County Recorder of Deeds
County Courthouse
110 South Street
Stockton, MO  65785
417-276-3213
417-276-5499 (FAX)

Clay County Recorder of Deeds
County Courthouse
One Courthouse Square
Liberty, MO  64068
816-792-7641

Clinton County Recorder of Deeds
County Courthouse
207 N. Main
Plattsburg, MO  64477
816-539-3719

Cooper County Recorder
County Courthouse
200 Main Street, Room 26
Boonville, MO  65233
660-882-2232

Daviess County Recorder of Deeds
County Courthouse, 2nd Floor
102 Main
Gallatin, MO  64640
660-663-2932

DeKalb County Recorder of Deeds
County Courthouse
Junction 33 and Hwy. 6
Maysville, MO  64469
816-449-2602

Gentry County Recorder of Deeds
400 W. Clay
Albany, MO  64402
660-726-3618


<PAGE>


Greene County Recorder of Deeds
940 Boonville
Springfield, MO  65802
417-868-4068
417-868-4807 (FAX)

Harrison County Recorder
County Courthouse
1500 Main
Bethany, MO  64424
660-425-6425

Henry County Recorder
County Courthouse
100 W. Franklin St.
Clinton, MO  64735
660-885-6963

Jackson County Recorder
415 East 12th  St., Room 104
Kansas City, MO  64106
816-881-3193

Jasper County Recorder of Deeds
Bank of America Bldg., 2nd Fl.
116 W. 2nd
Carthage, MO  64836
417-358-0431

Lawrence County Recorder of Deeds
Courthouse Square
Mt. Vernon, MO  65712
417-466-2670

Marion County Circuit Clerk & Recorder
County Courthouse
100 S. Main
Palmyra, MO  63461
573-769-2550

Moniteau County Circuit Clerk & Recorder
County Courthouse
200 E. Main St.
California, MO  65018
573-796-2071

Monroe County Recorder of Deeds
300 N. Main
Paris, MO  65275
660-327-5204


<PAGE>


Morgan County Recorder of Deeds
100 E. Newton
Versailles, MO  65084
573-378-4029

Nodaway County Recorder of Deeds
Courthouse Square, Room 104
305 N. Main
Maryville, MO  64468
660-582-5711

Pettis County Recorder of Deeds
414 S. Ohio
Sedalia, MO  65301
660-826-1136

Platte County Recorder of Deeds
415 3rd St., Suite 70
Platte City, MO  64079
816-858-2232

Ralls County Recorder of Deeds
311 S. Main
New London, MO  63459
573-985-5631

St. Charles County Recorder of Deeds
201 N. 2nd Street
St. Charles, MO  63302
636-949-7505

St. Clair Clerk & Recorder
655 2nd St.
Osceola, MO  64776
417-646-2226

Vernon County Recorder of Deeds
County Courthouse
100 W. Cherry
Nevada, MO  64772
417-448-2520

Worth County Recorder of Deeds
County Courthouse
4th & Front Streets
Grant City, MO  64456
660-564-2219


<PAGE>


NEBRASKA (13)

Burt County Clerk
County Courthouse
111 N. 13th St.
Tekamah, NE  68061
402-374-2955

Cass County Recorder of Deeds
County Courthouse
4th & Main Streets
Plattsmouth, NE  68048
402-296-3159

Douglas County Register of Deeds
Civic Center Building
1819 Farnam #H-09
Omaha, NE  68183
402-444-6781

Hall County Register of Deeds
Hall County Administration Bldg., Suite 6
121 S. Pine St.
Grand Island, NE  68801
308-385-5040

Hamilton County Register of Deeds
1111 13th St., #1
Aurora, NE  68818
402-694-3443

Lancaster County Register of Deeds
555 South 10th St.
Lincoln, NE  68058
402-441-7577

Nemaha County Clerk
County Courthouse
1824 "N" Street
Auburn, NE  68305
402-274-4213

Otoe County Register of Deeds
County Courthouse
1021 Central Ave.
Nebraska City, NE  68410
402-873-9530


<PAGE>

Richardson County Register of Deeds
County Courthouse
1700 Stone St.
Falls City, NE  68388
402-245-2535

Sarpy County Register of Deeds
1210 Golden Gate Drive, Rm. 1109
Papillion, NE  68046
402-593-2182

Seward County Clerk
529 Seward St.
Seward, NE  68434
402-643-2883

Washington County Clerk
1555 Colfax St.
Blair, NE  68008
402-426-6822

York County Clerk
County Courthouse
510 Lincoln Ave.
York, NE  68467
402-362-7759

NORTH DAKOTA (3)

Cass County Register of Deeds
211 Ninth St. South
Fargo, ND  58108
701-241-5620
701-241-5621 (FAX)

Grand Forks County Register of Deeds
151 S. 4th St.
Grand Forks, ND  58201
701-780-8261

Traill County Register of Deeds
County Courthouse
13 1st St. NW
Hillsboro, ND  58045
701-636-4457


<PAGE>


OKLAHOMA (27)

Cleveland County Clerk
201 S. Jones
Norman, OK  73069
405-366-0240

Craig County Clerk
301 W. Canadian Ave.
Vinita, OK  74301
918-256-2507

Creek County Clerk
317 E. Lee, Room 100
Sapulpa, OK  74066
918-224-4084

Garfield County Clerk
114 W. Broadway
Enid, OK  73702
580-237-0226

Garvin County Clerk
201 W. Grant
Pauls Valley, OK  73075
405-238-2772

Haskell County Clerk
202 E. Main
Stigler, OK  74462
918-967-2884

Hughes County Clerk
200 N. Broadway, Suite 5
Holdenville, OK  74848
405-379-5487

Kay County Clerk
201 S. Main
Newkirk, OK  74647
580-362-2537

LeFlore County Clerk
100 S. Broadway
Poteau, OK  74953
918-647-5738


<PAGE>


Lincoln County Clerk
811 Manvel
Chandler, OK  74834
405-258-1264

Logan County Clerk
County Courthouse
301 E. Harrison, Suite 102
Guthrie, OK  73044
405-282-0266

McClain County Clerk
121 N. 2nd, Room 303
Purcell, OK  73080
405-527-3360

Murray County Clerk
County Courthouse
West 10th and Wyandotte
Sulphur, OK  73086
580-622-3920

Noble County Clerk
300 Courthouse Drive
Perry, OK  73077
580-336-2141

Nowata County Clerk
229 N. Maple
Nowata, OK  74048
918-273-2480

Okfuskee County Clerk
209 N. 3rd
Okemah, OK  74859
918-623-1724

Oklahoma County Clerk
320 Robert S. Kerr Ave., Rm. 203
Oklahoma City, OK  73102
405-270-0082

Okmulgee County Clerk
314 W. 7th
Okmulgee, OK  74447
918-756-0788


<PAGE>


Osage County Clerk
600 Grandview
Pawhuska, OK  74056
918-287-3136

Pawnee County Register of Deeds
500 Harrison St., Room 202
Pawnee, OK  74058
918-762-2732

Payne County Clerk
County Courthouse
606 S. Husband
Stillwater, OK  74076
405-747-8344

Pittsburg County Clerk
115 E. Carl Albert Parkway
McAlester, OK  74501
918-423-6865

Pontotoc County Clerk
100 W. 13th, Room 205
Ada, OK  74820
580-332-1425

Rogers County Clerk
219 South Missouri
Claremore, OK  74017
918-341-2518

Stephens County Clerk
101 S. 11th St.
Duncan, OK  73534
580-255-0977

Tulsa County Clerk
500 South Denver, Suite 120
Tulsa, OK  74103
918-596-5801

Washington County Clerk
400 S. Johnstone, Room 100
Bartlesville, OK  74003
918-337-2840


<PAGE>


SOUTH DAKOTA (7)

Beadle County Register of Deeds
450 3rd St. SW
Huron, SD  57350
605-353-8412

Brown County Register of Deeds
25 Market St.
Aberdeen, SD  57401
605-626-7140

Codington County Register of Deeds
14 First Avenue South East
Watertown, SD  57201
605-882-6278

Deuel County Register of Deeds
408 4th St. W.
Clear Lake, SD  57226
605-874-2268

Lincoln County Register of Deeds
100 East 5th St.
Canton, SD  57013
605-764-5661

Minnehaha County Register of Deeds
415 North Dakota Ave.
Sioux Falls, SD  57104
605-367-4223

Moody County Register of Deeds
101 East Pipestone Avenue
Flandreau, SD  57028
605-997-3181

Union County Register of Deeds
209 E. Main
Elk Point, SD  57025
605-356-2132

WISCONSIN (6)

Chippewa County Register of Deeds
711 North Bridge Street
Chippewa Falls, WI  54729
715-726-7994


<PAGE>


Clark County Register of Deeds
507 Court St., Room 303
Neillsville, WI  54456
715-743-5162

Douglas County Register of Deeds
1313 Belknap, Room 108
Superior, WI  54880
715-395-1359

Dunn County Register of Deeds
800 Wilson Ave.
Menomonie, WI  54751
715-232-1228

Marathon County Register of Deeds
500 Forest Street
Wausau, WI  54403
715-261-1470

St. Croix County Register of Deeds
1101 Carmichael Road
Hudson, WI  54016
715-386-4600


<PAGE>


                                                                      Schedule 6

                        COPYRIGHTS AND COPYRIGHT LICENSES

None.

                           PATENTS AND PATENT LICENSES

None.

                        TRADEMARKS AND TRADEMARK LICENSES

None.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>10
<FILENAME>d01268exv10w8.txt
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.8


================================================================================


                           COLLATERAL AGENCY AGREEMENT

                                      Among

                         WILLIAMS ENERGY PARTNERS L.P.,

                        WILLIAMS PIPE LINE COMPANY, LLC,

                      The Several Purchasers Parties Hereto

                                       and

                      STATE STREET BANK AND TRUST COMPANY,
                    as Collateral Agent and Cash Escrow Agent

                           Dated as of October 1, 2002


================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
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                                                                                Page
                                                                                ----

<S>                                                                             <C>
SECTION 1 DEFINITIONS........................................................     1

     1.1.     Defined Terms..................................................     1

     1.2.     Other Definitional Provisions..................................     3

SECTION 2 APPOINTMENT OF COLLATERAL AGENT....................................     3

     2.1.     Appointment of Collateral Agent by the Secured Parties.........     3

     2.2.     Exercise of Powers; Instructions of Required Holders, etc......     4

SECTION 3 COLLATERAL ACCOUNTS; DISTRIBUTIONS.................................     4

     3.1.     The Collateral Account.........................................     4

     3.2.     Control of the Collateral Account..............................     4

     3.3.     Investment of Funds Deposited in the Collateral Account........     4

     3.4.     Application of Moneys..........................................     5

     3.5.     Collateral Agent's Calculations................................     5

     3.6.     Pro Rata Sharing...............................................     6

SECTION 4 THE CASH ESCROW ACCOUNT............................................     6

     4.1.     Cash Escrow Account............................................     6

     4.2.     Deposit of Cash Escrow Amounts.................................     6

     4.3.     Status of Cash Escrow Account Monies...........................     6

     4.4.     Disbursement of Cash Escrow Amounts............................     7

     4.5.     Failure to Deposit Cash Escrow Amounts.........................     7

     4.6.     Cash Escrow Agent..............................................     7

SECTION 5 THE COLLATERAL AGENT...............................................     7
</TABLE>

<PAGE>

<TABLE>
<S>                                                                              <C>
     5.1.     Compensation and Indemnification...............................     7

     5.2.     Rights of the Collateral Agent; Exculpatory Provisions.........     8

     5.3.     Delegation of Duties...........................................     9

     5.4.     Reliance by Collateral Agent...................................     9

     5.5.     Limitations on Duties of the Collateral Agent..................    11

     5.6.     Resignation and Removal of the Collateral Agent................    11

     5.7.     Status of Successor Collateral Agent...........................    12

     5.8.     Merger of the Collateral Agent.................................    12

SECTION 6 MISCELLANEOUS......................................................    13

     6.1.     Notices........................................................    13

     6.2.     No Waivers.....................................................    13

     6.3.     Amendments, Supplements and Waivers............................    13

     6.4.     Headings.......................................................    13

     6.5.     Severability...................................................    13

     6.6.     Successors and Assigns.........................................    14

     6.7.     Governing Law..................................................    14

     6.8.     Counterparts...................................................    14

     6.9.     Termination....................................................    14

     6.10.    Inspection by Regulatory Agencies..............................    14

     6.11.    Submission to Jurisdiction; Waivers............................    14

     6.12.    Waivers of Jury Trial..........................................    15

</TABLE>

<PAGE>

            COLLATERAL AGENCY AGREEMENT (this "Agreement"), dated as of October
1, 2002, among WILLIAMS ENERGY PARTNERS L.P., a Delaware limited partnership
(the "Guarantor"), WILLIAMS PIPE LINE COMPANY, LLC, a Delaware limited liability
company (the "Company"; together with the Company, the "Grantors"), the several
Purchasers (as defined in accordance with Section 1.1) party hereto and STATE
STREET BANK AND TRUST COMPANY, as collateral agent (the "Collateral Agent") and
cash escrow agent (the "Cash Escrow Agent").

                              W I T N E S S E T H:
                              - - - - - - - - - -

            WHEREAS, to induce the Purchasers to purchase the Notes to be issued
by the Company upon the terms and subject to the conditions set forth in the
Note Purchase Agreement (as defined below) the Company has executed the Security
Agreement, dated as of the date hereof (the "Security Agreement"), by and among
the Grantors and the Collateral Agent;

            WHEREAS, pursuant to the Security Agreement the Company has granted
certain Liens on its assets, and the Guarantor has pledged its membership
interests in the Company, to the Collateral Agent for the benefit of the holders
of Notes to secure the Obligations (as defined below);

            WHEREAS, pursuant to the Note Purchase Agreement, the Purchasers
have severally agreed to purchase Notes issued by the Company upon the terms and
subject to the conditions set forth therein;

            WHEREAS, the Company has agreed to deposit amounts equivalent to the
interest due on the Notes in an escrow account; and

            WHEREAS, it is a condition precedent to the effectiveness of the
Note Purchase Agreement that the Grantors, the Collateral Agent and the Cash
Escrow Agent shall have executed and delivered this Agreement to the Purchasers;

            NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration receipt of which is hereby acknowledged, the
Grantors, the Purchasers, the Collateral Agent and the Cash Escrow Agent hereby
agree as follows:

                                    SECTION 1

                                   DEFINITIONS

            1.1. Defined Terms. As used in this Agreement, terms defined in the
Note Purchase Agreement and used herein shall (unless otherwise defined herein)
have the meanings assigned to such terms in the Note Purchase Agreement, and the
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

            "Agreement" shall mean this Collateral Agency Agreement, as the same
      may be amended, supplemented or otherwise modified from time to time.

<PAGE>
                                                                               2


            "Cash Escrow Account" shall have the meaning assigned to such term
      in Section 4.1.

            "Cash Escrow Amount" shall have the meaning assigned to such term in
      Section 4.2.

            "Cash Proceeds" shall mean all Proceeds of Collateral consisting of
      cash, checks, credit card proceeds, money orders or commercial paper of
      any kind whatsoever.

            "Code" shall mean the Uniform Commercial Code as in effect in the
      State of New York from time to time.

            "Collateral" shall mean all assets, property and interests, now
      owned or hereafter acquired, upon which a Lien is purported to be created
      by any Security Document.

            "Collateral Account" shall have the meaning assigned to such term in
      Section 3.3 hereof.

            "Company" shall have the meaning assigned to such term in the
      preamble to this Agreement.

            "Distribution Date" shall mean each date fixed by the Collateral
      Agent (at the instruction of the Required Holders) for a distribution to
      the Secured Parties of funds held in the Collateral Account.

            "Note Purchase Agreement" means the Note Purchase Agreement, dated
      as of October 1, 2002, among Williams GP LLC, the Grantors and each of the
      Purchasers party thereto.

            "Notice of Default" shall mean a notice delivered by or to the
      Grantors pursuant to the Note Purchase Agreement stating that an Event of
      Default has occurred and is continuing.

            "Grantors" means the Guarantor and the Company.

            "Guarantor" shall have the meaning assigned to such term in the
      preamble to this Agreement.

            "Opinion of Counsel" shall mean an opinion in writing signed by
      legal counsel satisfactory to the Collateral Agent, who may, but need not,
      be an employee of the Company or counsel regularly retained by the
      Guarantor or the Collateral Agent.

            "Proceeds" shall have the meaning assigned to such term in the Code.

            "Responsible Trust Officer" shall mean any Vice President, Trust
      Officer or Corporate Trust Officer or any other officer, in each case
      employed in the Corporate Trust Administration Department of the
      Collateral Agent.

<PAGE>
                                                                               3


            "Secured Obligations" shall mean all of the following (without
      duplication), in each case whether now existing or hereafter incurred or
      created, except to the extent otherwise expressly provided in the
      agreements or instruments relating thereto:

                  (i) the Obligations;

                  (ii) the Guarantor Obligations (as defined in the Security
            Agreement);

                  (ii) all sums payable by the Company under this Agreement or
            any Security Document.

            "Secured Parties" shall mean at any time the holders of the Secured
      Obligations.

            "Security Agreement" as defined in the recitals hereto.

            1.2. Other Definitional Provisions. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section and Section references are to this Agreement unless
otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

                                    SECTION 2

                         APPOINTMENT OF COLLATERAL AGENT

            2.1. Appointment of Collateral Agent by the Secured Parties. (a)
By acceptance of the benefits of this Agreement and the Security Documents, each
Secured Party shall be deemed irrevocably (i) to consent to the appointment of
the Collateral Agent as its agent hereunder and under the Security Documents,
(ii) to confirm that the Collateral Agent shall have the authority to act as the
exclusive agent of such Secured Party for enforcement of any provision of this
Agreement and the Security Documents against any Company or the exercise of
remedies hereunder or thereunder, (iii) to agree that such Secured Party shall
not take any action to enforce any provision of this Agreement or any Security
Document against any Company or to exercise any remedy hereunder or thereunder
and (iv) to agree to be bound by the terms of this Agreement and the Security
Documents.

            (b) The Collateral Agent hereby agrees that it holds and will hold
all of its right, title and interest in, to and under the Security Documents and
the Collateral granted to the Collateral Agent thereunder whether now existing
or hereafter arising (all such right, title and interest being hereinafter
referred to as the "Collateral Estate") under and subject to the conditions set
forth in this Agreement and the Security Documents; the Collateral Agent further
agrees that it will hold such Collateral Estate for the benefit of the Secured
Parties for the enforcement of the payment of all Secured Obligations and as
security for the performance of and compliance by the Grantors with the
covenants and conditions of this Agreement and the Note Purchase Documents.

<PAGE>
                                                                               4


            2.2. Exercise of Powers; Instructions of Required Holders, etc. (a)
All of the powers, remedies and rights of the Collateral Agent as set forth
herein and in any Security Document may be exercised by the Collateral Agent as
provided herein and therein.

            (b) The Required Holders shall have the right, by one or more
instruments in writing executed and delivered to the Collateral Agent, to direct
the time, method and place of conducting any proceeding for any right or remedy
available to the Collateral Agent, or of exercising any trust or power conferred
on the Collateral Agent, or for the appointment of a receiver, or to direct the
taking or the refraining from taking of any action authorized by this Agreement,
the Note Purchase Agreement or any Security Document, provided that (i) such
direction shall not conflict with the provisions of law or of this Agreement or
of any Security Document or of any other Note Purchase Document and (ii) the
Collateral Agent shall be adequately indemnified. Nothing in this Section 2.2(b)
shall impair the right of the Collateral Agent, in its discretion and at any
time, to take any action which it deems proper and which is not inconsistent
with any direction received from the Required Holders. In the absence of such
direction from the Required Holders, the Collateral Agent shall have no duty to
take or refrain from taking any action unless explicitly required herein.

                                    SECTION 3

                       COLLATERAL ACCOUNTS; DISTRIBUTIONS

            3.1. The Collateral Account. At all times prior to repayment in full
of all the Obligations, there shall be maintained with the Collateral Agent at
the office of the Collateral Agent located in Massachusetts an account which
shall be entitled the "Williams Pipe Line Company Collateral Account" (the
"Collateral Account"). All moneys which are required by this Agreement, the Note
Purchase Agreement or any Security Document to be deposited in the Collateral
Account or which are delivered to or received by the Collateral Agent or any
agent or nominee of the Collateral Agent in respect of the Collateral, whether
in connection with the exercise of the remedies provided in this Agreement or
any Security Document or otherwise, shall be deposited in the Collateral Account
and applied in accordance with the terms of this Agreement.

            3.2. Control of the Collateral Account. All right, title and
interest in and to the Collateral Account shall vest in the Collateral Agent,
and funds on deposit in the Collateral Account shall constitute part of the
Collateral Estate. The Collateral Account shall be subject to the exclusive
dominion and control of the Collateral Agent.

            3.3. Investment of Funds Deposited in the Collateral Account(i) .
The Collateral Agent may, but is under no obligation to, invest and reinvest
moneys on deposit in the Collateral Account at any time in such Cash Equivalents
as the Company may direct in writing to the Collateral Agent, provided that, the
Collateral Agent shall not make any such investment upon receipt of a Notice of
Default. All such investments and the interest and income received thereon and
the net proceeds realized on the sale or redemption thereof shall be held in the
Collateral Account as part of the Collateral.

<PAGE>
                                                                               5


            3.4. Application of Moneys. (a) All moneys held by the Collateral
Agent in the Collateral Account or received by the Collateral Agent may, or at
the request of the Required Holders shall, to the extent available for
distribution (it being understood that the Collateral Agent may liquidate
investments prior to maturity in order to make a distribution pursuant to this
Section 3.4), be distributed (subject to the provisions of Sections 3.5 and 3.6)
by the Collateral Agent on each Distribution Date in the following order of
priority:

            First: equally to the payment of all unpaid fees and expenses of the
      Collateral Agent payable under this Agreement or any Security Document;

            Second: subject to Section 3.6, to the Secured Parties in an amount
      equal to the unpaid principal or face amount of, and unpaid interest on,
      and premium or fees, if any, in respect of, the Secured Obligations then
      outstanding whether or not then due and payable and, if such moneys shall
      be insufficient to pay such amounts in full, then ratably (without
      priority of any one over any other) to the Secured Parties in proportion
      to the unpaid amounts thereof on such Distribution Date;

            Third: to the Secured Parties, amounts equal to all other sums which
      constitute Secured Obligations, including without limitation the costs and
      expenses of the Secured Parties and their representatives which are due
      and payable under the relevant Note Purchase Documents and which
      constitute Secured Obligations as of such Distribution Date, and, if such
      moneys shall be insufficient to pay such sums in full, then ratably to the
      Secured Parties in proportion to such sums; and

            Fourth: any surplus then remaining shall be paid to the applicable
      Grantor or its successors or assigns or to whomsoever may be lawfully
      entitled to receive the same or as a court of competent jurisdiction may
      direct.

            (b) The term "unpaid" as used in clause Second of Section 3.4(a)
refers:

                  (i) in the absence of a bankruptcy proceeding with respect to
            the Company, to all amounts of Secured Obligations outstanding as of
            a Distribution Date, whether or not such amounts are fixed or
            contingent, and

                  (ii) during the pendency of a bankruptcy proceeding with
            respect to the Company, to all amounts allowed by the bankruptcy
            court in respect of Secured Obligations as a basis for distribution
            (including estimated amounts, if any, allowed in respect of
            contingent claims),

            to the extent that prior distributions (whether actually distributed
            or set aside pursuant to Section 3.5) have not been made in respect
            thereof.

            (c) The Collateral Agent shall make all payments and distributions
under this Section 3.4 to the relevant Secured Party based on the information
supplied to the Collateral Agent by such Secured Party.

            3.5. Collateral Agent's Calculations. In making the determinations
and allocations required by Section 3.4, the Collateral Agent may conclusively
rely upon information

<PAGE>
                                                                               6


supplied by the Required Holders as to the amounts payable with respect to
Obligations or upon information supplied by the holder of any other Secured
Obligation or the Company as to the amounts payable with respect to any other
Secured Obligation, and the Collateral Agent shall have no liability to any of
the Secured Parties for actions taken in reliance on any such information. All
distributions made by the Collateral Agent pursuant to Section 3.4 shall be
(subject to any decree of any court of competent jurisdiction) final (absent
manifest error).

            3.6. Pro Rata Sharing. If, through the operation of any bankruptcy,
reorganization, insolvency or other laws or otherwise, the Collateral Agent's
security interest hereunder and under the Security Documents is enforced with
respect to some, but not all, of the Secured Obligations then outstanding, the
Collateral Agent shall nonetheless apply the proceeds of the Collateral for the
benefit of the holders of all Secured Obligations in the proportions and subject
to the priorities specified herein. To the extent that the Collateral Agent
distributes Proceeds collected with respect to Secured Obligations held by one
holder to or on behalf of Secured Obligations held by a second holder, the first
holder shall be deemed to have purchased a participation in the Secured
Obligations held by the second holder, or shall be subrogated to the rights of
the second holder to receive any subsequent payments and distributions made with
respect to the portion thereof paid or to be paid by the application of such
Proceeds.

                                    SECTION 4

                             THE CASH ESCROW ACCOUNT

            4.1. Cash Escrow Account. The Company and the holders of the Notes
desire State Street Bank and Trust Company to act as Cash Escrow Agent to
effectuate the Company's obligations under Section 8.15 of the Note Purchase
Agreement, and the Cash Escrow Agent is willing to act as escrow agent and, in
that capacity, to hold, administer and distribute the amounts deposited by the
Company with the Cash Escrow Agent in escrow (the "Cash Escrow Account") in
accordance with this Section 4.

            4.2. Deposit of Cash Escrow Amounts. At the Initial Closing under
the Note Purchase Agreement and on each succeeding Interest Payment Date, the
Company shall provide the Cash Escrow Agent with a written calculation of the
Cash Escrow Amounts to be deposited by the Company for the next succeeding
six-month period. The Company shall deposit with the Cash Escrow Agent on or
before the last day of each month, and maintain on deposit with the Cash Escrow
Agent until the next succeeding Interest Payment Date, an amount representing
one-sixth of the interest payment due on the Notes on the next succeeding
Interest Payment Date (the "Cash Escrow Amount").

            4.3. Status of Cash Escrow Account Monies. All amounts deposited by
the Company in the Cash Escrow Account shall be segregated from other funds of
the Cash Escrow Agent and shall be held in trust by the Cash Escrow Agent for
the benefit of the holders of the Notes, solely for the purpose of the payment
of interest on the Notes. No Cash Escrow Amounts shall be included in the
Collateral Estate. The Cash Escrow Agent may, but is under no obligation to,
invest and reinvest moneys on deposit in the Cash Escrow Account at any time in

<PAGE>
                                                                               7


such Cash Equivalents as the Company may direct in writing to the Cash Escrow
Agent, provided that, the Cash Escrow Agent shall not make any such investment
upon receipt of a Notice of Default. Income earned, if any, by investment of the
monies in the Cash Escrow Account shall be transferred on each Interest Payment
Date to the Company unless a Notice of Default shall have been received by the
Cash Escrow Agent in which case any such income shall be transferred to the
Collateral Account.

            4.4. Disbursement of Cash Escrow Amounts. The Company shall provide
to the Cash Escrow Agent five (5) Business Days in advance of any Interest
Payment Date a written instruction identifying: (i) each holder of Notes; (ii)
an address and payment information for payment of interest on the Notes to each
such holder; and (iii) a calculation of the amount of interest to be paid to
each such holder of Notes. On the Interest Payment Date, the Cash Escrow Agent
shall disburse the Case Escrow Amount on deposit to the holders of the Notes in
accordance with the Company's instruction.

            4.5. Failure to Deposit Cash Escrow Amounts. Any failure of the
Company to timely and fully fund the Cash Escrow Amounts that continues for a
period of five days shall be reported by the Cash Escrow Agent to each of the
Company, the Collateral Agent and the holders of the Notes identified on the
latest list of such holders provided to the Cash Collateral Agent pursuant to
Section 4.4 hereof.

            4.6. Cash Escrow Agent. The Cash Escrow Agent shall be subject and
entitled to all of the provisions applicable to the Collateral Agent in Section
5 of this Agreement, including without limitation the compensation and
indemnification provisions, as if set out in this Section 4. The Cash Escrow
Agent is not a trustee and this Agreement shall not be construed to require the
Cash Escrow Agent to enforce any Note Purchase Document, including this
Agreement, or to seek deposits of cash amounts from the Company. Absent manifest
error, the Cash Escrow Agent shall have no liability in connection with its
reliance on the Company in connection with the Company's calculation of the Cash
Escrow Amounts or its instructions for disbursing the Cash Escrow Amounts.

                                    SECTION 5

                              THE COLLATERAL AGENT

            5.1. Compensation and Indemnification. The Grantors jointly and
severally covenant and agree to pay to the Collateral Agent from time to time,
promptly upon receipt of a statement therefor, and the Collateral Agent shall be
entitled to, compensation for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties of the Collateral Agent hereunder or under any Note Purchase
Document, which compensation shall not be limited by any provisions of law in
regard to the compensation of a trustee of an express trust. The Grantors
jointly and severally covenant and agree to pay, indemnify, and hold the
Collateral Agent and its respective officers, directors, employees, affiliates,
agents and controlling persons (each, an "Indemnitee") harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments,

<PAGE>
                                                                               8


suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against the
Guarantor or the Company under this Agreement (all the foregoing, collectively,
the "Indemnified Liabilities"), provided, that the Company shall have no
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities
to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of such Indemnitee.

            5.2. Rights of the Collateral Agent; Exculpatory Provisions. (a) The
Collateral Agent makes no representations as to the value or condition of the
Collateral or any part thereof, or as to the title of the Company thereto or as
to the validity, execution (except its own execution), enforceability, legality
or sufficiency of this Agreement, the Security Documents or the Secured
Obligations, and the Collateral Agent shall incur no liability or responsibility
in respect of any such matters. The Collateral Agent shall not be responsible
for insuring the Collateral or for the payment of taxes, charges or assessments
or discharging of liens upon the Collateral or otherwise as to the maintenance
of the Collateral, except that if the Collateral Agent takes possession of any
Collateral, the Collateral Agent shall use the care accorded its own assets in
the preservation of the Collateral in its possession and as required by any
applicable law. Notwithstanding the foregoing, the Collateral Agent shall be
responsible and accountable for damages occasioned by such taking of possession
or control which are the result of the Collateral Agent's gross negligence or
willful misconduct.

            (b) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by the Company of any of the covenants or
agreements contained herein or in any Security Document or Note Purchase
Document. Whenever it is necessary, or in the opinion of the Collateral Agent
advisable, for the Collateral Agent to ascertain the amount of Secured
Obligations then held by any Secured Party, the Collateral Agent may
conclusively rely on a certificate delivered to the Collateral Agent by such
Secured Party, and, if such Secured Party shall not give such information to the
Collateral Agent, such Secured Party shall not be entitled to receive
distributions hereunder (in which case distributions to those Secured Parties
who have supplied such information to the Collateral Agent shall be calculated
by the Collateral Agent using, for those Secured Parties who have not supplied
such information, the list and information then most recently delivered by the
Company regarding those Secured Parties' Secured Obligations (the Company being
required to promptly deliver such list and information upon the Collateral
Agent's written request)), and the amount so calculated to be distributed to the
Secured Party who fails to give such information shall be held in trust for such
Secured Party until such Secured Party does supply such information to the
Collateral Agent, whereupon on the next Distribution Date the amount
distributable to such Secured Party shall be recalculated using such information
and distributed to it.

            (c) The Collateral Agent shall be under no obligation or duty to
take any action under this Agreement or any Security Document if taking such
action (i) would subject the Collateral Agent to a tax in any jurisdiction where
it is not then subject to a tax or (ii) would require the Collateral Agent to
qualify to do business in any jurisdiction where it is not then so qualified,
unless the Collateral Agent receives security or indemnity satisfactory to it
against

<PAGE>
                                                                               9


such tax (or equivalent liability), or any liability resulting from such
qualification, in each case as results solely from the taking of such action
under this Agreement or any Security Document.

            (d) Notwithstanding any other provision of this Agreement (other
than those relating to the care of the Collateral in its possession), the
Collateral Agent shall not be personally liable for any action taken or omitted
to be taken by it in accordance with this Agreement or any other Note Purchase
Document, including the Security Documents, except for its own gross negligence
or willful misconduct.

            (e) Except in the case of an Event of Default of which a Responsible
Trust Officer has actual knowledge, the Collateral Agent shall be deemed to have
knowledge of an Event of Default only upon receipt of written notice thereof
from any of the holders of the Notes or any of the Grantors.

            (f) All requests, directions, orders or authorizations made by any
holder of Notes to the Collateral Agent shall be in writing. All requests,
directions, orders or authorizations made by any of the Grantors to the
Collateral Agent shall be in writing, delivered to the Collateral Agent and
signed in the name of each such Grantor by an authorized representative.

            (g) Whenever pursuant to the provisions hereof or of any other Note
Purchase Document it is required that any party hereto obtain the consent or
approval of the Collateral Agent, or that any matter prove satisfactory or
reasonable to the Collateral Agent, the Collateral Agent, prior to giving any
such consent or approval or indicating its satisfaction with any such matter,
shall (except where doing so, in its good faith judgment, could imperil the
Collateral or the Liens therein) be required to consult with the holders of the
Notes in a manner deemed reasonable by the Collateral Agent, and the Collateral
Agent shall be protected in following any direction of the Required Holders with
respect thereto.

            (h) The Collateral Agent shall not be required to risk its own funds
or otherwise incur personal liability in the performance of its duties or in the
exercise of any rights or remedies hereunder or under the Note Purchase
Documents.

            5.3. Delegation of Duties. The Collateral Agent may execute any of
the trusts or powers hereof and perform any duty hereunder either directly or by
or through agents or attorneys-in-fact. The Collateral Agent shall be entitled
to advice of counsel concerning all matters pertaining to such trusts, powers
and duties. The Collateral Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.

            5.4. Reliance by Collateral Agent. (a) Whenever in the
administration of this Agreement or the Security Documents the Collateral Agent
shall deem it necessary or desirable that a factual matter be proved or
established in connection with the Collateral Agent taking, suffering or
omitting any action hereunder or thereunder, such matter (unless other evidence
in respect thereof is herein specifically prescribed) may be deemed to be
conclusively proved or established by a certificate of a Responsible Officer of
the Company delivered to the Collateral

<PAGE>
                                                                              10


Agent, and such certificate shall be full warrant to the Collateral Agent for
any action taken, suffered or omitted in reliance thereon, subject, however, to
the provisions of Section 5.4.

            (b) The Collateral Agent may consult with counsel, and any Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by it hereunder or under any Security Document in
accordance therewith. The Collateral Agent shall have the right at any time to
seek instructions concerning the administration of this Agreement and the
Security Documents or to interplead any amounts held hereunder from any court of
competent jurisdiction. In the event of an interpleader, upon delivering to the
court the Collateral that is in dispute or initiating an action in interpleader,
the Collateral Agent shall automatically be released from any further
obligations or liability hereunder to dispose of such Collateral.

            (c) The Collateral Agent may rely, and shall be fully protected in
acting, upon any resolution, statement, certificate, instrument, opinion,
report, notice, request, consent, order, bond or other paper or document which
it has no reason to believe to be other than genuine and to have been signed or
presented by the proper party or parties or, in the case of cables, facsimiles
and telexes, to have been sent by the proper party or parties. In the absence of
its gross negligence or willful misconduct, the Collateral Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Collateral Agent and conforming to the requirements of this Agreement or any
other Security Document.

            (d) The Collateral Agent shall not be under any obligation to
exercise any of the rights or powers vested in the Collateral Agent by this
Agreement and the Security Documents, at the request or direction of the
Required Holders pursuant to this Agreement or otherwise, unless the Collateral
Agent shall have been provided adequate security and any reasonably requested
indemnity against the costs, expenses and liabilities which may be incurred by
it in compliance with such request or direction, including such reasonable
advances as may be requested by the Collateral Agent.

            (e) Upon any application or demand by any Grantor to the Required
Holders to cause or permit the Collateral Agent to take any action under any of
the provisions of this Agreement or any Security Document, the Grantor shall
furnish to the Purchasers a certificate of a Responsible Officer of such Grantor
stating that all conditions precedent, if any, provided for in this Agreement,
in any relevant Security Document or in the Note Purchase Agreement relating to
the proposed action have been or will be (in the case of application of proceeds
from sales of assets) complied with, and in the case of any such application or
demand as to which the furnishing of any document is specifically required by
any provision of this Agreement or a Security Document relating to such
particular application or demand, such additional document shall also be
furnished.

            (f) Any Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate of a Responsible Officer or representations
made by a Responsible Officer in a writing attached to such Opinion of Counsel
or filed with the Purchasers.

<PAGE>
                                                                              11


            5.5. Limitations on Duties of the Collateral Agent. The Collateral
Agent shall be obligated to perform such duties and only such duties as are
specifically set forth in this Agreement and the Security Documents, and no
implied covenants or obligations shall be read into this Agreement or any
Security Document against the Collateral Agent except as may be required by
applicable law.

            (b) No provision of this Agreement or of any Security Document shall
be deemed to impose any duty or obligation on the Collateral Agent to perform
any act or acts or exercise any right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Collateral Agent shall be unqualified or incompetent, to perform any such act or
acts or to exercise any such right, power, duty or obligation or if such
performance or exercise would constitute doing business by the Collateral Agent
in such jurisdiction or imposes a tax on the Collateral Agent by reason thereof.

            (c) If an Event of Default has occurred and is continuing, the
Collateral Agent shall initiate proceedings on behalf of the holders of the
Notes to enforce such holders' rights and remedies with respect to the
Collateral in accordance with the terms and conditions of the Security Documents
upon receipt of written instruction of the Required Holders directing the
Collateral Agent to initiate such proceedings and providing for the indemnity
required hereunder. Except as otherwise expressly provided herein, the
Collateral Agent shall be under no obligation to take any action to enforce any
rights or interests in the Collateral Estate (including, without limitation, the
Collateral) or to take any action toward the execution or enforcement of the
trusts hereunder or otherwise hereunder, whether on its own motion or on the
request of any other Person, which in the opinion of the Collateral Agent may
involve loss, liability or expense to it, unless each of the Grantors or one or
more of the Secured Parties shall offer and furnish security and indemnity,
reasonably satisfactory to the Collateral Agent in accordance herewith, against
loss, liability and expense to the Collateral Agent. Notwithstanding anything to
the contrary in this Agreement or the Security Documents, in the event the
Collateral Agent is entitled or required to commence an action to foreclose any
of the Mortgages or otherwise exercise its remedies to acquire control or
possession of the Collateral Estate, the Collateral Agent shall not be required
to commence any such action or exercise any such remedy to the extent the
Collateral Agent has determined in good faith that the Collateral Agent may
incur liability under any environmental law as the result of the presence at or
release on or from the Collateral Estate of any hazardous materials or hazardous
waste unless the Collateral Agent has received security or indemnity in an
amount and in a form all satisfactory to the Collateral Agent in its sole
discretion, protecting the Collateral Agent from all such liability.

            5.6. Resignation and Removal of the Collateral Agent. (a) The
Collateral Agent may at any time, by giving written notice to the Grantors and
the Purchasers resign and be discharged of the responsibilities hereby created,
such resignation to become effective upon (i) the appointment of a successor
Collateral Agent, (ii) the acceptance of such appointment by such successor
Collateral Agent and (iii) the written approval of such successor Collateral
Agent evidenced by one or more instruments signed by the Required Holders. If no
successor Collateral Agent shall be appointed and shall have accepted such
appointment within 90 days after the Collateral Agent gives the aforesaid notice
of resignation, the Collateral Agent, the Grantors or any Secured Party may
apply to any court of competent jurisdiction to appoint a successor Collateral
Agent to act until such time, if any, as a successor Collateral Agent shall

<PAGE>
                                                                              12


have been appointed as provided in this Section 5.6. Any successor so appointed
by such court shall immediately and without further act be superseded by any
successor Collateral Agent appointed by the Required Holders as provided in
Section 5.6(b). The Required Holders may, at any time upon giving 30 days' prior
written notice thereof to Collateral Agent, remove the Collateral Agent and
appoint a successor Collateral Agent, such removal to be effective upon the
acceptance of such appointment by the successor. The Collateral Agent shall be
entitled to fees to the extent incurred or arising, or relating to events
occurring, before such resignation or removal.

            (b) If at any time the Collateral Agent shall resign or be removed
or otherwise become incapable of acting, or if at any time a vacancy shall occur
in the office of the Collateral Agent for any other cause, a successor
Collateral Agent may be appointed by the Required Holders. The powers, duties,
authority and title of the predecessor Collateral Agent shall be terminated and
cancelled without procuring the resignation of such predecessor and without any
other formality (except as may be required by applicable law) than appointment
and designation of a successor in writing duly acknowledged and delivered to the
predecessor and the Company. Such appointment and designation shall be full
evidence of the right and authority to make the same and of all the facts
therein recited, and this Agreement and the Security Documents shall vest in
such successor, without any further act, deed or conveyance, all the estates,
properties, rights, powers, trusts, duties, authority and title of its
predecessor; but such predecessor shall, nevertheless, on the written request of
any holder of Notes, Grantor, or the successor, execute and deliver an
instrument transferring to such successor all the estates, properties, rights,
powers, trusts, duties, authority and title of such predecessor hereunder and
under the Security Documents and shall deliver all Collateral held by it or its
agents to such successor. Should any deed, conveyance or other instrument in
writing from the Company be required by any successor Collateral Agent for more
fully and certainly vesting in such successor the estates, properties, rights,
powers, trusts, duties, authority and title vested or intended to be vested in
the predecessor Collateral Agent, any and all such deeds, conveyances and other
instruments in writing shall, on request of such successor, be executed,
acknowledged and delivered by the Company. If the Company shall not have
executed and delivered any such deed, conveyance or other instrument within 10
days after it received a written request from the successor Collateral Agent to
do so, or if a Notice of Default has been delivered, the predecessor Collateral
Agent may execute the same on behalf of the Company. Each of the Grantors hereby
appoint any predecessor Collateral Agent as its agent and attorney to act for it
as provided in the next preceding sentence.

            5.7. Status of Successor Collateral Agent. Every successor
Collateral Agent appointed pursuant to Section 5.6 shall be a bank or trust
company in good standing and having power to act as Collateral Agent hereunder,
incorporated under the laws of the United States of America or any State thereof
or the District of Columbia or of Canada and having capital, surplus and
undivided profits of not less than $100,000,000, if there be such an institution
with such capital, surplus and undivided profits willing, qualified and able to
accept the trust hereunder upon reasonable or customary terms.

            5.8. Merger of the Collateral Agent. Any corporation into which the
Collateral Agent may be merged, or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Collateral
Agent shall be a party, or any corporation that acquires substantially all of
the corporate trust business of the Collateral Agent, shall be the

<PAGE>
                                                                              13


Collateral Agent under this Agreement and the Security Documents without the
execution or filing of any paper or any further act on the part of the parties
hereto.

                                    SECTION 6

                                  MISCELLANEOUS

            6.1. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications given to a Grantor, the Collateral
Agent or a holder of the Notes shall be given in writing and shall be deemed to
have been duly given when personally delivered or when duly deposited in the
mails, registered or certified mail postage prepaid, addressed (i) if to a
Grantor, to such party at its address specified in the Note Purchase Agreement,
(ii) if to the Collateral Agent, to it at its address specified below its
signature hereto or any other address which such party shall have specified as
its address for the purpose of communications hereunder or (iii) if to a holder
of the Notes, to it at its address specified from time to time in a list
provided by the Company to the Collateral Agent upon the Collateral Agent's
request.

            6.2. No Waivers. No failure on the part of the Collateral Agent, any
co-collateral agent, any separate collateral agent or any Secured Party to
exercise, no course of dealing with respect to, and no delay in exercising, any
right, power or privilege under this Agreement or any Security Document shall
operate as a waiver thereof nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

            6.3. Amendments, Supplements and Waivers. (a) None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 18 of the Note Purchase Agreement,
provided that no such supplemental agreement shall amend, modify or waive any
provision of Section 3.4 or the definition of Secured Obligations without the
written consent of each Secured Party whose rights would be adversely affected
thereby. Any such supplemental agreement shall be binding upon the Grantors, the
Collateral Agent and the Secured Parties and their respective successors and
assigns.

            (b) Without the consent of any Secured Party, the Collateral Agent
and any of the Grantors, at any time and from time to time, may enter into one
or more agreements supplemental hereto or to any Security Document, in form
satisfactory to the Collateral Agent, to mortgage or pledge to the Collateral
Agent, or grant a security interest in favor of the Collateral Agent in, any
property or assets as additional security for the Secured Obligations.

            6.4. Headings. The table of contents and the headings of Sections
and Sections have been included herein and in the Security Documents for
convenience only and should not be considered in interpreting this Agreement or
the Security Documents.

            6.5. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

<PAGE>
                                                                              14


            6.6. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each of the parties hereto and shall inure to the
benefit of each of the Secured Parties and their respective successors and
assigns, and nothing herein is intended or shall be construed to give any other
Person any right, remedy or claim under, to or in respect of this Agreement or
any Collateral.

            6.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

            6.8. Counterparts. This Agreement may be signed in any number of
counterparts (including by facsimile transmission) with the same effect as if
the signatures thereto and hereto were upon the same instrument.

            6.9. Termination. Upon the (a) release of the Liens on the
Collateral in accordance with Section 18.5 of the Note Purchase Agreement or (b)
the termination of the Note Purchase Agreement, the Collateral Agent will
promptly, at the Company's expense, (i) execute and deliver to the Company such
documents and other instruments as the Company shall reasonably request to
evidence the release of Liens on the Collateral (including, without limitation,
UCC-3 Termination Statements) and (ii) deliver or cause to be delivered to the
Company all property of the Company then held by the Collateral Agent or any
agent thereof. Concurrently with any such release or termination, this Agreement
and each of the Security Documents shall automatically terminate. The provisions
of this Section 6.9 shall survive the termination of this Agreement.

            6.10. Inspection by Regulatory Agencies. The Collateral Agent shall
make available, and shall cause each custodian and agent acting on its behalf in
connection with this Agreement to make available, all Collateral in such
Person's possession at all times for inspection by any regulatory agency having
jurisdiction over any Grantor to the extent required by such regulatory agency
in its discretion.

            6.11. Submission to Jurisdiction; Waivers. Each Grantor and the
Collateral Agent hereby irrevocably and unconditionally:

            (a) submits for itself and its property in any legal action or
      proceeding relating to this Agreement and the other Security Documents to
      which it is a party, or for recognition and enforcement of any judgment in
      respect thereof, to the non-exclusive general jurisdiction of the Courts
      of the State of New York, the courts of the United States of America for
      the Southern District of New York, and appellate courts from any thereof;

            (b) to the extent permitted by applicable law, consents that any
      such action or proceeding may be brought in such courts and waives any
      objection that it may now or hereafter have to the venue of any such
      action or proceeding in any such court or that such action or proceeding
      was brought in an inconvenient court and agrees not to plead or claim the
      same;

<PAGE>
                                                                              15


            (c) agrees that service of process in any such action or proceeding
      may be effected by mailing a copy thereof by registered or certified mail
      (or any substantially similar form of mail), postage prepaid, to it at the
      address specified in Section 6.1;

            (d) agrees that nothing herein shall affect the right to effect
      service of process in any other manner permitted by law or shall limit the
      right to sue in any other court of competent jurisdiction; and

            (e) waives, to the maximum extent not prohibited by law, any right
      it may have to claim or recover in any legal action or proceeding referred
      to in this Section any special, exemplary, punitive or consequential
      damages.

            6.12. Waivers of Jury Trial. EACH GRANTOR, THE COLLATERAL AGENT AND
EACH PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER SECURITY
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

<PAGE>
                                                                              16


            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed (by their respective authorized officers in the case of
corporate parties) as of the day and year first written above.


                                WILLIAMS ENERGY PARTNERS, L.P.,

                                By: Williams GP LLC as its General Partner


                                By:  ___________________________
                                     Name:
                                     Title:



                                WILLIAMS PIPE LINE COMPANY LLC

                                By: Williams Energy Partners, L.P as its
                                    Sole Member and Manager

                                By: Williams GP LLC as its General Partner


                                By:  ___________________________
                                     Name:
                                     Title:


                                STATE STREET BANK AND TRUST COMPANY, as
                                Collateral Agent and as Cash Escrow Agent

                                By:   ___________________________
                                      Name:
                                      Title:

                                Address:  2 Avenue de Lafayette - LCC 6
                                          Boston, Massachusetts 02111
                                          Attention: Corporate Trust Department


</TEXT>
</DOCUMENT>
</SUBMISSION>
