AGREEMENTS

 

                      AGREEMENT OF MERGER

                       Dated May 9, 1996

                            Between

               CENTRAL AND SOUTH WEST CORPORATION

                              and

                     TEJAS GAS CORPORATION

                          Relating to

                         TRANSOK, INC.

 i

                       AGREEMENT OF MERGER
                       TABLE OF CONTENTS

                                                             Page

                           ARTICLE I.
                          DEFINITIONS
     Section 1.01. Definitions                                 1
     Section 1.02. Rules of Construction                       1

                           ARTICLE II.
                        TERMS OF MERGER
     Section 2.01. Statutory Merger                            1
     Section 2.02. Purchase Price                              2
     Section 2.03. Closing                                     2
     Section 2.04. Actions at the Closing                      2
     Section 2.05. Effect of the Merger                        2 

                           ARTICLE III.
           REPRESENTATIONS AND WARRANTIES OF THE SELLER
                        AS TO THE SELLER
     Section 3.01. Organization                                4
     Section 3.02. Authorization of Agreement                  4
     Section 3.03. Approvals                                   4
     Section 3.04. No Violation                                4
     Section 3.05. Litigation                                  5
     Section 3.06. Brokerage Agreements                        5

                           ARTICLE IV.
            REPRESENTATIONS AND WARRANTIES OF THE SELLER
                        AS TO THE COMPANY
     Section 4.01. Organization and Qualification              5
     Section 4.02. Capitalization                              6
     Section 4.03. No Violation                                7
     Section 4.04. Financial Statements                        8
     Section 4.05. No Material Adverse Effect; Conduct         8
     
 ii
     Section 4.06. Title to Properties                         8
     Section 4.07. Certain Obligations                         9
     Section 4.08. Regulation; Permits and Licenses.          10
     Section 4.09. Litigation; Compliance with Laws           11
     Section 4.10. Taxes                                      12
     Section 4.11. Employee Benefit Plans                     12
     Section 4.12. Environmental Matters                      14
     Section 4.13. Patents, Trademarks                        14
     Section 4.14. Insurance                                  15
     Section 4.15. Public Utility                             15
     Section 4.16. Minute Books                               15
     Section 4.17. Powers of Attorney                         15
     Section 4.18. Intercompany Transactions                  15
     Section 4.19. Accounts Receivable                        15
     Section 4.20. Gas Balancing                              16

                           ARTICLE V.
               REPRESENTATIONS AND WARRANTIES OF
                        THE PURCHASER
     Section 5.01. Organization and Good Standing             16
     Section 5.02. Financing                                  16
     Section 5.03. Authorization of Agreement                 16
     Section 5.04. Approvals                                  16
     Section 5.05. No Violation                               17
     Section 5.06. Litigation                                 17
     Section 5.07. Brokerage Agreements                       17
     Section 5.08. Accounts Receivable                        17

                           ARTICLE VI.
                           AGREEMENTS
     Section 6.01. Affirmative Covenants of the Seller        17
     Section 6.02. Negative Covenants of the Seller           18
     Section 6.03. Access                                     20
     Section 6.04. Appropriate Action; Consents; Filings      21
     Section 6.05. Pending and Upcoming Rate Proceedings.     22
     Section 6.06. Preparation and Filing of Tax Returns; 
                   Payment of Taxes.                          22
     Section 6.07. Access to Information.                     24
     Section 6.08. Employees and Employee Benefit Plans       25
     Section 6.09. Working Capital Contribution               28
     Section 6.10. Intercompany Accounts; Post-Closing 
                   Relationships; Closing Covenants           29
     
 iii
     Section 6.11. Estimated Purchase Price                   30
     Section 6.12. Determination of Final Purchase Price      30
     Section 6.13. Public Announcements                       31
     Section 6.14. Confidentiality                            31
     Section 6.15. Acquisition Proposals                      31

                           ARTICLE VII.
                    CONDITIONS TO THE CLOSING
     Section 7.01. Conditions to Obligations of Each Party    32
     Section 7.02. Conditions to Obligation of the Purchaser  32
     Section 7.03. Conditions to Obligation of the Seller     33

                           ARTICLE VIII.
                         INDEMNIFICATION
     Section 8.01. Survival of Representations, Warranties, 
                   Covenants and Agreements                   34
     Section 8.02. General Indemnification                    34
     Section 8.03. Tax Indemnification and Audits             38
     Section 8.04. Section 338(h)(10) Elections               40

                           ARTICLE IX.
                           TERMINATION
     Section 9.01. Termination                                41
     Section 9.02. Effect of Termination; Nonconsummation     42
     Section 9.03. Fees and Expenses                          42

                           ARTICLE X.
                         MISCELLANEOUS
     Section 10.01. Notices                                   43
     Section 10.02. Headings; Cross References                43
     Section 10.03. Prior Agreements                          43
     Section 10.04. Amendment                                 43
     Section 10.05. Waiver                                    43
     Section 10.06. Further Actions                           44
     Section 10.07. Assignment                                44
     Section 10.08. Governing Law                             44
     Section 10.09. Counterparts                              44
     Section 10.10. Tranpache Partnership                     44

 iv
                            ANNEXES

     Annex A   _    Definitions
     Annex B   _    Transition Services

                      AGREEMENT OF MERGER

      THIS  AGREEMENT OF MERGER (this "Agreement")  is  made  and
entered   into  on  May  9,  1996,  by  and  between  TEJAS   GAS
CORPORATION,  a  Delaware  corporation  (the  "Purchaser"),   and
CENTRAL  AND SOUTH WEST CORPORATION, a Delaware corporation  (the
"Seller").

                            RECITALS

      This  Agreement  contemplates a transaction  in  which  the
Purchaser  will acquire all of the outstanding capital  stock  of
Transok,   Inc.,   an  Oklahoma  corporation   and   wholly-owned
subsidiary  of  the Seller (the "Company"), for  cash  through  a
reverse   subsidiary  merger  of  a  newly  formed   wholly-owned
subsidiary  of the Purchaser (the "Merger Subsidiary")  with  and
into the Company.  For federal and state income tax purposes, the
parties  will treat the reverse subsidiary merger as  a  sale  of
stock  by  the  Seller to the Purchaser, and the Seller  and  the
Purchaser  will  make  a  timely joint  Code  section  338(h)(10)
election.

     NOW, THEREFORE, in consideration of the premises hereof, the
mutual  promises herein made, and the representations, warranties
and  covenants  herein  contained, the parties  hereto  agree  as
follows:

                        ARTICLE I.

                        DEFINITIONS

     Section 1.01. Definitions.  Certain capitalized and other terms
used in this Agreement are defined in Annex A hereto and are used
herein with the meanings ascribed to them therein.

     Section 1.02. Rules  of  Construction.   Unless  the   context
otherwise requires, as used in this Agreement:   a term  has  the
meaning ascribed to it;  an accounting term not otherwise defined
has  the  meaning  ascribed  to it in accordance  with  generally
accepted  accounting principles as in effect from time  to  time:
"or"  is  not  exclusive;  "including" means "including,  without
limitation;"  and  words in the singular include the  plural  and
words in the plural include the singular.

                         ARTICLE II.                            

                       TERMS OF MERGER

     Section 2.01. Statutory  Merger.   Subject  to  the  terms  and
conditions  and in reliance upon the representations, warranties,
covenants  and agreements contained herein, the Merger Subsidiary
shall  merge  with  and into the Company (the "Merger"),  at  the
Effective Time.  The terms and conditions of the Merger  and  the
mode  of  carrying the same into effect shall be as set forth  in
this  Agreement.  The Company shall be the corporation  surviving
the  Merger.   Hereafter "Surviving Corporation" shall  mean  the
Company and "Constituent Corporations" shall mean the Company and
the Merger Subsidiary.

     Section 2.02. Purchase Price.

          (a)       The purchase price (the "Purchase Price") payable to
the  Seller  pursuant to the Merger shall be an amount  equal  to
$690,000,000; plus the amount by which the Working Capital of the
Company  as  of the Closing exceeds zero or minus the  amount  by
which  the  Working Capital of the Company as of the  Closing  is
less than zero, as the case may be.  As required by Section 6.09,
Working Capital of the Company as of the Closing shall be zero.

          (b)       The Estimated Purchase Price, determined as provided in
Section  6.11,  shall be paid by the Purchaser to the  Seller  by
wire  transfer of immediately available funds at the Closing  and
the Final Purchase Price shall be determined and paid as provided
in Section 6.12.

     Section 2.03. Closing.   The Closing shall take  place  at  the
offices  of  Vinson  & Elkins L.L.P., 2001 Ross  Avenue,  Dallas,
Texas 75201 at 10:00 a.m. on May 31, 1996 or at such other place,
time and date as the parties hereto may agree.  The date on which
the Closing occurs is referred to herein as the "Closing Date".

     Section 2.04. Actions  at  the Closing.  At the  Closing,  upon
fulfillment or waiver of the conditions precedent to the  Closing
set  forth  in  Article VII, the Seller and the  Purchaser  shall
cause  the Constituent Corporations to file with the Secretary of
State  of  the  State of Oklahoma a certificate  of  merger  (the
"Certificate of Merger") containing the information  required  by
Section  1081(C)  of  the Oklahoma General Corporation  Act  (the
"OGCA")  and  executed  and delivered  in  accordance  with  this
Agreement  and in accordance with the provisions of Section  1007
of  the OGCA, at which time the Merger will become effective (the
"Effective   Time"),   and    two   newly   formed   wholly-owned
subsidiaries  of  the Merger Subsidiary to merge  with  and  into
Transok  Gas Company and Transok Gas Processing Company  (each  a
Delaware corporation and wholly-owned subsidiary of the Company),
respectively,  pursuant to Section 251 of  the  Delaware  General
Corporation Law.

     Section 2.05. Effect of the Merger.

          (a) From and after the Effective Time, (i) for all purposes
the  separate corporate existence of the Merger Subsidiary  shall
cease  and  the  Company,  as  the Surviving  Corporation,  shall
possess  all the rights, privileges, powers and franchises  of  a
public  nature as well as of a private nature, and be subject  to
all  the  restrictions, disabilities and duties of  each  of  the
Constituent Corporations to the Merger; (ii) all and singular  of
the  rights,  privileges, powers and franchises of  each  of  the
Constituent  Corporations and all property,  real,  personal  and
mixed,  and  all debts due to any of the Constituent Corporations
and all property, real, personal and mixed, and all debts due  to
any  of  the  Constituent Corporations shall  be  vested  in  the
Surviving  Corporation; (iii) all property,  rights,  privileges,
powers and franchises, and all and every other interest shall  be
as  effectually the property of the Surviving Corporation as they
were  of the Constituent Corporations, and the title to any  real
estate,  vested  by deed or otherwise, in any of the  Constituent
Corporations shall not revert or in any way be impaired by reason
of  the  provisions of the OGCA, but all rights of creditors  and
all  liens upon any property of any Constituent Corporation shall
be  preserved  unimpaired; and (iv) all  debts,  liabilities  and

duties  of  each  Constituent Corporation  shall  attach  to  the
Surviving Corporation and may be enforced against it to the  same
extent as if such debts, liabilities and duties had been incurred
or  contracted  by the Surviving Corporation.  The  Merger  shall
have the effect set forth in the OGCA.

          (b)       The Surviving Corporation may, at any time after the
Effective   Time,  take  any  action  (including  executing   and
delivering any document) in the name and on behalf of  either  of
the Constituent Corporations in order to carry out and effectuate
the transactions contemplated by this Agreement.

          (c)       The certificate of incorporation of the Surviving
Corporation shall be amended and restated in the Merger at and as
of  the  Effective  Time  to  read  as  did  the  certificate  of
incorporation of the Merger Subsidiary immediately prior  to  the
Effective Time (except that Article First of such certificate  of
incorporation shall read in full as follows:  "The  name  of  the
corporation is Transok, Inc.").

          (d)       The bylaws of the Surviving Corporation shall be
amended  and restated at and as of the Effective Time to read  as
did  the bylaws of the Merger Subsidiary immediately prior to the
Effective Time (except that the name of the Surviving Corporation
will remain unchanged).

          (e)       The directors and officers of the Merger Subsidiary
immediately  prior  to  the  Effective  Time  shall  become   the
directors and officers of the Surviving Corporation at and as  of
the  Effective  Time  (retaining their respective  positions  and
terms of office).

          (f)       The manner of converting the shares of each of the
Constituent  Corporations  into  shares  or  securities  of   the
Surviving Corporation or the cash, property or other rights which
the  holders  of shares of such Constituent Corporations  are  to
receive in exchange for or upon conversion of such shares  is  as
follows:

             (i)  At and as of the Effective Time, the outstanding shares
of  Common Stock of the Company shall be converted into the right
to receive the Purchase Price.

            (ii)  At and as of the Effective Time, each share of common
stock,  par  value  $100.00 per share, of the  Merger  Subsidiary
shall  be  converted into one share of common  stock,  par  value
$100.00 per share, of the Surviving Corporation.

                          ARTICLE III.                                
             
             REPRESENTATIONS AND WARRANTIES OF THE SELLER
                       AS TO THE SELLER

     Subject to the provisions  of Sections 8.01 and 8.02, the Seller 
hereby represents and warrants as to itself to the Purchaser as follows:

     Section 3.01. Organization.   The Seller is a corporation  duly
incorporated,  validly existing and in good  standing  under  the
Laws of the State of Delaware, with all requisite corporate power
and  authority  to own, lease and operate its properties  and  to
carry on its business as it is now conducted.

     Section 3.02. Authorization of Agreement.  The Seller  has  all
requisite  corporate power and authority to execute  and  deliver
this Agreement and each instrument required hereby to be executed
and  delivered  by it at the Closing, to perform its  obligations
hereunder  and  thereunder  and to  consummate  the  transactions
contemplated hereby.  The execution and delivery by the Seller of
this Agreement and each instrument required hereby to be executed
and  delivered  by it at the Closing and the performance  of  its
obligations  hereunder and thereunder have been duly and  validly
authorized by all requisite corporate action on the part  of  the
Seller.  This  Agreement has been duly executed and delivered  by
the   Seller  and  (assuming  due  authorization,  execution  and
delivery  hereof by the other party hereto) constitutes a  legal,
valid  and binding obligation of the Seller, enforceable  against
the  Seller in accordance with its terms, except as the same  may
be limited by legal principles of general applicability governing
the application and availability of equitable remedies.

     Section 3.03. Approvals.  Except for the requirements  of   the
HSR  Act  and   those Laws, Regulations and Orders  noncompliance
with  which  could not reasonably be expected to have a  material
adverse  effect  on  the  ability of the Seller  to  perform  its
obligations  under this Agreement or to have a  Material  Adverse
Effect on the Company, no filing or registration with, no waiting
period  imposed  by and no Permit or Order of,  any  Governmental
Authority  is  required  under  any  Law,  Regulation  or   Order
applicable  to  the  Seller  or  the  Company  or  any   of   its
subsidiaries to permit the Seller to execute, deliver or  perform
this  Agreement or any instrument required hereby to be  executed
and delivered by it at the Closing.

     Section 3.04. No  Violation.   Assuming  effectuation  of  all
filings and registrations with, termination or expiration of  any
applicable waiting periods imposed by and receipt of all  Permits
and Orders of, Governmental Authorities indicated as required  in
Section 3.03, neither the execution and delivery by the Seller of
this  Agreement or any instrument required hereby to be  executed
and  delivered  by it at the Closing nor the performance  by  the
Seller  of its obligations hereunder or thereunder will   violate
or  breach  the  terms  of  or cause a default  under   any  Law,
Regulation or Order applicable to the Seller,  the certificate of
incorporation  or  bylaws  of the  Seller  or   any  contract  or
agreement  to which the Seller or any of its subsidiaries  (other
than the Company and its subsidiaries) is a party or by which  it
or any of its properties or assets is bound, or  with the passage
of  time, the giving of notice or the taking of any action  by  a
third  party, have any of the effects set forth in clause (a)  of
this  Section, except in any such case for any matters  described
in  this Section that could not reasonably be expected to have  a
material adverse effect upon the ability of the Seller to perform
its obligations under this Agreement.

     Section 3.05. Litigation.    There  are  no  actions,   suits,
investigations  or  proceedings  (including  any  proceedings  in
arbitration)  pending,  or,  to  the  Knowledge  of  the  Seller,
threatened, against the Seller or any of its assets, at law or in
equity,  in any Court or before or by any Governmental  Authority
that  could  reasonably be expected to have  a  material  adverse
effect on the validity or enforceability of this Agreement or the
ability  of  the  Seller  to perform its obligations  under  this
Agreement.

     Section 3.06. Brokerage  Agreements.  Neither the  Seller,  the
Company  nor  any of the Company's subsidiaries has, directly  or
indirectly, entered into any agreement with any Person that would
obligate the Company, any of its subsidiaries or the Purchaser to
pay any commission, brokerage fee or "finder's fee" in connection
with the transactions contemplated herein.  The fees and expenses
of  Morgan Stanley & Co. Incorporated incurred in connection with
the  transactions contemplated hereby will be for the account  of
the Seller.

                          ARTICLE IV.                               
           
           REPRESENTATIONS AND WARRANTIES OF THE SELLER
                       AS TO THE COMPANY

     The  Purchaser  acknowledges that,  prior  to  the execution 
of this Agreement,  it  has  been afforded   the  opportunity  to 
inspect  the  business  and  properties of  the  Company  and  to 
examine  the  records  of  the  Company  at  its offices, and has 
been  afforded  access  to  all  information  in  the
Company's  possession requested by the Purchaser.  THE  PURCHASER
FURTHER  ACKNOWLEDGES  THAT,  EXCEPT  AS  EXPRESSLY  PROVIDED  IN
ARTICLE  III  OR  THIS  ARTICLE IV,  THE  SELLER,  ITS  OFFICERS,
DIRECTORS,  EMPLOYEES, REPRESENTATIVES AND AGENTS HAVE  MADE  NO,
AND THE SELLER HEREBY EXPRESSLY DISCLAIMS ANY, REPRESENTATIONS OR
WARRANTIES   AS   TO  THE  ACCURACY  OR  COMPLETENESS   OF   SUCH
INFORMATION,  AS  TO  TITLE  OF  THE  COMPANY  OR  ANY   OF   ITS
SUBSIDIARIES TO ANY ASSETS, OR AS TO ANY OTHER INFORMATION,  DATA
OR  OTHER  MATERIALS (WRITTEN OR ORAL) FURNISHED TO THE PURCHASER
OR ITS REPRESENTATIVES OR AGENTS BY OR ON BEHALF OF THE SELLER.

      Subject  to  the  foregoing  and  to   the  provisions  of  
Sections  8.01  and  8.02,  the  Seller represents  and warrants 
as to the Company to the  Purchaser  as follows:

     Section 4.01. Organization and Qualification.  The Company  and
each  of its subsidiaries is a corporation or other legal  entity
duly  organized, validly existing and in good standing under  the
laws  of the jurisdiction of its organization (which in the  case
of  the  Company  is  the State of Oklahoma), has  all  requisite
corporate or partnership, as the case may be, power and authority
to  own,  lease and operate its properties and to  carry  on  its
business  as  it  is now conducted, and is duly qualified  to  do
business  and  is  in good standing as a foreign  corporation  or
other  entity in each jurisdiction in which the character of  its
properties or the nature of its business makes such qualification
necessary, except where the failure to be so qualified or in good

standing  could  not reasonably be expected to  have  a  Material
Adverse  Effect  on the Company.  The names and jurisdictions  of
organization of each of the Company's subsidiaries are listed  in
Section 4.01 of the Seller's Disclosure Letter.  Complete  copies
of   the  certificate  of  incorporation  and  bylaws  or   other
organizational  documents  of  the  Company  and  each   of   its
subsidiaries,  as  amended to the date  hereof,  have  been  made
available to the Purchaser.

      Section 4.02. Capitalization.

          (a) The authorized capital stock of the Company consists
solely  of  95,000 shares of common stock, par value $100.00  per
share ("Common Stock"), of which 92,186 shares (the "Stock")  are
issued  and outstanding and owned beneficially and of  record  by
the  Seller,  free  and clear of all Liens. No  other  shares  of
capital  stock  of  the Company are issued or outstanding.   Each
share  of  Stock  has been validly issued and is fully  paid  and
nonassessable.  No shares of Stock have been issued in  violation
of  any  preemptive  or similar rights of  any  past  or  present
stockholder of the Company.  None of the shares of capital  stock
of  the  Company or any other class of securities of the  Company
has  been  or  is  registered under the  Securities  Act  or  the
Exchange Act.

          (b) No shares of Common Stock are reserved for issuance,
and,   except for  this  Agreement,  there  are  no   contracts,
agreements, commitments or arrangements obligating the Seller  or
the Company  to offer, sell, issue or grant any shares of, or any
options, warrants or rights of any kind to acquire any shares of,
or  any securities that are convertible into or exchangeable  for
any shares of, capital stock of the Company,  to redeem, purchase
or  acquire,  or  offer to purchase or acquire,  any  outstanding
shares of, or any outstanding options, warrants or rights of  any
kind to acquire any shares of, or any outstanding securities that
are  convertible into or exchangeable for any shares of,  capital
stock  of  the  Company or  to grant any Lien on  any  shares  of
capital stock of the Company.

          (c)  The authorized, issued and outstanding capital stock
of,   or  other  equity  interests  in,  each  of  the  Company's
subsidiaries and the names and addresses of the holders of record
of  the  capital  stock or other equity interests  of  each  such
subsidiary  are  set  forth in Section 4.02(c)  of  the  Seller's
Disclosure Letter.  The issued and outstanding shares of  capital
stock  of, or other equity interests in, each of the subsidiaries
of  the  Company  that are owned by the Company  or  any  of  its
subsidiaries  have been duly authorized and are  validly  issued,
and,   with  respect  to  capital  stock,  are  fully  paid   and
nonassessable, and were not issued in violation of any preemptive
or  similar rights of any past or present equity holder  of  such
subsidiary.  All  such issued and outstanding  shares,  or  other
equity  interests, that are indicated as owned by the Company  or
one  of  its  subsidiaries  in Section 4.02(c)  of  the  Seller's
Disclosure  Letter are owned  beneficially as set  forth  therein
and  free and clear of all Liens.  No shares of capital stock of,
or  other equity interests in, any subsidiary of the Company  are
reserved  for  issuance, and there are no contracts,  agreements,
commitments or arrangements obligating the Company or any of  its
subsidiaries (i) to offer, sell, issue, grant, pledge, dispose of
or  encumber  any  shares of capital stock of,  or  other  equity
interests in, or any options, warrants or rights of any  kind  to
acquire any shares of capital stock of, or other equity interests
in,  or  any securities that are convertible into or exchangeable
for any shares of capital stock of, or other equity interests in,
any  of  the  subsidiaries  of the Company  or  (ii)  to  redeem,

purchase  or  acquire,  or  offer to  purchase  or  acquire,  any
outstanding shares of capital stock of, or other equity interests
in, or any outstanding options, warrants or rights of any kind to
acquire  any shares of capital stock of or other equity  interest
in,  or  any outstanding securities that are convertible into  or
exchangeable for, any shares of capital stock of, or other equity
interests in, any of the subsidiaries of the Company or (iii)  to
grant any Lien on any outstanding shares of capital stock of,  or
other equity interest in, any of the subsidiaries of the Company;
provided,  however,  that certain terms and  provisions  of,  and
applicable  law  relating to, the partnership  or  joint  venture
agreements  or  arrangements listed in  Section  4.02(c)  of  the
Seller's Disclosure Letter may require the partnerships or  joint
ventures to which such agreements or arrangements relate  or  the
partners  or  venturers  therein  to  take  certain  actions  not
Material  to the Company with respect to the equity interests  in
such  partnerships and joint ventures contrary  to  clauses  (i),
(ii) or (iii) above.

          (d)       Neither the Company nor any of its subsidiaries
  directly  or  indirectly  owns,   has  agreed  to  purchase  or
otherwise  acquire  or  holds any interest  convertible  into  or
exchangeable or exercisable for the capital stock or other equity
interests  of  any  Person (other than the  subsidiaries  of  the
Company  identified  in Section 4.01 of the  Seller's  Disclosure
Letter).   Except for any contracts, agreements,  commitments  or
arrangements  between the Company and its subsidiaries or between
such  subsidiaries or  between the Company and its  subsidiaries,
on  the  one hand, and the Seller and its Affiliates (other  than
the  Company  and its Subsidiaries), on the other, that  will  be
terminated  at  or prior to the Closing, there are no  contracts,
agreements,   commitments  or  arrangements  of   any   character
(contingent or otherwise) pursuant to which any Person is or  may
be entitled to receive any payment from the Company or any of its
subsidiaries  based  on, or calculated in  accordance  with,  the
revenues  or  earnings of the Company or any of its subsidiaries,
except  for  payments  not  Material  to  the  Company  from  the
partnerships or joint ventures listed in Section 4.02(c)  of  the
Seller's Disclosure Letter.

     Section 4.03. No  Violation.   Assuming  effectuation  of  all
filings and registrations with, the termination or expiration  of
any  applicable  waiting periods imposed by and  receipt  of  all
Permits  and  Orders  of, Governmental Authorities  indicated  as
required  in Section 3.03, neither the execution and delivery  by
the Seller of this Agreement or any instrument required hereby to
be   executed  and  delivered  by  it  at  the  Closing  nor  the
performance  by  the  Seller  of  its  obligations  hereunder  or
thereunder  will   violate or breach the  terms  of  or  cause  a
default  under   any Law, Regulation or Order applicable  to  the
Company   or  any  of  its  subsidiaries,   the  certificate   of
incorporation or bylaws or other organizational documents of  the
Company  or any of its subsidiaries or  any contract or agreement
to  which the Company or any of its subsidiaries is a party or by
which  they  or  any  of their properties or  assets  are  bound,
 result in the creation or imposition of any Lien, other than any
Permitted Encumbrance, on any of the properties or assets of  the
Company  or any of its subsidiaries,  result in the cancellation,
forfeiture, revocation, suspension or adverse modification of any
Permit owned or held by the Company or any of its subsidiaries or
, with the passage of time, the giving of notice or the taking of
any action by a third party, have any of the effects set forth in
clause  (a), (b) or (c) of this Section, except in any such  case
for  any  matters  described  in  this  Section  that  could  not
reasonably be expected to have a Material Adverse Effect  on  the
Company.

     Section 4.04. Financial  Statements.   There is included  in
Section  4.04  of the Seller's Disclosure Letter a  copy  of  the
Consolidated   Financial  Statements,   and   such   Consolidated
Financial  Statements fairly present  the consolidated  financial
position of the Company as of the respective dates of the balance
sheets  included  therein and  the consolidated  results  of  the
operations  of  the Company for the fiscal years  ended  on  such
dates,  all  in  conformity  with  GAAP  throughout  the  periods
involved.  Except as set forth in the Seller's Disclosure Letter,
there exist no liabilities or obligations of the Company that are
Material to the Company, whether accrued, absolute, contingent or
threatened, which would be required to be reflected, reserved for
or  disclosed under GAAP in the consolidated financial statements
of the Company as of and for the period ended on the date of this
representation   and   warranty,  other  than    liabilities   or
obligations  which  are  adequately reflected,  reserved  for  or
disclosed   in   the  Consolidated  Financial   Statements,   and
liabilities  or  obligations incurred in the ordinary  course  of
business of the Company since December 31, 1995.

     Section 4.05. No Material Adverse Effect; Conduct.

          (a)  Since December 31, 1995, no event  (other than any
event  that  is  of general application to all or  a  substantial
portion  of the Company's industry and other than any event  that
is  expressly  subject  to any other representation  or  warranty
contained  in  Articles III or IV) has, to the Knowledge  of  the
Seller,  occurred  that,  individually  or  together  with  other
similar  events,  could reasonably be expected to  constitute  or
cause a Material Adverse Effect on the Company.

          (b) Except as disclosed in the Seller's Disclosure Letter,
during the period from December 31, 1995 to the execution of this
Agreement  by  the Seller, neither the Company  nor  any  of  its
subsidiaries  has  engaged  in any  conduct  that  is  proscribed
during  the  period from the execution of this Agreement  by  the
Seller  to the Closing by subsections (a) through (j) of  Section
6.02  or agreed in writing or otherwise during such period  prior
to the execution of this Agreement by the Seller to engage in any
such conduct.

     Section 4.06. Title to Properties.

          (a)       The Company or its subsidiaries, individually or
together,  have  indefeasible title  to  all  of  the  properties
reflected  in  the Consolidated Balance Sheet,  (other  than  the
Pipeline Assets, as to which they have such title or interest  as
is  sufficient  to  enable the Company and  its  subsidiaries  to
conduct  their  business as currently conducted without  material
interference,  and  other than any properties  reflected  in  the
Consolidated  Balance  Sheet that  have been  sold  or  otherwise
disposed  of  since  the date of the Consolidated  Balance  Sheet
without  breaching either Section 4.05(b) or Section  6.02(f)  or
  are  not,  individually or in the aggregate,  Material  to  the
Company)  free  and  clear of Liens, other  than  (x)  Liens  the
existence  of  which  is reflected in the Consolidated  Financial
Statements,  (y)  Permitted  Encumbrances  and  (z)  Liens  that,
individually  or  in  the  aggregate, are  not  Material  to  the
Company.  The  Company  or  its  subsidiaries,  individually   or
together, hold under valid lease agreements all real and personal
properties reflected in the Consolidated Balance Sheet  as  being
held under capitalized leases, and all real and personal property
that  is  subject to the operating leases to which  reference  is
made  in the notes to the Consolidated Financial Statements,  and
enjoy  peaceful  and  undisturbed possession of  such  properties
under such leases, other than (i) any properties as to which such

leases  have terminated in the ordinary course of business  since
the   date  of  the  Consolidated  Balance  Sheet  and  (ii)  any
properties  that,  individually or  in  the  aggregate,  are  not
Material  to  the Company.  Neither the Company nor  any  of  its
subsidiaries has received any written notice of any adverse claim
to  the title to any properties owned by them or with respect  to
any lease under which any properties are held by them, other than
any  claims  that,  individually or in the aggregate,  could  not
reasonably be expected to have a Material Adverse Effect  on  the
Company.

          (b)       Easements.  Neither the Company nor any of its
subsidiaries is in violation of the terms of any Easement  except
any such violations that, individually or in the aggregate, could
not  reasonably be expected to have a Material Adverse Effect  on
the  Company.  All Easements that are Material to the Company are
valid  and  enforceable  and grant the  rights  purported  to  be
granted  thereby  and  all rights necessary  thereunder  for  the
current  operation  of  the  business  of  the  Company  and  its
subsidiaries.   There are no spatial gaps in the  Easements  that
could reasonably be expected to have a Material Adverse Effect on
the  Company,  and  all  parts of the Pipeline  Assets  that  are
Material  to the Company are located either on property owned  in
fee  by the Company or a subsidiary of the Company or on property
subject to an Easement in favor of the Company or a subsidiary of
the Company.

     Section 4.07. Certain Obligations.

          (a) Except as set forth in Section 4.07(a) of the Seller's
Disclosure   Letter,  neither  the  Company  nor   any   of   its
subsidiaries  is  a  party to or bound by any Material  Contract.
Except as set forth in Section 4.07(a) of the Seller's Disclosure
Letter, all Material Contracts are in full force and effect,  the
Company  or the subsidiary of the Company that is a party  to  or
bound  by  such  Material Contract has performed its  obligations
thereunder  to  date and, to the Knowledge of  the  Seller,  each
other  party thereto has performed its obligations thereunder  to
date, other than any failure of a Material Contract to be in full
force  and  effect or any nonperformance thereof that  could  not
reasonably be expected to have a Material Adverse Effect  on  the
Company.   Each  of the Medium-Term Notes issued by  the  Company
pursuant  to the Medium-Term Note Program identified  in  Section
4.07(a) of the Seller's Disclosure Letter conform in all material
respects  to  the  sample Medium-Term Note  included  in  Section
4.07(a-l) of the Seller's Disclosure Letter.

          (b) Subject to Section 4.08(a), except for matters that
could  not  reasonably  be expected to have  a  Material  Adverse
Effect  on  the  Company, no provision of any Law, Regulation  or
Order applicable to the Company or any of its subsidiaries  would
preclude the Company or any of its subsidiaries from charging and
collecting,   without  the  necessity  for   approvals   of   any
Governmental  Authority  and without  refund  obligation,  market
based  rates  for storing, processing, purchasing,  gathering  or
selling Hydrocarbons;  would preclude the Company or any  of  its
subsidiaries from constructing additions to, modifications of  or
interconnections  with  third  parties  with  respect   to,   its
transportation, storage, processing or gathering  facilities;  or
  could  reasonably be expected to require the Company or any  of
its  subsidiaries to make refunds of amounts collected for  sales
or services.

          (c) Except as set forth in Section 4.07(c) of the Seller's
Disclosure  Letter and for matters that could not  reasonably  be
expected  to have a Material Adverse Effect on the Company,  none
of the Company and its subsidiaries engages in any natural gas or
other  futures  or  options trading or is a party  to  any  price
swaps,  hedges,  futures  or  similar  instruments,  except   for
transactions  and  agreements entered  into  primarily  to  hedge
contracts  for the purchase or sale of Hydrocarbons to which  the
Company  or one of its subsidiaries is a party.  Section  4.07(c)
of  the  Seller's Disclosure Letter sets forth a true and correct
statement of the position, as of the date hereof, of the  Company
and  its  subsidiaries  with respect to obligations  under  Fixed
Price  Contracts  (including, with respect to  each  Fixed  Price
Contract,  location of delivery and variations in the  obligation
to  take or deliver) and related Hydrocarbon price swaps, hedges,
futures or similar instruments to which the Company or any of its
subsidiaries is a party and that are Material to the Company.

     Section 4.08. Regulation; Permits and Licenses.

          (a) The Company and its subsidiaries operate intrastate
pipelines  with Pipeline Assets located in the States  of  Texas,
Oklahoma,  and  Louisiana.   As such, the  natural  gas  storage,
transportation,  and  exchange services performed  in  interstate
commerce  by  the  Company and certain of  its  subsidiaries  are
subject  to  the  provisions  of either  a  limited  jurisdiction
certificate  issued  under the NGA or Section  311  of  the  NGPA
("Section  311")  and  the  applicable Regulations  of  the  FERC
promulgated   thereunder   (including    applicable    facilities
construction,   rate   authorization,   reporting   and    refund
requirements), as the provisions of such certificate, Section 311
and such Regulations may be interpreted, amended or modified from
time  to  time  pursuant to Orders of the FERC or of  any  Court.
Under  such Laws and Regulations, the Company and certain of  its
subsidiaries  are  authorized to charge market  based  rates  for
Section 311 storage services and are authorized to charge various
maximum   rates  for  Section  311  transportation  and  exchange
services.  Except as set forth in Section 4.08(a) of the Seller's
Disclosure  Letter, the rates for services collected pursuant  to
such  rate  authorizations  are not being  collected  subject  to
refund.  In  addition,  sales  for  resale  of  natural  gas   in
interstate  commerce made by the Company or its  subsidiaries  of
natural gas that is produced from reserves owned by a party other
than  such  seller  are  made pursuant to  Section  311  and  the
applicable Regulations thereunder or the terms and conditions  of
a  blanket  sales certificate authorization issued  by  the  FERC
under the NGA, as such authorization may be amended, modified  or
interpreted from time to time pursuant to Orders of the  FERC  or
of  any  Court.   Intrastate transportation,  exchange,  storage,
gathering,  and pipeline sales services performed by the  Company
and  its  subsidiaries  may  be  subject  to  certain  facilities
construction,    rate,   reporting   and   prior    authorization
requirements  applicable under the Laws of the States  of  Texas,
Oklahoma,  and Louisiana, and Regulations promulgated  thereunder
by   the  TRC,  the  OCC  and  the  LCC,  respectively,  as  such
Regulations  may  be  amended, modified and  interpreted  by  the
respective Governmental Authorities or the Courts.

          (b) To the Knowledge of the Seller, the Company and its
subsidiaries   have   obtained   all   Permits,   including   all
certificates  of  public  convenience  and  necessity  and   rate
authorizations  required  by the LCC and  by  the  FERC,  as  are
necessary  to  carry on their businesses as currently  conducted,
except  for  any such Permits that the failure to possess  which,

individually  or  in  the  aggregate,  could  not  reasonably  be
expected to have a Material Adverse Effect on the Company.   Such
Permits  are in full force and effect, have not been violated  in
any  respect that could reasonably be expected to have a Material
Adverse  Effect  on  the Company and, to  the  Knowledge  of  the
Seller,  no  suspension, revocation or cancellation  thereof  has
been threatened.

          (c) Neither the Company nor any subsidiary of the Company
is  subject to the jurisdiction of the FERC under the NGA, except
pursuant  to  Sections  284.121 through  284.126  of  the  FERC's
regulations,  18  C.F.R. 284.121 through 284.126 (1995),  Section
284.142  of  the FERC's regulations, 18 C.F.R.,  284.142  (1995),
and pursuant to a limited jurisdiction blanket certificate issued
under  Section  284.227  of  the FERC's  regulations,  18  C.F.R.
284.227  (1994).  The Company and its subsidiaries  have  engaged
in  no activities which would subject them, their activities,  or
their facilities to the NGA jurisdiction of the FERC.  All of the
Company's  and  its  subsidiaries' facilities used  to  transport
natural  gas  are  non-jurisdictional intrastate transmission  or
"gathering" facilities within the meaning of the NGA and/or NGPA,
and,  except  as set forth in the first sentence of this  Section
4.08(c), neither the Company nor any of its subsidiaries  has  or
is  engaged in the interstate transmission of gas through any  of
its  facilities.   The  Company's and each of  its  subsidiaries'
representations  concerning  the  jurisdictional  status  of  its
facilities  and  operations made to natural  gas  purchasers  and
interstate or intrastate pipelines in order to effect  sales   or
to   facilitate  transportation  transactions  (whether  for  the
Company,  its subsidiaries or any third parties)  have been  and,
through  the  Closing,  are  true and  correct  in  all  Material
respects,  and the Company and its subsidiaries have complied  in
all  Material  respects  with the terms and  conditions  of  such
sales,  transportation  or interconnect or  similar  arrangements
(including "on behalf of" certificates).  Neither the Company nor
any  of  its subsidiaries has violated, and neither has  received
notification  from  any  Governmental  Authority  that   it   has
violated,  the  NGA,  the NGPA, or any other Law  concerning  the
transmission and sale of natural gas or the conduct of gathering,
treating, processing, and compression activities associated  with
natural gas, except for any violations that, individually  or  in
the  aggregate,  could  not reasonably  be  expected  to  have  a
Material Adverse Effect on the Company.

     Section 4.09. Litigation; Compliance with Laws.  There  are  no
actions,  suits,  investigations or  proceedings  (including  any
proceedings in arbitration) pending or, to the Knowledge  of  the
Seller,   threatened  against  the  Company   or   any   of   its
subsidiaries, at law or in equity, in any Court or before  or  by
any  Governmental Authority (excluding any rulemaking or  similar
proceedings  of general applicability and any appeal or  petition
for review related thereto), except actions, suits or proceedings
that   are  set  forth  in Section 4.09 or Section  4.12  of  the
Seller's Disclosure Letter or , individually or, with respect  to
multiple  actions,  suits  or  proceedings  that  allege  similar
theories  of  recovery based on similar facts, in the  aggregate,
could  not  reasonably  be expected to have  a  Material  Adverse
Effect  on the Company.  Except as set forth in Section  4.09  of
the  Seller's Disclosure Letter, the Company and its subsidiaries
are  in  substantial  compliance with  all  applicable  Laws  and
Regulations  and  are not in default with respect  to  any  Order
applicable to the Company or any of its subsidiaries, except such
events of noncompliance or defaults that, individually or in  the
aggregate,  could not reasonably be expected to have  a  Material
Adverse Effect on the Company.

     Section 4.10. Taxes.

          (a)  Except for such matters as could not reasonably be
expected  to have a Material Adverse Effect on the Company,   all
returns  and  reports of or with respect to  any  Tax  which  are
required to be filed by or with respect to the Company or any  of
its  subsidiaries ("Tax Returns") on or before the  Closing  Date
have been or will be timely filed,  all Taxes which are shown  to
be  due  on  such Tax Returns on or before the Closing Date  have
been  or  will  be  timely  paid in full,   all  withholding  Tax
requirements imposed on or with respect to the Company or any  of
its  subsidiaries have been or will be satisfied in full  in  all
respects  and  no penalty, interest or other charge  is  or  will
become due with respect to the late filing of any such Tax Return
or late payment of any such Tax.

          (b) Except as set forth in Section 4.10(b) of the Seller's
Disclosure  Letter,  all Tax Returns have  been  audited  by  the
applicable  Governmental Authority or the applicable  statute  of
limitations  has  expired  for the period  covered  by  such  Tax
Returns.

          (c) Except as set forth in Section 4.10(c) of the Seller's
Disclosure  Letter, there is not in force any extension  of  time
with respect to the due date for the filing of any Tax Return  or
any  waiver  or  agreement  for any extension  of  time  for  the
assessment  or payment of any Tax due with respect to the  period
covered by any Tax Return.

          (d) There is no claim against the Company or any of its
subsidiaries  for  any  Taxes, and no assessment,  deficiency  or
adjustment has been asserted or proposed with respect to any  Tax
Return  that  could  reasonably be expected to  have  a  Material
Adverse Effect on the Company.

          (e) Except as set forth in Section 4.10(e) of the Seller's
Disclosure  Letter,  none of the Company  and  its  subsidiaries,
during  the  last ten years, has been a member of  an  affiliated
group filing a consolidated federal income Tax Return (other than
the Seller's Group).

     Section 4.11.  Employee Benefit Plans.

          (a) Each Benefit Plan is listed in Section 4.11(a) of the
Seller's Disclosure Letter.  True and correct copies of  each  of
the  following  have been made available to the Purchaser:    the
most  recent  annual report (Form 5500) relating to each  Benefit
Plan  filed  with  the IRS,  each such Benefit Plan,   the  trust
agreement, if any, relating to each such Benefit Plan,  the  most
recent  summary plan description for each such Benefit  Plan  for
which a summary plan description is required by ERISA,  the  most
recent  actuarial  report  or valuation  relating  to  each  such
Benefit  Plan subject to Title IV of ERISA and  the  most  recent
determination letter, if any, issued by the IRS with  respect  to
any such Benefit Plan qualified under Section 401 of the Code.

          (b) With respect to the Benefit Plans, no event has
occurred  and,  to the Knowledge of the Seller, there  exists  no
condition  or set of circumstances in connection with  which  the
Company  or  any  of  its subsidiaries could be  subject  to  any
liability under the terms of such Benefit Plans, ERISA, the  Code

or  any other applicable Law, other than any condition or set  of
circumstances  that could not reasonably be expected  to  have  a
Material Adverse Effect on the Company.

          (c) As to any Benefit Plan intended to be qualified under
Section 401 of the Code, such Benefit Plan satisfies in form  the
requirements of such Section and there has been no termination or
partial  termination of such Benefit Plan within the  meaning  of
Section 411(d)(3) of the Code.

          (d) There are no actions, suits or claims pending (other
than  routine  claims for benefits) or, to the Knowledge  of  the
Seller,  threatened  against, or with  respect  to,  any  of  the
Benefit Plans or their assets.

          (e) All contributions required to be made to the Benefit
Plans  pursuant  to  their terms and provisions  have  been  made
timely.

          (f) As to any Benefit Plan subject to Title IV of ERISA,
there  has been no event or condition which presents the material
risk  of  plan  termination, no accumulated  funding  deficiency,
whether or not waived, within the meaning of Section 302 of ERISA
or Section 412 of the Code has been incurred, no notice of intent
to  terminate the Benefit Plan has been given under Section  4041
of ERISA, no proceeding has been instituted under Section 4042 of
ERISA  to  terminate the Benefit Plan, and no  liability  to  the
Pension  Benefit  Guaranty Corporation has been  incurred  (other
than with respect to required premium payments).

          (g) In connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be  made
under  the  Benefit  Plans  or any of the  programs,  agreements,
policies  or other arrangements described in Section  4.11(i)  of
the Seller's Disclosure Letter which, in the aggregate, would  be
nondeductible under Section 280G of the Code.

          (h) No collective bargaining agreement is being negotiated
by  the  Company or any of its subsidiaries.  There is no pending
or,  to  the  Knowledge of the Seller, threatened labor  dispute,
strike  or  work  stoppage against the  Company  or  any  of  its
subsidiaries which could reasonably be expected to interfere with
the   business  activities  of  the  Company  or   any   of   its
subsidiaries.   To  the  Knowledge of the  Seller,  none  of  the
Company,  any  of  its  subsidiaries or any of  their  respective
representatives  or  employees has  committed  any  unfair  labor
practices  in  connection with the operation  of  the  respective
businesses  of the Company or its subsidiaries, and there  is  no
pending or, to the Knowledge of the Seller, threatened charge  or
complaint against the Company or any of its subsidiaries  by  the
National Labor Relations Board or any comparable state agency.

          (i) Except as set forth in Section 4.11(i) of the Seller's
Disclosure   Letter,  neither  the  Company  nor   any   of   its
subsidiaries  is  a  party  to  or  is  bound  by  any  severance
agreements,  programs or policies.  True and  correct  copies  of
all  employment agreements with officers of the Company  and  its
subsidiaries, and  all vacation, overtime and other  compensation

policies  of the Company and its subsidiaries relating  to  their
employees  have been made available to the Purchaser.  Except  as
set  forth in Section 4.11(i) of the Seller's Disclosure  Letter,
there  are no (x) agreements with consultants of the Company  and
its   subsidiaries  obligating  the  Company  or   any   of   its
subsidiaries  to  make  cash  payments  in  an  amount  exceeding
$150,000 or (y) noncompetition agreements with the Company or any
of its subsidiaries executed by officers of the Company.

          (j) Except as set forth in Section 4.11(j) of the Seller's
Disclosure  Letter,  no Benefit Plan provides retiree medical  or
retiree  life insurance benefits to any Person and   neither  the
Company nor any of its subsidiaries is contractually or otherwise
obligated (whether or not in writing) to provide any Person  with
life insurance or medical benefits upon retirement or termination
of  employment,  other  than as required  by  the  provisions  of
Sections 601 through 608 of ERISA and Section 4980B of the Code.

          (k) Neither the Company nor any of its subsidiaries
contributes to or has an obligation to contribute to, and has not
within  six years prior to the date of this Agreement contributed
to  or  had an obligation to contribute to, a multiemployer  plan
within the meaning of Section 3(37) of ERISA.

          (l) The Company's vacation policy does not provide for
carryover vacation from one calendar year to the next.

     Section 4.12. Environmental  Matters.   Except   for   matters
disclosed  in Section 4.12 of the Seller's Disclosure Letter  and
except for matters that, individually or in the aggregate,  would
not   have  a  Material  Adverse  Effect  on  the  Company,   the
properties,  operations and activities of  the  Company  and  its
subsidiaries  are in compliance with all applicable Environmental
Laws;   the  Company and its subsidiaries and the properties  and
operations of the Company and its subsidiaries are not subject to
any  existing,  pending  or,  to the  Knowledge  of  the  Seller,
threatened action, suit, investigation, inquiry or proceeding  by
or   before  any  Court  or  Governmental  Authority  under   any
Environmental Law;  all Permits, if any, required to be  obtained
or  filed  by  the Company or any of its subsidiaries  under  any
Environmental Law in connection with the business of the  Company
and  its  subsidiaries have been obtained or filed and are  valid
and  currently  in  full force and effect;   there  has  been  no
release of any hazardous substance, pollutant or contaminant into
the  environment  by  the  Company  or  its  subsidiaries  or  in
connection with their properties or operations; and  the  Company
and  its  subsidiaries have made available to the  Purchaser  all
internal  and external environmental audits and studies  and  all
correspondence on substantial environmental matters in each  case
relevant  to the Company or any of its subsidiaries and known  by
the  Seller, or which the Seller should have known, to be in  the
possession of the Company or its subsidiaries.

      Section 4.13. Patents, Trademarks.  Section 4.13 of the Seller's
Disclosure  Letter  sets forth all patents,  trademarks,  service
marks,   trade   names  and  copyrights  and  registrations   and
applications for any thereof, domestic or foreign,  owned  by  or
registered  in the name of the Company or one of its subsidiaries
or  in  which the Company or its subsidiaries has any rights  and
which   are  Material  to  the  Company.   The  Company  or   its
subsidiaries own or hold licenses under such patents, trademarks,
service  marks, trade names and copyrights as are  necessary  for
the  conduct  of its business as currently conducted  except  for
licenses which the failure to own or hold could not reasonably be

expected  to  have  a  Material Adverse Effect  on  the  Company.
Neither  the Company nor any of its subsidiaries is currently  in
receipt of any notice of infringement or notice of conflict  with
the asserted rights of others in any patents, trademarks, service
marks, trade names and copyrights owned or held by other Persons,
except,  in  each case, for matters that could not reasonably  be
expected to have a Material Adverse Effect on the Company.

     Section 4.14. Insurance.    Section  4.14  of   the   Seller's
Disclosure Letter sets forth all insurance policies held  by  the
Company  and  its subsidiaries that are Material to the  Company.
To  the  Knowledge of the Seller, all such policies are  in  full
force and effect and all premiums due thereon have been paid.

     Section 4.15. Public  Utility.  The Company is not  a  "holding
company,"  or  a  "public utility company,"  as  such  terms  are
defined  in the Holding Company Act and the rules and regulations
thereunder; it is, however, a "subsidiary company" of a  "holding
company,"  and  an  "affiliate" of a "holding company,"  as  such
terms  are  defined in the Holding Company Act and the rules  and
regulations thereunder.  The Seller has taken no action that, and
no  relationship  between the Seller and its Affiliates  existing
prior to the Closing, will cause the Company to continue to be  a
"subsidiary company" of a "holding company" or an "affiliate"  of
a  "holding company" after the Closing within the meaning of  the
Holding Company Act and the rules and regulations thereunder.

     Section 4.16. Minute Books.  The minute books of the Company and
its  subsidiaries which have been made available to the Purchaser
for  review constitute all of the Company's and its subsidiaries'
minute  books and contain a complete and accurate record  of  all
resolutions  and  formal  actions  of  the  Company's   and   its
subsidiaries'  stockholders  and directors  (and  any  committees
thereof), in each case, in their respective capacities as such.

     Section 4.17. Powers  of Attorney.  No Persons hold  powers  of
attorney for the Company or its subsidiaries except for revocable
limited powers of attorney granted in connection with ad valorem,
franchise  and  other  state and local  taxes  or  other  routine
business matters.

     Section 4.18. Intercompany  Transactions.    Except   as   may
otherwise  be required by Sections 6.09 and 6.10, since  December
31,  1995,  all  Material intercompany transactions  between  the
Company and its subsidiaries, on the one hand, and the Seller and
its Affiliates (other than the Company and its subsidiaries),  on
the  other,  including charges for factoring accounts receivable,
interest,  administrative  and  overhead  services,  transporting
Hydrocarbons and sales of Hydrocarbons, have been made  on  terms
consistent  in all material respects with, and accounted  for  by
the Company and its subsidiaries consistent with, transactions of
a  similar nature occurring during the periods reflected  in  the
Consolidated   Financial  Statements.   The   Company   and   its
subsidiaries have not guaranteed, or provided collateral, surety,
or  credit  support for, any obligations of the  Seller  and  its
Affiliates (other than the Company and its subsidiaries) to third
parties, except such that will be released at the Closing.

     Section 4.19. Accounts  Receivable.   The  accounts  receivable
included  in current accounts of the Company comprising  part  of
the  Working  Capital of the Company arise from, in all  material
respects, sales made or services rendered in the ordinary  course
of  business, are not subject to any material Lien (except  Liens
to  be  released at or prior to the Closing), are not subject  to

any  material conditions that would preclude the sale thereof  by
the  Company  (except  any  such condition  to  be  satisfied  or
released  at  or  prior to Closing) and are  collectible  in  the
ordinary  course of business, except as reflected in the  reserve
for  doubtful  accounts included in the Working  Capital  of  the
Company as of the Closing.

     Section 4.20. Gas  Balancing.  Except as set forth  in  Section
4.09  of the Seller's Disclosure Letter, to the Knowledge of  the
Seller,  since  December  31, 1995 no  claim  has  been  asserted
against  the Company or any of its subsidiaries relating  to  any
Material gas balancing liabilities.

                          ARTICLE V.                                
              
              REPRESENTATIONS AND WARRANTIES OF
                        THE PURCHASER

      Subject to the provisions  of Sections 8.01 and 8.02, the 
Purchaser represents and warrants  to the Seller as follows:

     Section 5.01. Organization and Good Standing.  The Purchaser is
a  corporation duly incorporated, validly existing  and  in  good
standing  under  the  Laws  of the State  of  Delaware  with  all
requisite corporate power and authority to own, lease and operate
its  properties  and  to  carry  on  its  business  as  currently
conducted.

     Section 5.02. Financing.   The Purchaser has  available  to  it
internal funds that are otherwise uncommitted and funds  that  it
can   acquire  through  borrowings  from  nationally   recognized
financial institutions, which borrowings are the subject of  firm
commitments  from such institutions obtained for the purposes  of
this  Agreement, and such funds are, in the aggregate, sufficient
to  enable the Purchaser to pay the Estimated Purchase  Price  of
the  Stock in full, together with all costs and expenses  related
thereto,  and  otherwise  to perform its obligations  under  this
Agreement.

     Section 5.03. Authorization of Agreement.  The Purchaser has all
requisite  corporate  power  and authority  to  enter  into  this
Agreement and each instrument required hereby to be executed  and
delivered  by  it  at  the  Closing, to perform  its  obligations
hereunder  and  thereunder  and to  consummate  the  transactions
contemplated hereby.  The execution and delivery by the Purchaser
of  this  Agreement  and each instrument required  hereby  to  be
executed  and delivered by it at the Closing, and the performance
of  its obligations hereunder and thereunder, have been duly  and
validly authorized by all requisite corporate action on the  part
of  the  Purchaser.   This Agreement has been duly  executed  and
delivered  by  the  Purchaser  and (assuming  due  authorization,
execution  and  delivery  hereof  by  the  other  party   hereto)
constitutes  a  legal,  valid  and  binding  obligation  of   the
Purchaser,  enforceable against the Purchaser in accordance  with
its  terms, except as the same may be limited by legal principles
of   general   applicability  governing   the   application   and
availability of equitable remedies.

     Section 5.04. Approvals.  Except for the requirements of the
HSR  Act  and    those Laws, Regulations and Orders noncompliance
with  which  could not reasonably be expected to have a  material
adverse  effect  on  the  Purchaser's  ability  to  perform  this
Agreement,  no  filing or registration with,  no  waiting  period
imposed  by and no Permit or Order of, any Governmental Authority
is  required under any Law, Regulation or Order applicable to the
Purchaser to permit the Purchaser to execute, deliver or  perform

this  Agreement or any instrument required hereby to be  executed
and delivered by it at the Closing.

     Section 5.05. No Violation. Assuming effectuation of all filings
and  registrations with, termination or expiration of all waiting
periods  imposed  by and receipt of all Permits  and  Orders  of,
Governmental  Authorities indicated as required in Section  5.04,
neither  the  execution  and delivery by the  Purchaser  of  this
Agreement  or  any instrument required hereby to be executed  and
delivered  by  it  at  the  Closing nor the  performance  by  the
Purchaser  of  its  obligations  hereunder  or  thereunder   will
  violate  or breach the terms of or cause a default  under   any
Law,  Regulation  or  Order applicable  to  the  Purchaser,   the
charter  or bylaws of the Purchaser or  any contract or agreement
to  which the Purchaser is a party or by which it or any  of  its
properties or assets is bound, or , with the passage of  time  or
the  giving  of  notice or the taking of any action  by  a  third
party,  have any of the effects set forth in clause (a)  of  this
Section,  except  in any such case for any matters  described  in
this  Section  that could not reasonably be expected  to  have  a
material  adverse  effect upon the ability of  the  Purchaser  to
perform its obligations under this Agreement.

     Section 5.06. Litigation.  There  are  no  actions,   suits,
investigations  or  proceedings  (including  any  proceedings  in
arbitration)  pending,  or, to the Knowledge  of  the  Purchaser,
threatened, against the Purchaser or any of its assets, at law or
in  equity,  in  any  Court  or before  or  by  any  Governmental
Authority  that could reasonably be expected to have  a  material
adverse  effect  on  the  validity  or  enforceability  of   this
Agreement  or  the  ability  of  the  Purchaser  to  perform  its
obligations under this Agreement.

     Section 5.07. Brokerage Agreements.  Neither the Purchaser  nor
any of its subsidiaries has, directly or indirectly, entered into
any agreement with any Person that would obligate the Seller, the
Company  or  any  of  the  Company's  subsidiaries  to  pay   any
commission,  brokerage fee or "finder's fee" in  connection  with
the transactions contemplated herein.

     
     Section 5.08. Accounts  Receivable.  The reserve  for  doubtful
accounts included in the Working Capital of the Company as of the
Closing  does not exceed the amount of receivables of the Company
comprising part of the Working Capital of the Company as  of  the
Closing  that is not collectible (it being understood and  agreed
that  this  representation  is  intended  solely  to  provide   a
mechanism  pursuant  to which the Purchaser will  rebate  to  the
Seller,  pursuant  to  Section 8.02, the  excess  of  receivables
actually  collected over the amount credited to  the  Seller  for
such  receivables  pursuant to Section 6.09(c) in  computing  the
Final Purchase Price).

                         ARTICLE VI.                                 
                         
                         AGREEMENTS

     Section 6.01. Affirmative Covenants of the Seller.   Except  as
expressly  contemplated  by this Agreement  or  consented  to  in
writing by the Purchaser (which consent shall not be unreasonably
withheld), the Seller will, during the period from the  execution
of this Agreement by the Seller to the Closing, cause the Company
and its subsidiaries:

          (a) to operate their businesses in all material respects in
the usual and ordinary course consistent with past practices;

          (b) to use all reasonable efforts to preserve substantially
intact  their  business organizations, maintain  the  rights  and
franchises that are Material to the Company, retain the  services
of  their  officers  and  maintain  the  relationships  with  the
customers and suppliers that are Material to the Company;

          (c) to maintain and keep the properties and assets that are
Material to the Company in as good repair and condition as on the
date  of  this  Agreement, ordinary wear and tear  excepted,  and
maintain  supplies and inventories in quantities consistent  with
their customary business practices;

          (d) to use all commercially reasonable efforts to keep in
full force and effect insurance comparable in amount and scope of
coverage  to  that  set  forth in Section 4.14  of  the  Seller's
Disclosure Letter; and

          (e) to comply in all material respects with all applicable
Laws, Regulations and Orders.

     Section 6.02. Negative Covenants of the Seller.  Except as  (i)
expressly  contemplated by this Agreement, (ii) required  by  the
partnership or joint venture agreements or arrangements listed in
Section 4.02(c) of the Seller's Disclosure Letter with respect to
the  business,  condition  (financial or otherwise),  operations,
performance or properties of the partnerships and joint  ventures
created thereby, or (iii) as otherwise consented to in writing by
the Purchaser (which consent shall not be unreasonably withheld),
the  Seller will not, from the execution of this Agreement by the
Seller  until  the  Closing, permit the Company  or  any  of  its
subsidiaries:

          (a)  (i)      to increase in any material respect the
compensation payable to or to become payable to any  director  or
executive  officer,  except  for increases  in  salary  or  wages
payable  or to become payable in the ordinary course of  business
and  consistent  with past practice;  to grant  in  any  material
respect any severance or termination pay (other than pursuant  to
the  normal  severance policy of the Company and its subsidiaries
as  in effect on the date of this Agreement) to, or to enter into
or  to  amend  any  employment or severance agreement  with,  any
director, officer or employee; or  to establish, adopt  or  enter
into any Benefit Plan;

          (b) to declare or to pay any dividend on, or to make any
other  distribution in respect of, outstanding shares of  capital
stock  or  other  equity interests, except for dividends  or  any
other  distributions by  a wholly-owned subsidiary of the Company
to  the Company or another wholly-owned subsidiary of the Company
or   as  disclosed in Section 6.02(b) of the Seller's  Disclosure
Letter;

          (c)   (i) to redeem, purchase or acquire, or to offer to
purchase or acquire, any outstanding shares of capital stock  of,
or  other  equity  interests  in,  or  any  securities  that  are
convertible into or exchangeable for any shares of capital  stock
of, or other equity interests in (other than any such acquisition

by  the  Company or any of its wholly-owned subsidiaries directly
from  any wholly-owned subsidiary of the Company in exchange  for
capital  contributions  or  loans to  such  subsidiary),  or  any
outstanding  options, warrants or rights of any kind  to  acquire
any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries;  to effect any reorganization
or  recapitalization; or  to split, combine or reclassify any  of
the  capital stock of, or other equity interests in, the  Company
or  any of its subsidiaries or issue or authorize or propose  the
issuance of any other securities in respect of, in lieu of or  in
substitution  for, shares of such capital stock  or  such  equity
interests;

          (d)    (i) to offer, sell, issue or grant, or authorize the
offering, sale, issuance or grant, of any shares of capital stock
of, or other equity interests in, any securities convertible into
or  exchangeable  for any shares of capital stock  of,  or  other
equity  interests in, or any options, warrants or rights  of  any
kind  to acquire any shares of capital stock of, or other  equity
interests  in,  the  Company or any of its subsidiaries;  or   to
grant any Lien with respect to any shares of capital stock of, or
other equity interests in, any subsidiary of the Company;

          (e)   to acquire, by merging or consolidating with, by
purchasing  an equity interest in or a portion of the assets  of,
or  in  any  other  manner,  any  business  or  any  corporation,
partnership,  association  or  other  business  organization   or
division thereof, or otherwise to acquire any assets of any other
Person  (other  than  the purchase of assets  from  suppliers  or
vendors  in  the ordinary course of business and consistent  with
past  practice), the aggregate purchase prices for which  exceeds
$3,000,000;

          (f) to sell, lease, exchange or otherwise dispose of, or to
grant  any Lien (other than a Permitted Encumbrance) with respect
to,  any  of the assets of the Company or any of its subsidiaries
that  are  Material  to the Company, except for  dispositions  of
assets  (up to an aggregate fair market value of $3,000,000)  and
inventories  in  the ordinary course of business  and  consistent
with past practice;

          (g) to adopt any amendments to its charter or bylaws or
other organizational documents that would alter the terms of  its
capital  stock or other equity interests or would have a material
adverse  effect  on  the  ability of the Seller  to  perform  its
obligations under this Agreement;

          (h)  (i) to change any of its policies or practices related to
business  transactions between the Company and its  subsidiaries,
on  the  one hand, and the Seller and its Affiliates (other  than
the  Company and its subsidiaries), on the other hand,  to change
any  of its methods of accounting in effect at December 31, 1995,
except  as  may  be  required to comply with GAAP,   to  make  or
rescind  any election relating to Taxes,  to settle or compromise
any  claim,  action,  suit, litigation, proceeding,  arbitration,
investigation,  audit or controversy relating  to  Taxes  (except
where  the  cost  to  the Company and its  subsidiaries  of  such
settlements  or  compromises, individually or in  the  aggregate,
does  not  exceed $500,000), or  to change any of its methods  of
reporting  income or deductions for federal income  tax  purposes
from those employed in the preparation of the federal income  tax
returns for the taxable year ending December 31, 1994, except, in
each case, as may be required by Law and except, in the cases  of

clauses  (i),  (ii)  (iii) and (v), for matters  that  could  not
reasonably be expected to have a Material Adverse Effect  on  the
Company;

          (i) to incur any obligations for borrowed money or purchase
money  indebtedness that are Material to the Company, whether  or
not  evidenced by a note, bond, debenture or similar  instrument,
except obligations to the Seller and its Affiliates which, in the
case  of obligations to the Seller and its Affiliates other  than
the  Company and its subsidiaries, will be forgiven or  otherwise
satisfied  at  the Closing in accordance with Sections  6.09  and
6.10;

          (j) to enter into any arrangement, agreement or contract
with any third party (other than customers in the ordinary course
of  business)  which  is  Material to the  Company  and  that  is
substantially   more   restrictive  on  the   Company   and   its
subsidiaries  or substantially less advantageous to  the  Company
and  its  subsidiaries than arrangements, agreements or contracts
existing on the date hereof;

          (k)  to enter into any (i) new Hydrocarbons purchase
contract  or  Hydrocarbons sale contract or amend or  modify  any
such  contract  now  in existence, which contract,  amendment  or
modification  is  Material to the Company  or  (ii)  Fixed  Price
Contract;

          (l)  to enter into any new Hydrocarbons transportation,
gathering, compression or dehydration contract or amend or modify
any such contract now in existence, which contract, amendment  or
modification is Material to the Company;

          (m) to enter into any new Hydrocarbons storage contract or
Hydrocarbons  processing contract or amend  or  modify  any  such
contract   now   in  existence,  which  contract   amendment   or
modification is Material to the Company;

          (n) to initiate any proceeding before the OCC, the LCC, the
TRC,  the  FERC or any other federal or state regulatory  agency,
which  proceeding could reasonably be expected to have a Material
Adverse Effect on the Company; or

          (o)  to agree in writing or otherwise to do any of the
foregoing.

     Section 6.03.  Access.

          (a)   From the execution of this Agreement by the Seller
until  the  Closing, the Seller shall cause the Company  and  its
subsidiaries    to  afford  the  Purchaser  and   its   officers,
directors,  employees, accountants, consultants,  legal  counsel,
agents   and   other  representatives,  including   environmental
engineers   (collectively,  the  "Purchaser's  Representatives"),
reasonable  access  at  reasonable times, upon  reasonable  prior
notice,  to the officers, employees, agents, properties,  offices
and  other facilities of the Company and its subsidiaries and  to
the  books  and records thereof and  to furnish promptly  to  the
Purchaser  and  the Purchaser's Representatives such  information
concerning  the  business,  properties,  contracts,  records  and
personnel   of  the  Company  and  its  subsidiaries   (including
financial, operating and other data and information)  as  may  be
reasonably requested, from time to time, by the Purchaser.

          (b)   Notwithstanding the foregoing provisions of this
Section, the Seller shall not be required to cause the Company or
any of its subsidiaries to grant access or furnish information to
the  Purchaser or any of the Purchaser's Representatives  to  the
extent that such information is subject to an attorney/client  or
attorney  work  product  privilege or that  such  access  or  the
furnishing of such information is prohibited by Law or by a valid
and   binding  confidentiality  agreement  with  a  third  party;
provided,  however, that, in the latter instance, if so requested
by the Purchaser, the Seller will use all commercially reasonable
efforts  to  obtain  from  such third  party  a  waiver  of  such
prohibition.

          (c) The information received pursuant to this Section shall
be  deemed  to  be  "Evaluation Material"  for  purposes  of  the
Confidentiality Agreement.

     Section 6.04. Appropriate Action; Consents; Filings.

          (a) The Seller and the Purchaser shall each use, and shall
cause   each  of  their  respective  subsidiaries  to  use,   all
commercially  reasonable efforts  to take,  or  to  cause  to  be
taken, all appropriate action, and to do, or to cause to be done,
all things necessary, proper or advisable under applicable Law or
otherwise  to  consummate  and make  effective  the  transactions
contemplated  by this Agreement,  to obtain from any Governmental
Authorities  any  Licenses, Permits  or  Orders  required  to  be
obtained  by  the  Purchaser  or  the  Seller  or  any  of  their
subsidiaries in connection with the authorization, execution  and
delivery   of  this  Agreement  and  the  performance  of   their
obligations  hereunder,   to  make  all  necessary  filings,  and
thereafter to make promptly any other required submissions,  with
respect  to  this Agreement required under  the HSR Act  or   any
other  applicable  Law, Regulation or Order;  provided,  however,
that the Purchaser and the Seller shall cooperate with each other
in  connection  with  the  making of  all  such  filings  and  in
supplying  any information requested supplementally or by  second
request  from any Governmental Authority.  The Purchaser and  the
Seller  shall  request early termination of  the  waiting  period
under  the  HSR Act with respect to the transactions contemplated
hereby.

          (b) The Purchaser  and the Seller agree to cooperate and to
cause their respective subsidiaries to cooperate with respect to,
and  agree  to use all commercially reasonable efforts vigorously
to  contest  and resist and to have vacated, lifted, reversed  or
overturned, any action, including legislative, administrative  or
judicial   action,   including  any  Order  (whether   temporary,
preliminary or permanent) of any Governmental Authority, that  is
in   effect  and  that  restricts,  prevents  or  prohibits   the
consummation of the transactions contemplated by this  Agreement.
Each  of the Purchaser and the Seller also agree to take any  and
all  commercially reasonable actions that may be required by  any
Governmental  Authority as a condition to  the  granting  of  any
Permit  or Order required in order to permit the consummation  of
the  transactions contemplated hereby or as may  be  required  to
vacate,  lift, reverse or overturn any administrative or judicial
action  that  would otherwise cause any condition to the  Closing
not  to  be satisfied; provided, however, that in no event  shall
the  Seller take any action that could reasonably be expected  to
have  a  Material Adverse Effect on the Company and in  no  event
shall  either  party be required to take any  action  that  could
reasonably be expected to have a Material Adverse Effect on  such
party or to result in a breach of this Agreement.

          (c) Each of the Seller and the Purchaser shall use, and
shall  cause its subsidiaries to use, all commercially reasonable
efforts  to  obtain  from  all Persons (other  than  Governmental
Authorities)  all  consents  that  are   necessary,   proper   or
advisable  or  otherwise required under any contracts,  licenses,
leases, Easements, or other agreements to which the Seller or the
Purchaser or any of its subsidiaries is a party or by which it is
bound,  in  order to permit the Seller or the Purchaser,  as  the
case may be, to perform its obligations hereunder.

          (d) If any party shall fail to obtain any third party
consent  described in subsection (c) of this Section, such  party
shall use all commercially reasonable efforts, and shall take any
such  actions reasonably requested by the other party,  to  limit
the  adverse  effect  upon the Seller and  the  Purchaser,  their
respective   subsidiaries,   and  their   respective   businesses
resulting, or which could reasonably be expected to result  after
the Closing, from the failure to obtain such consent.

          (e) Each of the Purchaser and the Seller shall promptly
notify  the other of  any complaints, investigations or  hearings
(or  communications indicating that the same may be contemplated)
from  or  by  any  Governmental Authorities with respect  to  the
transactions  contemplated  hereby or   the  institution  or  the
threat of litigation involving this Agreement or the transactions
contemplated hereby.

     Section 6.05. Pending  and  Upcoming  Rate  Proceedings. The
Company   and  its  subsidiaries  currently  have  pending   rate
proceedings  in  FERC  Docket Nos. PR96-2  (Traditional  System),
PR96-7 (Anadarko System) and TRC Docket No. 8457 with respect  to
transportation service under Section 311.  From the execution  of
this  Agreement by the Seller until the Closing, the Seller shall
cause  the  Company and its subsidiaries to use all  commercially
reasonable  efforts  to  obtain approval for  the  maximum  rates
requested  in such proceedings and to prevail in such litigation.
Notwithstanding the foregoing, the Seller reserves the  right  to
permit  the  Company  and  its subsidiaries  to  agree  with  the
appropriate  Governmental Authorities or other  parties,  at  any
time  prior  to the Closing,  to settle all or any  part  of  the
issues  in  such proceedings or litigation, including any  issues
regarding the appropriate maximum rate, fuel component,  rate  of
return  or other cost of service or rate design aspect,  when  in
the  sole judgment of the Company or such subsidiary, such action
is  in  the best interests of the Company or such subsidiary  and
could  not  reasonably  be expected to have  a  Material  Adverse
Effect on the Company.

     Section 6.06 Preparation and Filing of Tax Returns; Payment of
Taxes.

          (a)  With respect to each Tax Return covering a taxable
period  ending on or before the Closing Date that is required  to
be  filed after the Closing Date for, by or with respect  to  the
Company  or  any subsidiary of the Company (other  than  the  Tax
Returns described in subsection (c) of this Section), the  Seller
shall  cause  such Tax Return to be prepared, shall cause  to  be
included  in  such  Tax Return all items of income,  gain,  loss,
deduction  and credit or other items (collectively  "Tax  Items")
required  to be included therein, and shall deliver the  original
of  such  Tax Return to the Purchaser at least thirty  (30)  days
prior  to the due date (including extensions) of such Tax Return.
If  the  amount  of the Tax shown to be due on  such  Tax  Return
exceeds the amount of the Closing Date Tax Accrual for such  Tax,
the  Seller shall pay to the Purchaser the amount of such  excess

not  less  than five (5) days prior to the due date of  such  Tax
Return.   If  the amount of the Tax shown to be due on  such  Tax
Return  is  less than the amount of the Closing Date Tax  Accrual
for such Tax, the Purchaser shall pay to the Seller the amount of
such difference not less than five (5) days prior to the due date
of such Tax Return.  The Purchaser shall cause the Company or the
respective  subsidiary to file timely such Tax  Return  with  the
appropriate taxing authority and to pay the amount of Taxes shown
to be due on such Tax Return.

          (b)  With respect to each Tax Return covering a taxable
period  beginning on or before the Closing Date and ending  after
the  Closing Date that is required to be filed after the  Closing
Date for, by or with respect to the Company or any subsidiary  of
the  Company (other than the Tax Returns described in  subsection
(c)  of  this Section), the Purchaser shall cause such Tax Return
to  be prepared and shall cause to be included in such Tax Return
all  Tax  Items  required to be included therein.  The  Purchaser
shall  determine,  subject to verification  by  the  Seller,  the
portion,  if  any,  of  the Tax due with respect  to  the  period
covered  by such Tax Return which is attributable to the  Company
or  the  respective subsidiary for a Pre-Closing Taxable  Period.
The determination of the portion of such Tax that is attributable
to the Pre-Closing Period shall be based, in the case of real and
personal property Taxes, on a per diem basis and, in the case  of
other  Taxes, on the actual activities, taxable income or taxable
loss  of  the Company and its subsidiaries during the Pre-Closing
Period and Post-Closing Period.  At least thirty (30) days  prior
to  the  due date (including extensions) of such Tax Return,  the
Purchaser shall deliver to the Seller a copy of such Tax  Return.
If  the  amount  of  Tax attributable to the Pre-Closing  Taxable
Period  exceeds  the amount of the Closing Date Tax  Accrual  for
such  Tax,  the Seller shall pay to the Purchaser the  amount  of
such excess Tax not less than five (5) days prior to the due date
of such Tax Return.  If the amount of Tax attributable to the Pre-
Closing  Taxable Period is less than the amount  of  the  Closing
Date  Tax  Accrual for such Tax, the Purchaser shall pay  to  the
Seller the amount of such difference not less than five (5)  days
prior  to  the due date of such Tax Return.  The Purchaser  shall
cause  the  Company or the respective subsidiary to  file  timely
such Tax Return with the appropriate taxing authority and to  pay
timely  the  amount of Taxes shown to be due on such Tax  Return.
For  purposes  of  this subsection, (i) any Texas  franchise  Tax
imposed  on the Taxable Earned Surplus of the Company or  any  of
its  subsidiaries  which  is determined  with  reference  to  the
federal  taxable income of the Company or any of its subsidiaries
for  the  period up to and including the Closing  Date  shall  be
treated as attributable to a Pre-Closing Taxable Period, and (ii)
any  state  income or franchise Tax (other than  Texas  franchise
Tax)  which  is imposed on the Company or any of its subsidiaries
in  a  Post-Closing Taxable Period and is determined by reference
to  federal taxable income of a Pre-Closing Taxable Period of the
Company   or  any  of  its  subsidiaries  shall  be  treated   as
attributable to a Pre-Closing Taxable Period.

          (c)      The Seller shall cause to be included in the
consolidated federal income Tax Returns (and the state income Tax
Returns  of  any  state in which the Seller  files  consolidated,
combined  or  unitary income Tax Returns)  of the Seller's  Group
for  all periods ending on or before or which include the Closing
Date, all Tax Items of the Company and its subsidiaries which are
required  to be included therein, shall file timely all such  Tax
Returns  with  the appropriate taxing authorities and  shall  pay
timely all Taxes due with respect to the periods covered by  such
Tax Returns.

          (d) The Seller shall be responsible for the payment of all
state  and  local  transfer, sales, use or  other  similar  taxes
resulting from the transactions contemplated by this Agreement.

          (e) From time to time prior to the Closing Date, the Seller
shall  have  the  right  to  cause the  Company  or  any  of  its
subsidiaries  to  pay to the IRS or the applicable  state  taxing
authority  (or  to the Seller or another member of  the  Seller's
Group  as  agent  for the payment of such Tax)  such  amounts  on
account  of  the  Company's  and  the  subsidiaries'  shares   of
consolidated  federal income Tax liability and any  consolidated,
combined  or  unitary state income Tax liability of the  Seller's
Group  for the 1996 taxable year as are consistent with  any  tax
sharing  agreements, arrangements, policies or  guidelines  ("Tax
Sharing  Agreements") that may exist between the Company  or  any
subsidiary of the Company, on the one hand, and the Seller or any
other  Affiliate  of  the Seller, on the  other.   All  such  Tax
Sharing Agreements will be terminated and any obligations to make
payments  under  them shall be canceled as of the  Closing  Date.
Any  and  all payments then remaining due under those Tax Sharing
Agreements shall be made prior to their termination.

     Section 6.07. Access to Information.   From  and  after  the
Closing:

          (a) The Seller and each member of the Seller's Group shall
grant  to  the  Purchaser  (or  its  designees)  access  at   all
reasonable  times  to all of the information, books  and  records
relating   to  the  Company  and  its  subsidiaries  within   the
possession  of  the  Seller or any member of the  Seller's  Group
(including   work   papers   and   correspondence   with   taxing
authorities),  and  shall  afford  to  the  Purchaser   (or   its
designees)  the  right  (at  the  Purchaser's  expense)  to  take
extracts  therefrom  and to make copies thereof,  to  the  extent
reasonably  necessary  to  permit the Purchaser  or  any  of  its
Affiliates (or its designees) to prepare Tax Returns, to  conduct
negotiations  with Tax authorities, to fulfill an  obligation  to
any  Governmental Authority imposed by Law, Regulation  or  Order
and  to  implement the provisions of, or to investigate or defend
any claims between the parties arising under, this Agreement.

          (b) The Purchaser shall grant or cause the Company and its
subsidiaries to grant to the Seller or any of its Affiliates  (or
its  designees)  access at all reasonable times  to  all  of  the
information,  books and records relating to the Company  and  its
subsidiaries within the possession of the Purchaser, the  Company
or  its  subsidiaries (including work papers  and  correspondence
with taxing authorities), and shall afford to the Seller (or  its
designees)  the right (at the Seller's expense) to take  extracts
therefrom  and  to make copies thereof, to the extent  reasonably
necessary to permit the Seller (or its designees) to prepare  Tax
Returns, to conduct negotiations with Tax authorities, to fulfill
an  obligation  to  any Governmental Authority  imposed  by  Law,
Regulation  or Order and to implement the provisions  of,  or  to
investigate  or  defend any claims between  the  parties  arising
under, this Agreement or otherwise.

          (c) Each of the parties hereto will preserve and retain all
schedules,  work papers and other documents relating to  any  Tax
Returns  of  or  with  respect to  the  Company  or  any  of  its
subsidiaries  or  to  any  claims, audits  or  other  proceedings
affecting  the  Company  or  any of its  subsidiaries  until  the
expiration  of the statute of limitations (including  extensions)

applicable  to the taxable period to which such documents  relate
or  until the final determination of any controversy with respect
to  such taxable period, and until the final determination of any
payments that may be required with respect to such taxable period
under this Agreement.

          (d)  Notwithstanding the foregoing provisions of this
Section, neither party hereto shall be required to grant or cause
to  be  granted  to  the other access to information,  books  and
records  or  to  furnish  extracts  or  copies  thereof  if  such
information, books and records also include information regarding
such party or any of its Affiliates.  In such circumstances, such
party  shall either  provide appropriately detailed summaries  of
the  information contained therein or , in providing extracts  or
copies thereof, redact the information relating to such party  or
its Affiliates.

     Section 6.08.  Employees and Employee Benefit Plans.

          (a) Effective as of the Closing, the Seller shall cause the
Company  to withdraw as a participating employer from all Benefit
Plans other than any Benefit Plans as to which the Company is the
sole sponsoring entity.

          (b) Effective as of the Closing, the Seller shall cause
each employee of the Company on the Closing Date (the "Continuing
Employees")  who is a participant in the Central and  South  West
System Pension Plan (the  "CSW Pension Plan") on the Closing Date
to  become  100%  vested  in his accrued benefit  under  the  CSW
Pension  Plan  as  of  the Closing and shall  cause  the  accrued
benefits  of the Continuing Employees under the CSW Pension  Plan
to  be  distributed to such Continuing Employees pursuant to  the
terms and provisions of the CSW Pension Plan as if the Continuing
Employees  had  terminated employment for  purposes  of  the  CSW
Pension Plan as of the Closing.  Effective as of the Closing, the
Purchaser  shall  take all action necessary  and  appropriate  to
extend  coverage under a new or existing defined benefit  pension
plan  (the  "Purchaser's Pension Plan") qualified  under  section
401(a)  of  the  Code  to  the  Continuing  Employees  who   were
participants  in  the  CSW  Pension Plan  at  the  Closing.   The
Continuing  Employees shall be credited with  service  under  the
Purchaser's  Pension Plan, for eligibility, vesting, and  accrual
of  benefit purposes, with the service credited to them for  such
purposes  under  the  CSW Pension Plan as of  the  Closing.   The
Continuing Employees' benefits under the Purchaser's Pension Plan
shall  be  reduced  by the actuarial equivalent  of  the  pension
benefit paid or payable to such Continuing Employees from the CSW
Pension  Plan.   In making such reduction, the  pension  paid  or
payable  under each plan shall be determined under the provisions
of  each  plan  as if payable at normal retirement  date  in  the
normal form; provided, however, that the pension benefit paid  or
payable  under  the CSW Pension Plan in the normal  form  at  the
normal  retirement  date shall be converted to  the  normal  form
under   the   Purchaser's  Pension  Plan  using   the   actuarial
assumptions under the Purchaser's Pension Plan.  The net  pension
payable  under  the  Purchaser's  Pension  Plan  shall  then   be
actuarially  adjusted in accordance with the  provisions  of  the
Purchaser's Pension Plan for the actual time and form of payment.

          (c) Effective as of the Closing, the Purchaser shall take
all  action necessary and appropriate to extend coverage under  a
new  or  existing  defined contribution  plan  (the  "Purchaser's
Savings Plan") qualified under section 401(a) of the Code to  the

Continuing  Employees who have account balances under the Central
and South West System Thrift Plus Plan (the "CSW Thrift Plan") at
the  Closing.   The Continuing Employees shall be  credited  with
service  under the Purchaser's Savings Plan, for eligibility  and
vesting  purposes, with the service credited to  them  under  the
terms  of  the  CSW Thrift Plan as of the Closing.   As  soon  as
practicable following the Closing, the Seller shall cause  to  be
transferred  from  the  trustee of the CSW  Thrift  Plan  to  the
trustee of the Purchaser's Savings Plan an amount in cash  or  in
kind  (with any in kind transfers to be agreed upon by the Seller
and   the  Purchaser,  except  that  it  is  hereby  agreed  that
participant  loans  shall  be  transferred  in  kind;   provided,
however, that any loan repayments shall be applied to investments
available  under  the  Purchaser's Savings  Plan)  equal  to  the
aggregate  account  balances (both vested and  unvested)  of  the
Continuing Employees under the CSW Thrift Plan determined  as  of
the transfer date (which shall be a valuation date) in accordance
with  the methods of valuation set forth in the CSW Thrift  Plan.
From  and  after  the date of such transfer, the Purchaser  shall
cause  the Purchaser's Savings Plan to assume the obligations  of
the  CSW Thrift Plan  with respect to the benefits accrued by the
Continuing  Employees  under the CSW Thrift  Plan,  and  the  CSW
Thrift Plan shall cease to be responsible therefor.

          (d) Except as provided in subsections (e), (f), and (j) of
this  Section, claims for benefits under welfare plans,  as  such
term  is  defined  in Section 3(1) of ERISA, in which  Continuing
Employees  participate arising out of occurrences  prior  to  the
Closing  shall be covered by the applicable welfare plan  of  the
Seller  in  accordance with the terms of  such  plan.   All  such
claims  for  benefits  by  Continuing Employees  arising  out  of
occurrences  subsequent to the Closing shall be  covered  by  the
applicable welfare plan of the Purchaser in accordance  with  the
terms  of  such  plan.   Neither the Purchaser  nor  any  of  its
subsidiaries  shall  be  liable for  payment  of  any  disability
benefit  due  to  disabled  employees  of  the  Company  or   its
subsidiaries  or Continuing Employees who, prior to the  Closing,
are  in the waiting or qualifying period for disability benefits.
After the Closing, the Seller shall be responsible for disability
benefits  payable  to such persons under the Seller's  disability
plan.

          (e) Claims for medical, dental, prescription drug, vision,
and  employee  assistance plan benefits by  Continuing  Employees
with respect to purchases or services or treatment rendered prior
to the Closing shall be covered by the applicable welfare plan of
the Seller in accordance with the terms of such plan.  Claims for
such  benefits by Continuing Employees with respect to  purchases
or services or treatment rendered on or subsequent to the Closing
shall  be covered by the applicable welfare plan of the Purchaser
in  accordance with the terms of such plan.  The Purchaser  shall
cause  the  Continuing Employees to be granted credit  under  the
welfare   plan  of  the  Purchaser  providing  medical,   dental,
prescription drug, vision, and employee assistance plan coverage,
for the year during which the Closing occurs, for any deductibles
already incurred by such Continuing Employees for such year under
the  welfare plan of the Seller providing such coverage, and  the
Purchaser  shall  cause  to  be waived  any  eligibility  waiting
periods and pre-existing condition restrictions under the welfare
plans  of  the  Purchaser  to  the extent  necessary  to  provide
immediate  coverage under such welfare plans as  of  the  Closing
(but  only  to  the extent that coverage was provided  under  the
applicable  welfare  plan of the Seller).   The  Purchaser  shall
provide   the   Continuing  Employees   (and   their   respective
beneficiaries)  with medical benefits sufficient to  satisfy  the
obligations of the Seller under Section 4980B(f) of the Code with
respect to such Continuing Employees so that the Seller will  not
incur any tax under Section 4980B of the Code.

          (f) Effective as of the Closing, the Purchaser shall, or
shall  cause  the  Company  to, take  all  action  necessary  and
appropriate  to  extend coverage under a new or  existing  health
care  spending account plan (the "Purchaser's Health Care  Plan")
to  the  Continuing  Employees.  A Continuing Employee  shall  be
considered  to  have  an  account balance under  the  Purchaser's
Health Care  Plan following the Closing  that is the same as such
Continuing Employee's account balance under the Central and South
West  System Health Care Reimbursement Plan (the "CSW Health Care
Plan")  immediately prior to the Closing, and  the  elections  in
effect  for the year in which the Closing Date occurs  under  the
CSW Health Care Plan shall remain in effect under the Purchaser's
Health Care Plan for the remainder of such year unless changed as
a  result  of a change in family status.  As of the Closing,  the
positive and negative balances of the Continuing Employees  under
the  CSW  Health Care Plan shall be netted.  To the  extent  that
there  is  a  net positive balance, claims under the  Purchaser's
Health  Care  Plan following the Closing shall be paid  from  the
Central  and  Southwest  System Voluntary Employees'  Beneficiary
Association  (the "CSW VEBA") until such balance  is  eliminated.
Thereafter, all such claims shall be paid by the Company.  To the
extent  that  there is a net negative balance as of the  Closing,
the  Company shall make a contribution to the CSW VEBA as  of  or
before  the  Closing  equal  to the net  negative  balance.   For
purposes  of  this  paragraph,  a Continuing  Employee  shall  be
considered to have a positive balance in such employee's  account
as  of  the  Closing if the amounts that have been withheld  from
such  Continuing Employee's compensation during the year in which
the  Closing occurs, pursuant to the CSW Health Care Plan,  prior
to   the  Closing,  exceeded  disbursements  on  such  Continuing
Employee's  behalf  from the CSW Health Care Plan  prior  to  the
Closing  for such year's claims.  A Continuing Employee shall  be
considered   to  have  a  negative  balance  in  such  Continuing
Employee's account as of the Closing if the disbursements on such
Continuing Employee's behalf from the CSW Health Care Plan  prior
to  the  Closing for the year in which the Closing occurs exceeds
the   amounts  that  have  been  withheld  from  such  Continuing
Employee's  compensation during such year, pursuant  to  the  CSW
Health Care Plan, prior to the Closing.

          (g) Effective as of the Closing, the Purchaser shall, or
shall  cause  the  Company  to, take  all  action  necessary  and
appropriate to extend coverage under a new or existing  dependent
care  spending  account  plan  (the "Purchaser's  Dependent  Care
Plan") to the Continuing Employees.  A Continuing Employee  shall
be  considered  to have an account balance under the  Purchaser's
Dependent  Care Plan following the Closing that is  the  same  as
such Continuing Employee's account balance under the Central  and
South  West  System  Dependent Care  Assistance  Plan  (the  "CSW
Dependent Care Plan") immediately prior to the Closing,  and  the
elections in effect for the year in which the Closing Date occurs
under  the  CSW Dependent Care Plan shall remain in effect  under
the  Purchaser's  Dependent Care Plan for the remainder  of  such
year  unless   changed as a result of a change in family  status.
To  the extent that there are amounts held in the CSW VEBA as  of
the Closing attributable to a Continuing Employee's participation
in  the  CSW  Dependent Care Plan, claims under  the  Purchaser's
Dependent Care Plan following the Closing shall be paid from  the
CSW  VEBA until such amounts are depleted.  Thereafter, all  such
claims shall be paid by the Company.

          (h) For a period of one year following the Closing Date,
the Purchaser shall, or shall cause the Company to, establish and
manage a severance benefit plan to cover the Continuing Employees
with  such  severance  benefit being  a  severance  benefit  plan

substantially  similar  to  the Central  and  South  West  System
Severance  Benefit  Plan,  effective  July  1,  1995  (the   "CSW
Severance  Benefit  Plan").  For  purposes  of  such  plan,   any
restructuring,  reorganization,  or  other  position  elimination
involving  a  Continuing  Employee shall be  considered  approved
within  the  meaning of Section 2.1 of the CSW Severance  Benefit
Plan  and   service  with the Seller or any of its  subsidiaries,
including the Company, shall be taken into account.

          (i) Vacation entitlement accrued by Continuing Employees
for the year in which the Closing Date occurs under the Company's
vacation  policy  as  in  effect  as  of  the  Closing  shall  be
recognized  by  the  Purchaser  and  the  Company  following  the
Closing.   Service  with the Seller or any of  its  subsidiaries,
including  the Company, shall be taken into account for  purposes
of the Purchaser's vacation policy following the Closing.

          (j)   With respect to all employees who retired from
employment  with the Company prior to the Closing  and  who  have
been,  or  are  eligible  to  be, provided  with  post-retirement
medical,  dental, or life insurance coverage as  of  the  Closing
under  plans sponsored by the Seller or the Company,  the  Seller
shall assume or retain any and all liability with respect to  the
provision  of such coverages to such retired employees and  their
eligible  dependents on and after the Closing.  With  respect  to
all  Continuing  Employees who retire from  employment  with  the
Company  after the Closing and who have been, or are eligible  to
be,   provided  with  post-retirement  medical,  dental  or  life
insurance as of the Closing under plans sponsored by the  Company
or  the  Seller, the Purchaser shall assume any and all liability
with  respect to the provision of such coverages to such  retired
Continuing Employees and their eligible dependents on  and  after
the  Closing (up to a present benefit obligation of $3.2 million,
computed  using  the  actuarial assumptions of  the  CSW  Pension
Plan).

          (k) Claims for workers compensation benefits for Continuing
Employees  arising out of occurrences prior to the Closing  shall
be   the  responsibility  of  the  Seller.   Claims  for  workers
compensation  benefits for Continuing Employees  arising  out  of
occurrences subsequent to the Closing shall be the responsibility
of the Purchaser.

          (l) Nothing herein shall be deemed or construed  to give
rise to any rights, claims, benefits, or causes of action to  any
Continuing Employee or any other Person, except the Seller or  to
prevent, restrict, or limit the Purchaser or the Company and  its
subsidiaries following the Closing from modifying or  terminating
its  pension  or other benefit plans, programs, or policies  from
time  to  time  as  it  may  deem appropriate,  subject  only  to
compliance with the express provisions of subsections (a) through
(k) of this Section for the benefit of the Seller.

     Section 6.09.  Working Capital Contribution.  Effective as of the
Closing,  the  Seller shall cause  the purchase  agreement  dated
January  2,  1991,  between  the Company  and  CSW  Credit,  Inc.
pursuant   to  which  the  Company  factors  its  trade  accounts
receivable  to  CSW Credit, Inc. to be amended to  terminate  the
factoring of accounts receivable of the Company arising after the
Closing,    the  Company's  intercompany  payable  or  receivable
balance, as the case may be, in the CSW Money Pool to be forgiven
in  full resulting in a capital contribution (or resulting  in  a
distribution), and (c) to be assigned (without recourse)  to  the

Company, as a capital contribution, the right, title and interest
in  and  to  the  amount of current accounts receivable  balances
existing as of the Closing that are required to bring the Working
Capital  of  the Company as of the Closing to zero (after  giving
effect  to  clause (b) of this Section and Section  6.10(a))  and
that  have  been  factored by the Company  to  CSW  Credit,  Inc.
pursuant to such purchase agreement.

     Section 6.10. Intercompany Accounts; Post-Closing Relationships;
Closing Covenants.

          (a) Except for the Company's intercompany payable or
receivable  balance, as the case may be, in the  CSW  Money  Pool
(which is specifically addressed in Section 6.09), and except for
those  accounts  set  forth in Section 6.10(a)  of  the  Seller's
Disclosure Letter, the Seller, effective as of the Closing,  will
cause  all  intercompany accounts (including those pertaining  to
all  income  taxes) between the Company and its subsidiaries,  on
the  one hand, and the Seller and its Affiliates (other than  the
Company  and  its  subsidiaries), on the other,  to  be  paid  or
otherwise satisfied.

          (b) Effective as of the Closing, the only obligations of
the Company and its subsidiaries to the Seller and its Affiliates
(other  than the Company and its subsidiaries) and of the  Seller
and  its Affiliates (other than the Company and its subsidiaries)
to  the  Company and its subsidiaries shall be those  obligations
expressly set forth in the contracts listed in Section 6.10(b) of
the   Seller's  Disclosure  Letter,  irrespective  of  any  prior
relationships,  arrangements, business practices  or  courses  of
dealing  and any forecasts, estimates or projections  related  to
the subject matter of such contracts.

          (c) The Seller agrees to assign to the Company, at or prior
to  the  Closing, the confidentiality agreements with  all  other
prospective purchasers of the Company.

          (d) At the Purchaser's request, the Seller agrees to
provide  the  transition services described in Annex  B  to  this
Agreement  to  the  Company  until April  15,  1997  at  a  level
sufficient  to  effect  a smooth transfer of  the  ownership  and
operation of the Company by the Seller to the Purchaser, and  the
Purchaser  agrees  to pay the Seller the cost  of  such  services
(consistent  with the payment for similar services  made  in  the
past  under  that certain agreement among Central and South  West
Services, Inc., the Company and certain Affiliates of the Company
dated August 18, 1988).

          (e) As of the Closing, the Seller shall cause the Company
and   its   subsidiaries  to  have  no  outstanding   long   term
indebtedness  for borrowed money which would be  required  to  be
reflected under GAAP in the consolidated financial statements  of
the  Company  as of the Closing, other than any such indebtedness
reflected in the Consolidated Financial Statements and  the  debt
secured by the real estate mortgages disclosed in Section 4.07(a)
of the Seller's Disclosure Letter.

          (f)  The Seller agrees to use commercially reasonable
efforts to cooperate with the Company and its subsidiaries  after
the  Closing  in  making and prosecuting claims  under  insurance
policies and programs of the Seller and its Affiliates that cover
the  Company and its subsidiaries.  The insurance trust of  which
the   Seller  is  a  member  under  the  Trust  Agreement   dated
November 1, 1990 (the "Trust"), will continue to process, respond
to,  defend,  and pay claims received prior to the Closing.   The

Company  and  its subsidiaries will process, respond to,  defend,
and  pay  claims made after the Closing; provided, however,  that
the  Company and its subsidiaries after the Closing will continue
to   be  entitled  to  make  claims  against  insurance  policies
purchased by the Trust prior to the Closing in which the  Company
and its subsidiaries are named as insureds in accordance with the
terms  of such policies so long as such insurance policies remain
in  effect,  but the Company and its subsidiaries will  not  make
claims  against the Trust or Trust assets for claims  made  after
the  Closing.  The Seller shall cause no premiums or  assessments
to  be  due and payable from the Company and its subsidiaries  to
the  Trust (and no distributions or refunds to be due and payable
from  the  Trust to the Company and its subsidiaries)  after  the
Closing.

          (g) Prior to or at the Closing the Seller shall enter into,
or  cause  Public Service Company of Oklahoma to enter  into,  an
agreement  providing  for the indemnity to the  Company  and  its
subsidiaries described in the seventh paragraph of Note 10 to the
Consolidated  Financial Statements as such indemnity  relates  to
the claims against the Company or such subsidiaries described  in
such  paragraph  or similar claims against the  Company  or  such
subsidiaries made subsequent to December 31, 1995 that relate  to
events  occurring or circumstances existing prior to the Closing.
Such agreement shall contain terms similar to those set forth  in
Sections 8.02(e) and (f) regarding the defense and settlement  of
claims,  but  in  any  event  shall  be  in  form  and  substance
reasonably acceptable to the Purchaser.

     Section 6.11. Estimated Purchase Price.  At least three (3) days
prior  to the Closing, the Seller in good faith shall prepare  in
reasonable  detail  and  deliver to  the  Purchaser  a  statement
setting forth the Seller's calculations with respect to its  best
estimation  of the Purchase Price, including its best  estimation
of the amount of Working Capital of the Company as of the Closing
(the "Estimated Purchase Price").

     Section 6.12. Determination of Final Purchase Price.  As soon as
reasonably  practicable and in any event within sixty  (60)  days
following the Closing Date, the Purchaser shall cause the Company
to  prepare  and deliver to the Seller a statement setting  forth
the   Purchaser's   calculation  (the   "Final   Purchase   Price
Calculation")  of the final purchase price (the  "Final  Purchase
Price"),  including the actual amount of Working Capital  of  the
Company  as  of  the  Closing and, if the  Final  Purchase  Price
differs  from the Estimated Purchase Price, the reasons  therefor
in reasonable detail.  The Final Purchase Price Calculation shall
contain  sufficient  detail to enable the Seller  to  relate  the
calculations  contained therein to the books and records  of  the
Company  and  its  subsidiaries.  The Purchaser shall  cause  the
Company  to make available to the Seller all information  in  the
possession   of  the  Company  and  its  subsidiaries  reasonably
required  for  the Seller  to verify whether the  Final  Purchase
Price  Calculation  is  correct.   Within  forty-five  (45)  days
following  the delivery of the Final Purchase Price  Calculation,
the  Seller shall notify the Purchaser whether it agrees with the
Final Purchase Price Calculation; provided, however, that, if the
Seller   shall fail so to notify the Purchaser within such forty-
five (45) day period, it shall be deemed to have agreed with  the
Final  Purchase Price Calculation.  If the Seller shall  disagree
with  the  Final Purchase Price Calculation, the Seller  and  the
Purchaser  shall  endeavor in good faith to agree  on  the  Final
Purchase  Price but, if they shall not agree within  thirty  (30)
days  following the Seller's notice to the Purchaser, either  the
Purchaser  or  the Seller may cause the issues in dispute  to  be
referred for resolution to Price Waterhouse L.L.P. (or such other
firm  of independent public accountants as the Purchaser and  the
Seller  may mutually designate), and the Seller and the Purchaser

shall  cooperate, and the Purchaser shall cause the  Company  and
its  subsidiaries  to  cooperate, with such firm  of  independent
public  accountants  by  making  available  to  that  firm   such
information,  books and records and such personnel as  such  firm
may  reasonably  request.  The costs of such firm of  independent
public  accountants shall be borne equally by the  Purchaser  and
the   Seller.  The  Purchaser  and  the  Seller  shall  use   all
commercially reasonable efforts to cause such firm of independent
public  accountants  to  examine the books  and  records  of  the
Company  and  its subsidiaries, as well as any other  information
that  such firm may reasonably conclude is necessary to make such
determination, and to make a determination with respect  to  such
issues within sixty (60) days following the date such issues  are
referred  to  them.  Any such determination shall  be  final  and
binding  on  the Purchaser and the Seller and may be enforced  by
appropriate  judicial or other proceedings.  The  Final  Purchase
Price  shall  then be calculated by the Seller and the  Purchaser
based on those matters as to which they are in agreement and  the
determination by the independent public accountants as  to  those
matters,  if any, as to which they did not agree.  If  the  Final
Purchase  Price  as so determined (whether by  agreement  of  the
parties  or  determination  by  accountants)  shall  exceed   the
Estimated Purchase Price, the Purchaser shall pay the Seller  the
amount of such excess plus interest thereon from the Closing Date
until  paid at a rate equal to the base or reference rate  quoted
from  time to time by the Bank, but, if the Final Purchase  Price
as so determined shall be less than the Estimated Purchase Price,
the  Seller shall pay the Purchaser the amount of such  shortfall
plus  interest thereon from the Closing Date until paid at a rate
equal  to the base or reference rate quoted from time to time  by
the  Bank, such payment in either case to be made within five (5)
days  following  the  final determination of the  Final  Purchase
Price.

     Section 6.13. Public   Announcements.   Except  as   otherwise
required  by Law or the New York Stock Exchange, the  Seller  and
the  Purchaser shall consult with each other before  issuing  any
press  release  or  otherwise making any public  statements  with
respect  to  this  Agreement  and the  transactions  contemplated
hereby  and  shall not issue any such press release or  make  any
such  public  statement  prior to such consultation.   The  press
release  announcing the execution and delivery of this  Agreement
shall be a joint press release of the Seller and the Purchaser.

     Section 6.14. Confidentiality.  After the Closing,  the  Seller
will  not,  and will not permit its Affiliates which it  controls
(excluding  the  Company and its subsidiaries)  to,  disclose  or
provide  to  any other Person any material non-public information
of a confidential nature concerning the business or operations of
the  Company  or  its subsidiaries, except as  required  by  Law,
Regulation or Order.

     Section 6.15. Acquisition Proposals.  From the execution of this
Agreement  by the Seller until the Closing or the termination  of
this Agreement in accordance with its terms, the Seller will not,
and  will cause its officers, directors, employees or agents  not
to, directly or indirectly,  take any action to solicit, initiate
or  encourage  any  proposal regarding  the  acquisition  of  the
Company  or  its  assets by merger or otherwise or  ,  except  as
required  by  Law,  Regulation or Order, engage  in  negotiations
with,  or  disclose any non-public information  relating  to  the
Company, or afford access to its properties, books or records  to
any  Person that has made or, to the Knowledge of the Seller, may
be considering making an acquisition proposal.

                          ARTICLE VII.
                    
                    CONDITIONS TO THE CLOSING

     Section 7.01. Conditions  to Obligations of  Each  Party.   The
obligations  of  each  party  to this  Agreement  to  effect  the
transactions contemplated hereby to occur at the Closing shall be
subject  to the satisfaction or, to the extent permitted by  Law,
waiver of each of the following conditions:

          (a) All requirements of any applicable Law, Regulation or
Order  necessary  for the valid consummation of the  transactions
contemplated  herein  to  occur at the Closing  shall  have  been
fulfilled  (including  the  termination  or  expiration  of   the
applicable  waiting period under the HSR Act),  and  all  filings
required  to  be made with any Governmental Authority  under  any
applicable Law, Regulation or Order (including the filing of  the
Certificate of Merger) and all Permits and Orders required to  be
obtained  from  any  Governmental Authority or  Court  under  any
applicable  Law, Regulation or Order, in each case, in  order  to
permit the Seller or the Purchaser to consummate the transactions
contemplated hereby to occur at the Closing shall have been  made
or  obtained  (other than any requirement the  nonfulfillment  of
which  and any Permit or Order the nonreceipt of which could  not
reasonably be expected to have a Material Adverse Effect  on  the
Seller, the Purchaser or the Company); and

          (b)  No temporary restraining order, preliminary or
permanent  injunction  or other Order  issued  by  any  Court  of
competent  jurisdiction  preventing  the  consummation   of   the
transactions contemplated hereby to occur at the Closing shall be
in effect.

     Section 7.02.  Conditions  to Obligation of the Purchaser.   The
obligation   of   the  Purchaser  to  effect   the   transactions
contemplated hereby to occur at the Closing shall be  subject  to
the  satisfaction or, to the extent permitted by Law,  waiver  of
each of the following conditions:

          (a) The representations and warranties of the Seller set
forth in this Agreement shall be true and correct in all material
respects as of the execution of this Agreement by the Seller  and
(except  to the extent such representations and warranties  speak
as of an earlier date) as of the Closing as though made at and as
of   the  Closing  and  the  Purchaser  shall  have  received   a
certificate  signed on behalf of the Seller by the  president  or
any  vice  president and by the chief financial  officer  of  the
Seller  to such effect (except the representations and warranties
set  forth in Sections 4.07, 4.08 and 4.09 insofar as they relate
to the Palo Duro Pipeline);

          (b) The Seller shall have performed in all material
respects  all obligations required to be performed  by  it  under
this Agreement at or prior to the Closing Date, and the Purchaser
shall  have received a certificate signed on behalf of the Seller
by the president or any vice president and by the chief financial
officer of the Seller to such effect;

          (c) The Seller shall have furnished the Purchaser at the
Closing with certified copies of resolutions duly adopted by  the
Board  of  Directors  of  the Seller authorizing  the  execution,
delivery  and  performance of this Agreement and each  instrument
required hereby to be executed and delivered by the Seller at the
Closing;

          (d) There shall not be any action or proceeding pending or
threatened  (including  any investigation)  by  any  Governmental
Authority  to  restrain,  enjoin or invalidate  the  transactions
contemplated  herein  or to compel the Purchaser  to  divest  any
material  assets, which would, in the judgment of  the  Board  of
Directors of the Purchaser, made in good faith and based upon the
advice of counsel, involve expense or lapse of time or result  in
a  reconfiguration  of  the Purchaser's business  which  expense,
lapse  of  time  or  result would be materially  adverse  to  the
interests of the Purchaser;

          (e) The Purchaser shall have received from counsel to the
Seller  an  opinion  dated as of the Closing  Date  in  form  and
substance reasonably satisfactory to the Purchaser; and

          (f) The Purchaser shall have received at the Closing
resignations   of   all  directors  of  the   Company   and   its
subsidiaries.

     Section 7.03. Conditions  to  Obligation  of  the  Seller.  The
obligation  of the Seller to effect the transactions contemplated
hereby  to  occur  at  the  Closing  shall  be  subject  to   the
satisfaction or, to the extent permitted by Law, waiver  of  each
of the following conditions:

          (a) The representations and warranties of the Purchaser set
forth in this Agreement shall be true and correct in all material
respects  as of the execution of this Agreement by the  Purchaser
and  (except  to  the extent such representations and  warranties
speak as of an earlier date) as of the Closing as though made  at
and  as  of  the  Closing and the Seller shall  have  received  a
certificate signed on behalf of the Purchaser by the president or
any  vice  president and by the chief financial  officer  of  the
Purchaser to such effect;

          (b) The Purchaser shall have performed in all material
respects   all obligations required to be performed by  it  under
this  Agreement at or prior to the Closing Date, and  the  Seller
shall  have  received  a  certificate signed  on  behalf  of  the
Purchaser by the president or any vice president and by the chief
financial officer of the Purchaser to such effect;

          (c) The Purchaser shall have furnished the Seller at the
Closing with certified copies of resolutions duly adopted by  the
Board  of  Directors of the Purchaser authorizing the  execution,
delivery  and  performance of this Agreement and each  instrument
required hereby to be executed and delivered by the Purchaser  at
the Closing;

          (d) There shall not be any action or proceeding pending or
threatened  (including  any investigation)  by  any  Governmental
Authority  to  restrain,  enjoin or invalidate  the  transactions
contemplated  herein  or  to compel the  Seller  to   divest  any
material  assets, which would, in the judgment of  the  Board  of
Directors  of the Seller, made in good faith and based  upon  the
advice of counsel, involve expense or lapse of time or result  in
a  reconfiguration of the Seller's business which expense,  lapse
of time or result would be materially adverse to the interests of
the  Seller or  pay over any material amount of the proceeds from
the Merger;

          (e) The Seller shall have received from counsel to the
Purchaser  an opinion dated as of the Closing Date  in  form  and
substance reasonably satisfactory to the Seller; and

          (f) The Purchaser shall have delivered to the Seller at the
Closing  immediately available funds in an amount  equal  to  the
Estimated Purchase Price.

                        ARTICLE VIII.                               
                      
                      INDEMNIFICATION

     Section 8.01. Survival of Representations, Warranties, Covenants
and  Agreements.  The representations, warranties, covenants  and
agreements  of the parties contained in Articles II, III,  IV,  V
and  VI  (other than the representations and warranties contained
in  Sections  3.02,  3.06, 4.02(a), 4.08(c) (to  the  extent  the
representations and warranties set forth in such  Section  relate
to  the Palo Duro Pipeline), 4.09,  4.10, 4.11, 4.12, 4.16,  4.17
and  4.18  and the covenants and agreements contained in Sections
6.06,  6.07, 6.08, 6.10 and 6.14) shall survive both the  Closing
and  any  investigation by the parties with respect  thereto  but
shall terminate and be of no further force or effect on the first
anniversary  of the Closing.  The representations and  warranties
contained  in  Sections  4.09 and 4.11  shall  survive  both  the
Closing and any investigation by the parties with respect thereto
but  shall terminate and be of no further force and effect on the
second  anniversary  of  the Closing.   The  representations  and
warranties  contained in Section 4.12 shall survive  the  Closing
and  any investigation by the parties with respect thereto  until
the  tenth  anniversary of the Closing.  The representations  and
warranties  contained  in Sections 3.02, 3.06,  4.02(a),  4.08(c)
(except  to  the  extent the representations and  warranties  set
forth  in  such Section relate to the Palo Duro Pipeline),  4.16,
4.17  and  4.18  and  the covenants and agreements  contained  in
Sections  6.06,  6.07, 6.08, 6.10(a)-(f) and 6.14  shall  survive
both  the  Closing  and any investigation  by  the  parties  with
respect   thereto  until  the  expiration  of  the   statute   of
limitations  (including  any  and all  periods  of  extension  or
tolling thereof) applicable to actions on written contracts.  The
representations and warranties contained in Sections 4.08(c)  (to
the  extent the representations and warranties set forth in  such
Section  relate  to the Palo Duro Pipeline), and   4.10  and  the
covenants  contained in Section 6.10(g) shall  survive  both  the
Closing and any investigation by the parties with respect thereto
until the expiration of the statute of limitations (including any
and  all  periods of extension or tolling thereof) applicable  to
the   subject  matter  of  such  sections.   Notwithstanding  the
foregoing,   any  such  representation,  warranty,  covenant   or
agreement  as  to  which a bona fide claim  relating  thereto  is
asserted  in writing in accordance with Section 8.02 during  such
survival  period shall, with respect only to such claim,  survive
such  survival  period.   The covenants and  agreements  in  this
Article  VIII shall survive the Closing and shall remain in  full
force  and effect for such period as is necessary to resolve  any
bona   fide  claim  made  with  respect  to  any  representation,
warranty,  covenant  or  agreement contained  in  this  Agreement
during the survival period thereof.  The remaining covenants  and
agreements  of  the  parties hereto contained in  this  Agreement
shall  survive the Closing without any contractual limitation  on
the period of survival.

    Section 8.02. General Indemnification.

          (a) Subject to the limitations on survival contained in
Section 8.01, if the transactions contemplated hereby to occur at
the  Closing  are effected, each party hereto (the  "Indemnifying
Party")  hereby agrees, from and after the Closing, to  indemnify
and  hold  harmless  the  other party  hereto  (the  "Indemnified
Party")  against  any  losses,  claims,  damages  or  liabilities

("Losses") which such Indemnified Party shall actually incur,  to
the extent that such Losses (or actions, suits or proceedings  in
respect thereof and any appeals therefrom ("Proceedings")) (other
than any Losses subject to Section 8.03 herein):

               (i) arise out of or are based upon any allegation that any
representation or warranty made herein in Article III,  IV  or  V
for  the  benefit  of the Indemnified Party by  the  Indemnifying
Party is untrue or has been breached in any respect; or

               (ii) arise out of or are based upon any allegation that any
covenant  or  agreement  made  herein  for  the  benefit  of  the
Indemnified  Party  by  the  Indemnifying  Party  has  not   been
performed in accordance with its terms;

and will reimburse the Indemnified Party for any legal
or  other  expenses reasonably incurred by it in connection  with
investigating   or   defending  against  any   such   Losses   or
Proceedings.  Notwithstanding the foregoing,  except  for  Losses
resulting from breaches of Sections 3.02, 3.06, 4.02, 4.08(c) (to
the  extent the representations and warranties set forth in  such
Section  relate  to  the Palo Duro Pipeline), 4.10,  4.18,  4.19,
5.08,  6.06,  6.09, 6.10 and 6.12, the Indemnifying  Party  shall
(x) not be liable to the Indemnified Party under this Section for
any  Loss incurred by the Indemnified Party which does not exceed
$500,000,  and (y) be liable to the Indemnified Party under  this
Section only for the amount of Losses incurred by the Indemnified
Party  which  exceed  $10,000,000  in  the  aggregate;  provided,
however,  that  the  amount of such Losses that  are  subject  to
indemnification  hereunder shall not exceed  the  Final  Purchase
Price;  and  provided, further, that the Losses  incurred  by  an
Indemnified   Party  shall,  for  purposes  of  determining   the
threshold  level  thereof in accordance with  this  sentence  and
otherwise,  be  offset  by  (i) the amount  of  any  such  Losses
incurred by the Indemnifying Party jointly and severally with the
Indemnified  Party  to  the  extent  of  payments  made  by   the
Indemnifying  Party;  and  (ii) the  proceeds  of  any  insurance
received by the Indemnified Party with respect thereto.

          (b) Promptly after receipt by the Indemnified Party under
subsection  (a)  of  this Section of notice  of  a  Loss  or  the
commencement  of any Proceeding against which it believes  it  is
indemnified under this Section, the Indemnified Party shall, if a
claim  in  respect thereto is to be made against the Indemnifying
Party  under  this  Section,  notify the  Indemnifying  Party  in
writing of the commencement thereof; provided, however, that  the
omission so to notify the Indemnifying Party shall not relieve it
from any liability which it may have to the Indemnified Party  to
the  extent that the Indemnifying Party is not prejudiced by such
omission.

          (c) For purposes of determining whether an event, fact or
occurrence  constitutes a misrepresentation or a  breach  of  any
representation, warranty, covenant or agreement contained in this
Agreement  for  which indemnification can be or is  sought  under
this  Section,  as  used  in  any such representation,  warranty,
covenant or agreement, the terms "Material" and "Material Adverse
Effect" shall have the following meanings:

                      "Material"  shall  mean  material  to   the
condition  (financial  and  other),  results  of  operations   or
business  of  a  specified Person and its subsidiaries,  if  any,

taken  as  whole; provided that, without limiting  the  foregoing
definition,  the  parties acknowledge and agree that  any  amount
exceeding $500,000 is material; and

                     "Material  Adverse Effect"  shall  mean  any
change  or  effect  that  would  be  materially  adverse  to  the
consolidated   business,  condition  (financial  or   otherwise),
operations, performance or properties of a specified  Person  and
its  subsidiaries,  if  any, taken as  a  whole;  provided  that,
without   limiting   the   foregoing  definition,   the   parties
acknowledge  and  agree that any amount exceeding  $5,000,000  is
material in respect of Section 4.05 and that any amount exceeding
$500,000 is material in all other cases;

           provided  that the special purpose use  of  the  terms
"Material"  and "Material Adverse Effect" in this subsection  (c)
shall  be disregarded and given no effect in determining what  is
"material"  for  purposes  of  the  definitions  of  such   terms
contained  in  Annex A to this Agreement and how  they  are  used
elsewhere in this Agreement.

          (d) The Indemnifying Party shall, within thirty (30) days
after receipt of a notice of Loss or Proceeding given pursuant to
subsection (b) of this Section, either  acknowledge liability, as
between  the  Indemnifying Party and the Indemnified  Party,  for
such Loss or the amount in controversy in such Proceeding and pay
the  Indemnified Party the amount of such Loss or the  amount  in
controversy  in  such  Proceeding in cash  or  other  immediately
available  funds (or establish by agreement with the  Indemnified
Party  an  alternative payment schedule),  acknowledge liability,
as  between the Indemnifying Party and the Indemnified Party, for
such  Loss  or  the  amount in controversy  in  such  Proceeding,
disavow  the  validity of the Loss or Proceeding  or  the  amount
thereof  and, to the extent that it shall so desire in accordance
with  subsection  (d) of this Section, assume the  legal  defense
thereof,  or   object  (or  reserve the  right  to  object  until
additional   information   is  obtained)   to   the   claim   for
indemnification or the amount thereof, setting forth the  grounds
therefor in reasonable detail; provided that, if the Indemnifying
Party  objects (or reserves its right to object) within such  30-
day period as provided in this clause (iii), then the Indemnified
Party  may  bring suit (in the same Proceeding or  otherwise)  to
resolve  the  dispute  and,  pending  final  resolution  of  such
dispute,  the  Indemnified  Party  may  proceed  as  though   the
Indemnifying  Party had responded in accordance with  clause  (i)
above.   If  the  Indemnifying Party  does  not  respond  to  the
Indemnified Party as provided in this subsection within such  30-
day  period,  the  Indemnifying Party shall  be  deemed  to  have
acknowledged  its  liability for such  indemnification  claim  in
accordance with clause (i) of this subsection and the Indemnified
Party may exercise any and all of its rights under applicable law
to collect such amount.

          (e) If any such Proceeding shall be brought against an
Indemnified  Party  and  it shall notify the  Indemnifying  Party
thereof  in  accordance with subsection (c) of this Section,  the
Indemnifying  Party  shall, if it shall have  responded  to  such
notice  in accordance with clause (ii) of subsection (c) of  this
Section,  be  entitled to assume the legal defense  thereof  with
counsel reasonably satisfactory to the Indemnified Party.   After
notice  from the Indemnifying Party to the Indemnified  Party  of
its  election to assume the defense of such claim or such action,

the  Indemnifying  Party shall not be liable to  the  Indemnified
Party  under  this  Section  for any  attorney's  fees  or  other
expenses  (except reasonable costs of investigation) subsequently
incurred by the Indemnified Party in connection with the  defense
thereof. If the Indemnifying Party does not assume the defense of
a  Proceeding  as  to  which  it has acknowledged  liability,  as
between itself and the Indemnified Party, pursuant to clause (ii)
of  subsection  (c)  of this Section, the Indemnified  Party  may
require the Indemnifying Party to reimburse it on a current basis
for   its   reasonable  expenses  of  investigation,   reasonable
attorney's   fees  and  expenses  and  reasonable   out-of-pocket
expenses  incurred  in the defense thereof and,  subject  to  the
provisions  of  subsection (e) of this Section, the  Indemnifying
Party  shall be bound by the result obtained with respect thereto
by the Indemnified Party.

          (f) An Indemnifying Party will not, without the prior
written consent of the Indemnified Party (which consent shall not
be unreasonably withheld), settle or compromise or consent to the
entry  of  any judgment with respect to any pending or threatened
Proceeding  in  respect of which indemnification or  contribution
may be sought hereunder (whether or not the Indemnified Party  is
an  actual  or  potential party to such Proceeding)  unless  such
settlement,  compromise  or  consent  includes  an  unconditional
release  of the Indemnified Party from all liability arising  out
of  such Proceeding.  If the Indemnifying Party has responded  to
the Indemnified Party pursuant to clause (i) of subsection (c) of
this  Section, the Indemnified Party may settle or compromise  or
consent  to  the  entry  of  any judgment  with  respect  to  the
Proceeding  that  was the subject of notice to  the  Indemnifying
Party  pursuant  to  subsection (c) of this Section  without  the
consent of the Indemnifying Party.  An Indemnified Party will not
otherwise,  without the prior written consent of the Indemnifying
Party  (which consent shall not be unreasonably withheld), settle
or  compromise  or  consent to the entry  of  any  judgment  with
respect  to  any pending or threatened Proceeding, but,  if  such
Proceeding  is settled or compromised or if there is entered  any
judgment with respect to any such Proceeding, in either case with
the  consent of the Indemnifying Party, or if there  be  a  final
judgment   of   the   plaintiff  in  any  such  Proceeding,   the
Indemnifying  Party  agrees to indemnify and  hold  harmless  any
Indemnified  Party  from and against any  loss  or  liability  by
reason of such settlement, compromise or judgment.

          (g) From and after the Closing, except as provided in
Section  8.03, the provisions of this Section shall be  the  sole
and  exclusive remedy of each party hereto for any breach of  the
other   party's   representations,   warranties,   covenants   or
agreements  contained in this Agreement; provided, however,  that
each  party may seek specific performance by the other  party  of
the  agreements and obligations set forth in Sections 6.07,  6.13
and  6.14.  Notwithstanding anything in  this  Agreement  to  the
contrary,  in  no  event  shall any losses,  claims,  damages  or
liabilities  indemnified hereunder include any  consequential  or
punitive damages, except to the extent that such are awarded to a
third party in a proceeding against an indemnified party.

     Section 8.03. Tax Indemnification and Audits.

          (a) From and after the Closing, the Seller hereby agrees to
protect,  defend, indemnify and hold harmless the  Purchaser  and
the Company and its subsidiaries from and against, and agrees  to
pay, all:

               (i) Taxes of the Company or any subsidiary of the Company
attributable to any Pre-Closing Taxable Period (except for  Taxes
arising out of any transaction of the Company or its subsidiaries
not  in  the ordinary course of business occurring on the Closing
Date  but subsequent to the Closing), but only to the extent  the
amount of such Taxes exceeds the amount taken into account  as  a
liability for such Taxes in determining the Purchase Price;

               (ii) Taxes of any corporation (other than the Company
and  its  subsidiaries) that is or was a member of  the  Seller's
Group; and

               (iii) Taxes of the Company or any subsidiary of the 
Company attributable to the Section 338(h)(10) Elections made pursuant 
to Section 8.04.

          (b)  From and after the Closing, the Purchaser agrees to
protect, defend, indemnify and hold harmless the Seller from  and
against, and agrees to pay, all:

               (i) Taxes of the Company or any subsidiary of the 
Company attributable to any Post-Closing Taxable Period; and

               (ii) Taxes arising out of any transaction of the 
Company or its subsidiaries not in the ordinary course of business 
occurring on the Closing Date and after the Closing.

          (c) If a claim shall be made by any taxing authority that,
if  successful, would result in the indemnification  of  a  party
(the  "Tax  Indemnified  Party")  under  this  Section,  the  Tax
Indemnified  Party  shall promptly notify  the  party  (the  "Tax
Indemnifying  Party") obligated under this Section  to  indemnify
the  Tax  Indemnified  Party in writing of such  fact;  provided,
however,  that  the omission to so notify the Indemnifying  Party
shall not relieve it from any liability which it may have to  the
Indemnified  Party to the extent that the Indemnifying  Party  is
not prejudiced by such omission.

               (i) The Tax Indemnified Party shall take such action in
connection  with  contesting such claim as the  Tax  Indemnifying
Party  shall request in writing from time to time, including  the
selection  of counsel and experts and the execution of powers  of
attorney; provided that (a) within thirty (30) days after the notice
required  by this subsection has been delivered (or such  earlier
date  that  any  payment of Taxes is due by the  Tax  Indemnified
Party  but  in no event sooner than five (5) days after  the  Tax
Indemnifying   Party's   receipt  of  such   notice),   the   Tax
Indemnifying  Party requests that such claim  be  contested,  and
(b) the Tax Indemnifying Party shall have agreed to pay to the  Tax

Indemnified Party all costs and expenses that the Tax Indemnified
Party  incurs in connection with contesting such claim, including
reasonable  attorneys' and accountants' fees  and  disbursements.
The  Tax  Indemnified Party shall not make any  payment  of  such
claim  for  at least thirty (30) days (or such shorter period  as
may be required by applicable law) after the giving of the notice
required  by  this subsection, shall give to the Tax Indemnifying
Party  any  information requested relating  to  such  claim,  and
otherwise  shall  cooperate with the Tax  Indemnifying  Party  in
order   to   contest  effectively  any  such  claim.    The   Tax
Indemnifying Party shall determine the method of any  contest  of
such claim and shall control the conduct thereof.

             (ii) Subject to the provisions of paragraph (i) of this
subsection,  the  Tax  Indemnified  Party  shall  enter  into   a
settlement  of such contest with the applicable taxing  authority
or  prosecute such contest to a determination in a Court, all  as
the Tax Indemnifying Party may request.

             (iii) Promptly after the extent of the liability of the Tax
Indemnified Party with respect to a claim shall be established by
the  final  judgment or decree of a Court or a final and  binding
settlement  with  a  Governmental Authority  having  jurisdiction
thereof,  the  Tax  Indemnifying  Party  shall  pay  to  the  Tax
Indemnified  Party  the  amount of any Taxes  to  which  the  Tax
Indemnified Party may become entitled by reason of the provisions
of this Section.

          (d) Notwithstanding anything to the contrary in this
Section, any interest, penalties, fines, assessments or additions
to  Tax resulting from or attributable to the failure of the  Tax
Indemnified Party to act in a timely manner, including in  filing
Tax Returns, responding to Tax audit or other inquiries or making
payments  shall not be indemnifiable hereunder and shall  be  the
sole responsibility of the Tax Indemnified Party.

          (e) In addition to the provisions of this subsection (c) of
this  Section, if any proposed audit adjustments of a Pre-Closing
Taxable Period Tax Return could result in a tax adjustment for  a
Post-Closing Taxable Period, the Seller shall promptly inform the
Purchaser.   If the Seller elects not to contest the  adjustment,
the  Purchaser  shall  have the option, at  the  Purchaser's  own
expense,  to  contest the proposed adjustment in accordance  with
the provisions of subsection (c) of this Section.

          (f) In addition to the provisions of subsection (c) of this
Section,  if  any  proposed audit adjustments of  a  Post-Closing
Taxable Period Tax Return could result in an audit adjustment for
a Pre-Closing Taxable Period, the Purchaser shall promptly inform
the   Seller.   If  the  Purchaser  elects  not  to  contest  the
adjustment, the Seller shall have the option, at the Seller's own
expense,  to  contest the proposed adjustment in accordance  with
the provisions of subsection (c) of this Section.

          (g) Except for the indemnification provided in Section 8.02
for breach of any representation or warranty contained in Section
4.10 or any covenant or agreement contained in Section 6.06,  the
indemnification provided in this Section shall be the sole remedy
for  any  claim in respect of Taxes.  In the event of a  conflict
between  the provisions of this Section and any other  provisions
of  this Agreement, the provisions of this Section shall control.

The  limitations of Section 8.02 shall not apply to  any  amounts
for  which  a party is liable under this Section.  Any claim  for
indemnity under this Section must be made prior to the expiration
of  the applicable Tax statute of limitations with respect to the
relevant  taxable  period (including all periods  of  tolling  or
extension).

          (h) To the extent any determination of Taxes, whether as
the  result  of an audit or examination, a claim for refund,  the
filing  of an amended return or otherwise results in a refund  of
Taxes  paid  (a "Refund"),  the Seller shall be entitled  to  any
part of such Refund attributable to a Pre-Closing Taxable Period,
the  Purchaser  shall  be entitled to any  part  of  such  Refund
attributable to a Post-Closing Taxable Period, and  the Purchaser
and the Seller shall each be entitled to a Refund attributable to
a  taxable  period described in Section 6.06(b) in  the  portions
that  the  Purchaser  and the Seller originally  bore  any  Taxes
payable  with  respect to such taxable period.   Whichever  party
receives  such  Refund shall, within ten (10) days after  receipt
thereof,  pay such Refund, or any part thereof, and the  interest
received  thereon  to  the  party  entitled  thereto  under  this
subsection.

          (i) Any payment from the Purchaser to the Seller pursuant
to Section 6.06 or this Section shall be treated for Tax purposes
as  an  increase in the Purchase Price, and any payment from  the
Seller  to the Purchaser pursuant to Section 6.06 or this Section
shall  be treated for Tax purposes as a reduction in the Purchase
Price.

     Section 8.04. Section 338(h)(10) Elections.

          (a) The Seller, as the common parent of the Seller's Group,
and  the  Purchaser  shall make a joint  election  under  section
338(h)(10)  of  the  Code  and  a  similar  election  under   any
applicable state income tax law for the Company and for  each  of
the corporate subsidiaries (collectively, the "Section 338(h)(10)
Elections").   At the Closing, the Seller shall  deliver  to  the
Purchaser an Internal Revenue Service Form 8023-A and any similar
form  under  applicable state income tax law (the  "Forms")  with
respect  to  the Section 338(h)(10) Elections, which  shall  have
been  duly executed by an authorized person for the Seller.   The
Purchaser  shall  cause  the Forms to  be  duly  executed  by  an
authorized person for the Purchaser, shall complete any schedules
required  to  be attached thereto, shall provide a  copy  of  the
executed  Forms and schedules to the Seller, and the  Seller  and
the  Purchaser shall duly and timely file the Forms as prescribed
by  Treasury  Regulation   1.338(h)(10)-1  or  the  corresponding
provisions of applicable state income tax law.

          (b) The Purchaser shall select a firm of qualified
appraisers  to conduct an appraisal of the Company's assets  (the
"Appraisal"),  which selection must be approved  by  the  Seller,
such approval not to be unreasonably withheld. The Seller and the
Purchaser agree that the results of the Appraisal shall  be  used
to allocate the Purchase Price and liabilities of the Company and
its subsidiaries (plus other relevant items) to the assets of the
Company  and its subsidiaries for all purposes (including  United
States or any state, county or local government Tax purposes)  in
accordance  with  the  Code and applicable Treasury  Regulations.
Such  allocation of the Purchase Price shall be prepared  by  the
Purchaser  and  submitted in writing to the Seller within  ninety
(90)  calendar  days after the date on which the  Final  Purchase
Price  is  determined.  The Seller shall consent to such Purchase

Price  allocation  unless  such  Purchase  Price  allocation   is
unreasonable.  If the Seller does not object in writing  to  such
proposed  allocation  within  thirty  (30)  calendar  days  after
receipt  of  the  Purchaser's written proposal,  the  Purchaser's
proposed allocation shall become final and binding on the  Seller
and  the Purchaser.  If the Seller makes timely objection to  the
Purchaser's proposal, the Purchaser and Seller shall have  thirty
(30) calendar days to reach agreement or the allocation shall  be
submitted to Price Waterhouse L.L.P.  The determination of  Price
Waterhouse L.L.P. shall be final and binding on the Purchaser and
the  Seller and the fees and expenses of Price Waterhouse  L.L.P.
shall  be  borne equally by the Purchaser and the Seller.   Price
Waterhouse  L.L.P.  shall  adjust the Purchase  Price  allocation
provided  by the Purchaser to the extent necessary to  make  such
allocation  reasonable.  The Purchaser and the Seller shall  duly
prepare  and timely file such reports and information returns  as
may   be   required  under  the  Code  and  applicable   Treasury
Regulations  and  any corresponding or comparable  provisions  of
applicable  state and local Tax laws to report the allocation  of
the Purchase Price.

                           ARTICLE IX.  
                           
                           TERMINATION

     Section 9.01. Termination.  This Agreement may be terminated at
any time prior to the Closing:

          (a) by mutual consent of the Seller  and the Purchaser;

          (b) by the Purchaser, upon a breach in any material respect
of  any  representation, warranty, covenant or agreement  on  the
part  of  the  Seller  set forth in this  Agreement,  or  if  any
representation or warranty of the Seller shall have become untrue
in  any material respect, in either case such that the conditions
set  forth in Section 7.02(a) or Section 7.02(b), as the case may
be,   would be incapable of being satisfied by June 30, 1996  (or
as otherwise extended as described in Section 9.01(e)); provided,
however,  that, in any case, a willful breach shall be deemed  to
cause  such  conditions to be incapable of  being  satisfied  for
purposes of this subsection;

          (c) by the Seller, upon a breach in any material respect of
any  representation, warranty, covenant or agreement on the  part
of  the  Purchaser  set  forth  in  this  Agreement,  or  if  any
representation  or  warranty of the Purchaser shall  have  become
untrue  in  any  material respect, in either case such  that  the
conditions  set forth in Section 7.03(a) or Section  7.03(b),  as
the  case may be,  would be incapable of being satisfied by  June
30,   1996   (or   as   otherwise  extended   as   described   in
Section 9.01(e)); provided, however, that, in any case, a willful
breach  shall be deemed to cause such conditions to be  incapable
of being satisfied for purposes of this subsection (c);

          (d) by either the Seller or the Purchaser, if there shall
be  any  Order  which is final and nonappealable  preventing  the
consummation of the transactions contemplated hereby, unless  the
party  relying on such Order to terminate this Agreement has  not
complied with its obligations under Section 6.04(b); and

          (e) by either the Seller or the Purchaser, if the Closing
shall  not  have  occurred  prior to  June  30,  1996;  provided,
however,  that  this Agreement may be extended by written  notice
from  either party hereto to the other to a date not  later  than
July 31, 1996, if the Closing shall not have occurred as a direct
result  of  the  nonfulfillment of  the  condition  contained  in
subsection (a) of Section 7.01 by June 30, 1996.

           The  right  of  any  party hereto  to  terminate  this
Agreement pursuant to this Section shall remain operative and  in
full force and effect regardless of any investigation made by  or
on  behalf of any party hereto, any person controlling  any  such
party  or  any of their respective officers, directors, employees
or  representatives, whether prior to or after the  execution  of
this  Agreement; provided, however, that each party shall provide
written  notice to the other party of any breach  by  such  other
party  of  a representation, warranty, covenant or agreement  set
forth  in this Agreement as soon as practicable upon learning  of
such  breach, and the non-breaching party may only terminate this
Agreement pursuant to subsections (b) or (c) of this Section,  as
the case may be, if such breach is not cured within ten (10) days
of  such  notice being given.  If such ten (10) day  cure  period
extends beyond the date set forth in such subsections, then  such
date  shall  be extended to be the first business day immediately
following the expiration of such ten (10) day cure period.

     Section 9.02. Effect of Termination; Nonconsummation.  Except as
provided in  this Section and Section 9.03, in the event  of  the
termination  of  this Agreement pursuant to  Section  9.01,  this
Agreement shall forthwith become void and of no further force and
effect.    If  the  transactions  contemplated  hereby  are   not
consummated  by  reason of the termination of this  Agreement  or
otherwise,  there  shall be no liability on the  part  of  either
party hereto to the other and all rights and obligations of  each
party hereto shall cease, except that nothing herein (other  than
the  immediately following sentence) shall relieve any  party  of
any  liability  for   any  breach of such  party's  covenants  or
agreements  contained in this Agreement or  any  breach  of  such
party's   representations  or  warranties   contained   in   this
Agreement.   Notwithstanding anything in this  Agreement  to  the
contrary,  in  no  event  shall any losses,  claims,  damages  or
liabilities  claimed  with  respect  to  the  exception  to   the
immediately  preceding  sentence  include  any  consequential  or
punitive damages, except to the extent that such are awarded to a
third party in a Proceeding against an Indemnified Party.

     Section 9.03. Fees and Expenses.  All Expenses incurred by  the
parties  hereto shall be borne solely and entirely by  the  party
which  has  incurred such Expenses; provided, however,  that  the
Seller  (and  not  the  Company or  its  subsidiaries)  shall  be
responsible  for  the  fees and expenses  of  all  third  parties
retained  by  or  on behalf of the Seller and its  Affiliates  in
connection with the transactions contemplated by this Agreement.

                          ARTICLE X.
                                   
                         MISCELLANEOUS

    Section 10.01. Notices.   All  notices and other  communications
hereunder  to  a party hereto shall be in writing  and  shall  be
deemed  to  be properly given if delivered personally, telecopied
(subject  to  confirmation) or mailed  to  it  by  registered  or
certified  mail (return receipt requested), in the  case  of  the
Seller, to:

                    Central and South West Corporation
                    1616 Woodall Rodgers Freeway
                    P.O. Box 660164
                    Dallas, Texas  77256-0164
                    Telecopy Number:  (214) 777-1528
                    Attention:  Senior Vice President and General Counsel

     and in the case of the Purchaser, to:

                    Tejas Gas Corporation
                    1301 McKinney Street, Suite 700
                    Houston, Texas 77010
                    Telecopy Number: (713) 658-9600
                    Attention: James W. Whalen, Chief Financial Officer

      or  at  such  other address as shall be specified  by  like
notice.

     Section 10.02. Headings;  Cross  References.   The  descriptive
headings  of the several Articles and Sections of this  Agreement
are inserted for convenience only and do not constitute a part of
the  Agreement.   Unless  the  context  otherwise  requires,  all
references herein to Articles or Sections shall refer to Articles
or Sections of this Agreement.

     Section 10.03. Prior Agreements.  This Agreement shall supersede
all prior agreements, documents or other instruments with respect
to   the   matters   covered  hereby,   save   and   except   the
Confidentiality Agreement which shall remain in  full  force  and
effect in accordance with its terms until the Closing, but  shall
expire at the Closing.

     Section 10.04. Amendment.  This Agreement may be amended by  the
parties  hereto  by  action  taken  by  or  on  behalf  of  their
respective Boards of Directors at any time prior to the  Closing.
This  Agreement  may not be amended except by  an  instrument  in
writing signed by the parties hereto.

     Section 10.05. Waiver.  At any time prior to the Closing, either
party  hereto may  extend the time for the performance of any  of
the  obligations or other acts of the other party hereto,   waive
any  inaccuracies  in the representations and warranties  of  the
other  party  contained  herein  or  in  any  document  delivered
pursuant hereto and  waive compliance by the other party with any

of  the  covenants  or  conditions contained  herein.   Any  such
extension  or  waiver shall be valid only  if  set  forth  in  an
instrument in writing signed by the party or parties to be  bound
thereby.

     Section 10.06. Further  Actions.  Each party shall  execute  and
deliver  such other certificates, agreements and other  documents
and take such other actions as may reasonably be requested by the
other  party in order to consummate or implement the transactions
contemplated by this Agreement.

     Section 10.07. Assignment.  This Agreement and all of the  
provisions hereof shall be binding upon and inure to the benefit of
the  parties hereto and their respective successors and permitted
assigns,  but  neither  this Agreement nor  any  of  the  rights,
interests   or  obligations  hereunder  shall  be  assigned,   by
operation  of law or otherwise, by any party hereto  without  the
prior written consent of the other party; provided, however, that
the  Purchaser may assign its rights under this Agreement to  any
corporation,  all  of the outstanding voting stock  of  which  is
owned  directly  or  indirectly by the Purchaser;  and  provided,
further,  that no such assignment shall relieve the Purchaser  of
any  of  its obligations under this Agreement.  Nothing  in  this
Agreement,  express or implied, is intended to  confer  upon  any
person  other  than  the  parties  hereto  and  their  respective
successors  and  permitted  assigns,  any  rights,  remedies   or
obligations under or by reason of this Agreement.

     Section 10.08. Governing Law.  The terms of this Agreement shall
be governed by, and interpreted in accordance with the provisions
of, the laws of the State of Texas.

     Section 10.09. Counterparts.  This Agreement may be executed  in
any  number of counterparts, each of which when so executed shall
be  deemed an original but all of which together shall constitute
one and the same instrument.

     Section 10.10. Tranpache  Partnership.  To the extent  that  any
representation, warranty or covenant contained in this  Agreement
relates  to  the  business, condition (financial  or  otherwise),
operations,  performance or properties of Tranpache  Partnership,
(i)  any such representation or warranty shall be limited to only
those matters of which the Seller has Knowledge and (ii) any such
covenants  shall be limited to only those matters over which  the
Seller has control.

      IN  WITNESS WHEREOF, each of the parties hereto has  caused
this  Agreement to be signed in its corporate name  by  its  duly
authorized officer, all on the date first above written.

                         CENTRAL AND SOUTH WEST CORPORATION

                                   By:
                                        E. R. Brooks
                                        Chairman, President and
                                        Chief Executive Officer

                                   TEJAS GAS CORPORATION

                                   By:
                                        Charles R. Crisp
                                        President

 A-1
                                                           ANNEX A

                   SCHEDULE OF DEFINED TERMS

      The  following terms when used in the Agreement shall  have
the  meanings set forth below unless the context shall  otherwise
require:

      "Affiliate"  shall, with respect to any  Person,  mean  any
other  Person that controls, is controlled by or is under  common
control with the former. The term "control" and correlative terms
shall  have the meanings ascribed to them in Rule 405  under  the
Securities Act.

      "Agreement"  shall mean the Agreement of  Merger  made  and
entered  into  as  of  May 9, 1996 between  the  Seller  and  the
Purchaser,  including  any  amendments  thereto  and  each  Annex
(including  this  Annex  A) and Schedule thereto  (including  the
Seller's   Disclosure  Letter  and  the  Purchaser's   Disclosure
Letter).

      "Appraisal" shall have the meaning ascribed to such term in
Section 8.04(b).

      "Bank" shall mean Citibank N.A.

      "Benefit Plans" shall mean any employee pension benefit plan
(whether  or not insured), as defined in Section 3(2)  of  ERISA,
any  employee  welfare benefit plan (whether or not  insured)  as
defined  in  Section  3(1)  of  ERISA,  any  stock  bonus,  stock
ownership,  stock  option,  stock  purchase,  stock  appreciation
rights,  phantom stock or other stock plan (whether qualified  or
nonqualified), and any bonus or incentive compensation plan under
which the Company or any of its subsidiaries may become obligated
in  any  manner  (including obligations to make contributions  or
other  payments)  to  any  of the present  or  former  directors,
officers,   employees,  agents,  consultants  or  other   similar
representatives providing services to or for the Company  or  any
of  its  subsidiaries in connection with such services; provided,
however,  that such term shall not include (a) routine employment
policies  and  procedures developed and applied in  the  ordinary
course  of  business and consistent with past practice, including
wage,  vacation,  holiday  and  sick  or  other  leave  policies,
(b) workers compensation insurance and (c) directors and officers
liability insurance.

       "Certificate of Merger" shall have the meaning ascribed  to
such term in Section 2.04 of the Agreement.

       "Closing" shall mean a meeting of all Persons interested in
the  transactions  contemplated by the  Agreement  at  which  all
documents  deemed  necessary by the parties to the  Agreement  to
evidence the fulfillment or waiver of all conditions precedent to
the   consummation  of  the  transactions  contemplated  by   the
Agreement are executed and delivered.

       "Closing  Date" shall have the meaning ascribed thereto  in
Section 2.03 of the Agreement.

 A-2
      "Closing  Date Tax Accrual" for a Tax shall be  the  amount
reflected as a liability for that Tax in the Consolidated Balance
Sheet plus or minus, as the case may be, any adjustments to  that
liability arising during the Computation Period and reflected  in
the Purchase Price pursuant to Section 2.02(a) of the Agreement.

      "Code"  shall mean the Internal Revenue Code  of  1986,  as
amended, and the rules and regulations promulgated thereunder.

      "Common Stock" shall have the meaning ascribed to such term
in Section 4.02(a) of the Agreement.

      "Company" shall have the meaning ascribed to such  term  in
the Recitals to the Agreement.

       "Confidentiality  Agreement"  shall  mean   that   certain
confidentiality  agreement between the Seller and  the  Purchaser
dated February 9, 1996.

      "Consolidated  Balance Sheet" shall mean  the  consolidated
balance sheet of the Company and its subsidiaries, as of December
31,  1995,  included  in  the Consolidated  Financial  Statements
together with the notes thereto.

       "Consolidated   Financial  Statements"  shall   mean   the
consolidated  balance sheets of the Company and its  subsidiaries
as  of  December 31, 1994 and December 31, 1995 and  the  related
consolidated  statements of income, cash  flows  and  changes  in
stockholder's  equity  for the fiscal years  ended  December  31,
1993,  1994  and  1995, together with the notes thereto,  all  as
audited  by  Arthur Andersen LLP, independent accountants,  under
their report with respect thereto dated February 9, 1996.

      "Constituent Corporations" shall have the meaning  ascribed
to such term in Section 2.01 of the Agreement.

      "Continuing Employees" shall have the meaning  ascribed  to
such term in Section 6.08(b) of the Agreement.

      "Court"  shall mean any court, federal, state or local,  or
arbitration tribunal.

      "CSW  Health Care Plan" shall have the meaning ascribed  to
such term in Section 6.08(f) of the Agreement.

     "CSW Dependent Care Plan" shall have the meaning ascribed to
such term in Section 6.08(g) of the Agreement.

     "CSW Money Pool" shall mean the arrangement among the Seller
and its Affiliates pursuant to which surplus cash is consolidated
and  short  term borrowings are facilitated as reflected  in  the

 A-3
accounting  records  of  the  Company  by  the  captions   titled
"Advances to Affiliates" and "Advances from Affiliates"  included
in the Consolidated Balance Sheet.

      "CSW Pension Plan" shall have the meaning ascribed to  such
term in Section 6.08(b) of the Agreement.

     "CSW Severance Benefit Plan" shall have the meaning ascribed
to such term in Section 6.08(h) of the Agreement.

     "CSW Thrift Plan" shall the meaning ascribed to such term in
Section 6.08(c) of the Agreement.

      "CSW  VEBA"  shall the meaning ascribed  to  such  term  in
Section 6.08(f) of the Agreement.

      "Easements"  shall  mean  any  easements,  rights  of  way,
permits,  servitudes,  licenses, leasehold  estates  and  similar
rights held by the Company or any of its subsidiaries relating to
real property used in their business but owned by other Persons.

      "Effective  Time" shall have the meaning ascribed  to  such
term in Section 2.04 of the Agreement.

      "Environmental Law or Laws" shall mean any  and  all  laws,
statutes,  ordinances,  rules,  regulations,  or  orders  of  any
Governmental  Authority pertaining to health or  the  environment
currently  in  effect  and applicable  to  the  Company  and  its
subsidiaries,  including  the Clean  Air  Act,  as  amended,  the
Comprehensive   Environmental,   Response,   Compensation,    and
Liability  Act of 1980 ("CERCLA"), as amended, the Federal  Water
Pollution  Control Act, as amended, the Occupational  Safety  and
Health  Act  of  1970, as amended, the Resource Conservation  and
Recovery  Act  of  1976 ("RCRA"), as amended, the  Safe  Drinking
Water  Act,  as  amended, the Toxic Substances  Control  Act,  as
amended,  the Hazardous & Solid Waste Amendments Act of 1984,  as
amended,  the  Superfund  Amendments and Reauthorization  Act  of
1986, as amended, the Hazardous Materials Transportation Act,  as
amended,  the Oil Pollution Act of 1990 ("OPA"), any  state  laws
implementing  the  foregoing federal laws,  and  any  state  laws
pertaining  to  the  handling  of oil  and  gas  exploration  and
production  wastes or the use, maintenance, and closure  of  pits
and  impoundments,  and all other environmental  conservation  or
protection  laws.   For  purposes of  the  Agreement,  the  terms
"hazardous  substance" and "release" have the meanings  specified
in  CERCLA; provided, however, that to the extent the laws of the
state  in  which the property is located establish a meaning  for
"hazardous  substance" or "release"  that is  broader  than  that
specified  in  either CERCLA or RCRA, such broader meaning  shall
apply,  and  the  term "hazardous substance"  shall  include  all
dehydration  and  treating wastes, waste (or  spilled)  oil,  and
waste  (or  spilled) petroleum products, and (to  the  extent  in
excess  of background levels) radioactive material, even if  such
are   specifically  exempt  from  classification   as   hazardous
substances  pursuant to CERCLA or RCRA or the analogous  statutes
of any jurisdiction applicable to the Company or its subsidiaries
or any of their respective properties or assets.

 A-4
      "ERISA"  shall mean the Employee Retirement Income Security
Act   of   1974,  as  amended,  and  the  rules  and  regulations
promulgated thereunder.

      "Estimated Purchase Price" shall have the meaning  ascribed
to such term in Section 6.11 of the Agreement.

      "Exchange  Act" shall mean the Securities Exchange  Act  of
1934,  as  amended,  and  the rules and  regulations  promulgated
thereunder.

      "Expenses" shall mean all out-of-pocket expenses (including
all   fees  and  expenses  of  counsel,  accountants,  investment
bankers,  experts  and  consultants to a  party  hereto  and  its
affiliates)  incurred by a party or on its behalf  in  connection
with  or  related to the authorization, preparation, negotiation,
execution and performance of the Agreement, and all other matters
related  to  the  consummation of the  transactions  contemplated
thereby.

      "FERC"  shall mean the Federal Energy Regulatory Commission
including its predecessor, the Federal Power Commission, and  any
successors thereto.

      "Final  Purchase Price" shall have the meaning ascribed  to
such term in Section 6.12 of the Agreement.

      "Final  Purchase Price Calculation" shall have the  meaning
ascribed to such term in Section 6.12.

       "Fixed   Price   Contracts"  shall  mean  any   contracts,
commitments   or  agreements  for  the  purchase   or   sale   of
Hydrocarbons (i) having a remaining term of more than sixty  (60)
days,  wherein  the purchase or sale price thereunder  throughout
part  of  the  remaining  life of such  contract,  commitment  or
agreement  is  a  fixed  amount or an amount  that  is  otherwise
reasonably  determinable as of the date hereof  pursuant  to  the
terms  of  such contract, commitment or agreement, or (ii)  which
the  Company  or any subsidiary thereof has hedged  with  futures
contracts  or otherwise; provided, however, that the  term  Fixed
Price  Contracts  will  not include any contract,  commitment  or
agreement under which the purchase or sales price throughout  the
remaining life of the contract, commitment or agreement is  based
on a market responsive reference price for a Hydrocarbon.

      "Forms"  shall have the meaning ascribed to  such  term  in
Section 8.04(a) of the Agreement.

      "GAAP"  shall mean generally accepted accounting principles
consistently  applied; provided, however, that the Statements  of
Financial Accounting Standards (SFAS) Nos. 121 will be applied in
determining Working Capital of the Company prior to the Closing.

      "Governmental Authority" shall mean any federal,  state  or
local governmental agency or authority (other than a Court).

 A-5
      "Holding Company Act" shall mean the Public Utility Holding
Company  Act  of 1935, as amended, and the rules and  regulations
promulgated thereunder.

       "HSR  Act"  shall  mean  the  Hart-Scott-Rodino  Antitrust
Improvements  Act  of  1976,  as  amended,  and  the  rules   and
regulations promulgated thereunder.

      "Hydrocarbons" shall mean crude oil, natural  gas,  natural
gas  liquids  and other hydrocarbons produced from crude  oil  or
natural gas.

      "Indemnified Party" shall have the meaning ascribed to such
term in Section 8.02(a) of the Agreement.

     "Indemnifying Party" shall have the meaning ascribed to such
term in of Section 8.02(a) of the Agreement.

     "IRS" shall mean the Internal Revenue Service.

      "Knowledge" shall mean (i) with respect to the Seller,  the
actual  knowledge of the officers of the Seller and the  Company,
and  the  in-house  attorneys employed in the  general  counsel's
office of the Company and (ii) with respect to the Purchaser, the
actual  knowledge  of  the officers of the  Purchaser.   For  the
purposes  of this definition, and without limiting other  matters
of  which they have knowledge, in-house attorneys of the  Company
shall be deemed also to have knowledge of the contents of letters
directed  to  the  Company's independent  auditors  from  outside
counsel  of the Company in connection with its fiscal 1995,  1994
and 1993 annual audits.

      "Law" shall mean all laws, statutes, ordinances, rules  and
regulations  of  the United States, any foreign country,  or  any
domestic  or  foreign  state, and any  political  subdivision  or
agency  thereof,  including all decisions of  Courts  having  the
effect of law in each such jurisdiction.

       "LCC"   shall   mean  the  Commissioner  of  Conservation,
Department  of  Natural Resources of the State of Louisiana,  and
any predecessors or successors thereto.

      "Lien"  shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any  agreement
to  give  any  of the foregoing), any conditional sale  or  other
title retention agreement, any lease in the nature thereof or the
filing of or agreement to give any financing statement under  the
Uniform Commercial Code of any jurisdiction.

      "Losses"  shall have the meaning ascribed to such  term  in
Section 8.02(a) of the Agreement.

      "Material" shall mean material to the condition  (financial
and  other),  results of operations or business  of  a  specified
Person  and its subsidiaries, if any, taken as a whole;  provided
that  the  special purpose use of the term "Material" in  Section
8.02(c) of the Agreement shall be disregarded and given no effect

 A-6
in  any  determination of what is material for purposes  of  this
definition  of  the  term "Material" as used  elsewhere  in  this
Agreement.

      "Material Adverse Effect" shall mean any change  or  effect
that  would  be materially adverse to the consolidated  business,
condition  (financial or otherwise), operations,  performance  or
properties of  a specified Person and its subsidiaries,  if  any,
taken  as a whole; provided that the special purpose use  of  the
term  "Material  Adverse  Effect" in  Section  8.02(c)  shall  be
disregarded and given no effect in any determination of  what  is
material  for  purposes of this definition of the term  "Material
Adverse Effect" as used elsewhere in this Agreement.

      "Material  Contract" shall mean, as between the Company  or
any  of  its subsidiaries, on the one hand, and any Person  other
than any other member of the group consisting of the Company  and
its subsidiaries, on the other:

           (1)   Any  collective bargaining  agreement  or  other
agreement with any labor union;

           (2)   Any employment or consulting agreement, contract
or  commitment between the Company or any of its subsidiaries and
any  employee, officer or director thereof (i) having  more  than
one  year  to  run  from the date hereof, (ii) providing  for  an
obligation to pay or accrue compensation of $250,000 or more  per
annum  or  (iii)  providing for the payment  or  accrual  of  any
additional  compensation upon a change in control of the  Company
or  any  of  its  subsidiaries or upon any  termination  of  such
employment  or  consulting relationship  following  a  change  in
control of the Company or any of its subsidiaries;

           (3)   Any agency or representation agreement with  any
Person  which  is not terminable by the Company  or  one  of  its
subsidiaries without penalty upon not more than ninety (90) days'
notice;

           (4)   Any  agreement, contract or commitment with  any
Person  containing  any  covenant limiting  the  freedom  of  the
Company  or  any  of its subsidiaries to engage in  any  line  of
business or to compete with any Person;

           (5)   Any partnership, joint venture or profit sharing
agreement with any Person;

           (6)  Any agreement, contract, commitment, indenture or
other  instrument  relating  to  the  borrowing  of  money  in  a
principal  amount of $500,000 or more or any direct  or  indirect
guarantee  of  any obligation of any other Person or Governmental
Authority for, or agreement to service the repayment of, borrowed
money  in  a principal amount of $500,000 or more, including  any
agreement  or  arrangement (i) relating  to  the  maintenance  of
compensating  balances, (ii) with respect to lines of  credit  or
letters  of  credit, (iii) relating to the purchase or repurchase
obligations  of any other Person or Governmental Authority,  (iv)
to advance or supply funds to or to invest in any other Person or
Governmental  Authority,  (v) to pay for  property,  products  or
services  of any other Person or Governmental Authority  even  if
such  property, products or services are not conveyed,  delivered
or  rendered  and  (vi) to guarantee any lease or  other  similar
periodic  payments to be made by any other Person or Governmental
Authority;

 A-7
            (7)   Any  lease  (A)  with  annual  rental  payments
aggregating  $500,000  or  more that is  not  terminable  without
premium or penalty on ninety (90) days or less notice or  (B)  of
assets exceeding $10,000,000 fair market value;

           (8)  Any agreement, contract or commitment relating to
the disposition or acquisition of any investment in any Person if
such  investment  has  a  book value of, or  the  disposition  or
acquisition price of such investment or interest is, $500,000  or
more;

          (9)  Any agreement, contract or commitment to which the
Company or any of its subsidiaries is a party or by which any  of
them  is  bound  (i)  which  relates to the  receiving,  storing,
compressing,  dehydrating, processing, purchasing,  transporting,
gathering,  exchanging or sale of Hydrocarbons  (either  for  the
account  of the Company or a subsidiary thereof or on  behalf  of
third  parties) (A) involving a commitment of the Company  for  a
term in excess of one month (or that may not be terminated by the
Company   upon  notice  of  one  month  or  less)  and  involving
consideration  in  excess  of $500,000  within  any  twelve-month
period  commencing after the date of the Agreement, or  which  is
otherwise Material to the Company, and (B) regardless of  whether
the   agreement,   contract   or   commitment   is   "firm"    or
"interruptible"  or  (ii)  which is a swap, exchange  or  futures
contract.   As  used  in clause (i) in reference  to  any  sales,
purchase, transportation, storage or exchange agreement, contract
or  commitment, the term "interruptible" means  that neither  the
Company nor any of its subsidiaries will be liable for any reason
for  any damages (including consequential damages)  if it  elects
to  not  purchase,  sell, transport or exchange  hydrocarbons  in
connection with such agreement, contract or commitment,  and  the
term  "firm"  means that such agreement, contract  or  commitment
does not meet the foregoing definition of "interruptible"; or

           (10) Any other agreement, contract or commitment which
involves  payment or potential payment, pursuant to the terms  of
such  agreement, contract or commitment, by or to the Company  or
any  of  its  subsidiaries of $500,000 or more within any  twelve
month period commencing after the date of the Agreement;

      "Merger"  shall have the meaning ascribed to such  term  in
Section 2.01 of the Agreement.

      "Merger Subsidiary" shall have the meaning ascribed to such
term in the Recitals to the Agreement.

     "NGA" shall mean the Natural Gas Act of 1938, as amended.

      "NGPA"  shall mean the Natural Gas Policy Act of  1978,  as
amended.

 A-8
     "OCC" shall mean the Oklahoma Corporation Commission and any
predecessors or successors thereto.

      "OGCA"  shall  have the meaning ascribed to  such  term  in
Section 2.04 of the Agreement.

      "Order"  shall mean any judgment, order or  decree  of  any
court,  arbitration tribunal or Governmental Authority,  federal,
state or local.

      "Palo  Duro  Lease"  means that certain Lease  and  License
Agreement dated July 1, 1993, between Palo Duro Pipeline Company,
Inc. and the Company.

     "Palo Duro Pipeline" means the pipeline facility and related
interests  and assets leased or licensed to the Company  pursuant
to the Palo Duro Lease.

       "Permit"   shall  mean  any  and  all  permits,  licenses,
authorizations,  orders,  certificates,  registrations  or  other
approvals  granted  by  any  federal,  state,  local  or  foreign
Governmental Authority.

     "Permitted Encumbrances" shall mean the following:

            (1)    liens   for  taxes,  assessments   and   other
governmental charges not delinquent or which are currently  being
contested   in  good  faith by appropriate proceedings;  provided
that,  in the latter case, the Company or one of its subsidiaries
shall  have set aside on its books adequate reserves with respect
thereto;

           (2)   mechanics' and materialmen's liens not filed  of
record  and similar charges not delinquent or which are filed  of
record  but  are  being  contested in good faith  by  appropriate
proceedings;  provided that, in the latter case, the  Company  or
one  of  its  subsidiaries shall have  set  aside  on  its  books
adequate reserves with respect thereto;

           (3)   liens  in  respect of judgments or  awards  with
respect to which the Company or one of its subsidiaries shall  in
good faith currently be prosecuting an appeal or other proceeding
for  review  and  with  respect to  which  the  Company  or  such
subsidiary  shall have secured a stay of execution  pending  such
appeal  or such proceeding for review; provided that the  Company
or  such  subsidiary shall have set aside on its  books  adequate
reserves with respect thereto;

          (4)  easements, leases, reservations or other rights of
others  in,  or  minor defects and irregularities  in  title  to,
property  or  assets of the Company or any of  its  subsidiaries;
provided  that  such  easements,  leases,  reservations,  rights,
defects  or  irregularities do not materially impair the  use  of
such property or assets for the purposes for which they are held;
and

 A-9
           (5)   any  lien  or privilege vested  in  any  lessor,
licensor  or  permittor  for rent or  other  obligations  of  the
Company  or  any of its subsidiaries thereunder so  long  as  the
payment  of  such rent or the performance of such obligations  is
not delinquent.

      "Person"  shall  mean  an individual, partnership,  limited
liability  company,  corporation,  joint  stock  company,  trust,
estate,    joint    venture,   association   or    unincorporated
organization,  or  any  other form of  business  or  professional
entity.

     "Pipeline Assets" shall mean the pipelines, equipment, other
tangible  personal property, Easements and other  similar  assets
and  rights used by the Company or its subsidiaries in connection
with  their  natural  gas  pipeline,  gathering,  processing  and
storage operations that are reflected in the Consolidated Balance
Sheet other than any such properties, assets and rights that  (i)
have  been  sold or otherwise disposed of since the date  of  the
Consolidated  Balance  Sheet  without  breaching  either  Section
4.05(b)  or  Section 6.02(f) of the Agreement or  (ii)  are  not,
individually or in the aggregate, Material to the Company.

      "Post-Closing Taxable Period" means (i) any taxable  period
beginning  after the Closing Date and (ii) with  respect  to  any
taxable period beginning on or before the Closing Date and ending
after  the Closing Date, the portion of such taxable period  that
is after the Closing Date.

      "Pre-Closing  Taxable Period" means (i) any taxable  period
ending on or before the Closing Date or (ii) with respect to  any
taxable period beginning on or before the Closing Date and ending
after  the Closing Date, the portion of such taxable period  that
is on or before the Closing Date.

      "Proceedings" shall have the meaning ascribed to such  term
in Section 8.02(a) of the Agreement.

      "Purchase  Price" shall have the meaning ascribed  to  such
term in Section 2.02 of the Agreement.

      "Purchaser" shall have the meaning ascribed to such term in
the introductory paragraph of the Agreement.

      "Purchaser's  Dependent Care Plan" shall have  the  meaning
ascribed to such term in Section 6.08(g) of the Agreement.

      "Purchaser's  Disclosure Letter" shall  mean  that  certain
disclosure  letter  of  even date with  the  Agreement  from  the
Purchaser to the Seller delivered concurrently with the execution
and delivery of the Agreement.

      "Purchaser's  Health  Care Plan"  shall  have  the  meaning
ascribed to such term in Section 6.08(f) of the Agreement.

 A-10
      "Purchaser's Pension Plan" shall have the meaning  ascribed
to such term in Section 6.08(b) of the Agreement.

       "Purchaser's  Representatives"  shall  have  the   meaning
ascribed to such term in Section 6.03(a) of the Agreement.

      "Purchaser's Savings Plan" shall have the meaning  ascribed
to such term in Section 6.08(c) of the Agreement.

      "Refund"  shall have the meaning ascribed to such  term  in
Section 8.03(h) of the Agreement.

      "Regulation"  shall  mean any rule  or  regulation  of  any
Governmental Authority having the effect of law.

      "Section  338(h)(10)  Elections"  shall  have  the  meaning
ascribed to such term in Section 8.04(a) of the Agreement.

      "Securities Act" shall mean the Securities Act of 1933,  as
amended, and the rules and regulations promulgated thereunder.

     "Seller" shall have the meaning ascribed to such term in the
first paragraph of the Agreement.

       "Seller's  Disclosure  Letter"  shall  mean  that  certain
disclosure letter of even date with the Agreement from the Seller
to  the  Purchaser delivered concurrently with the execution  and
delivery of the Agreement.

       "Seller's   Group"   means  the  "affiliated   group"   of
corporations  (as defined in Section 1504 of the Code)  of  which
Seller has been and will be the "common parent" (as that term  is
used in Section 1504(a) of the Code).

      "Stock"  shall have the meaning ascribed to  such  term  in
Section 4.02(a) of the Agreement.

       A   "subsidiary"  of  a  specified  Person  shall  be  any
corporation,   partnership,  limited  liability  company,   joint
venture  or  other  legal entity of which  the  specified  Person
(either  alone or through or together with any other  subsidiary)
owns,  directly or indirectly, 50% or more of the stock or  other
equity  or  partnership  interests  the  holders  of  which   are
generally  entitled  to vote for the election  of  the  board  of
directors  or other governing body of such corporation  or  other
legal entity.

      "Surviving Corporation" shall have the meaning ascribed  to
such term in Section 2.01 of the Agreement.

      "Taxable Earned Surplus" shall have the meaning ascribed to
the  term  "Net Taxable Earned Surplus" in  171.110 of the  Texas
Tax Code (Vernon 1992 and Supp. 1996).

 A-11
      "Tax Indemnified Party" shall have the meaning ascribed  to
such term in Section 8.03(c) of the Agreement.

      "Tax Indemnifying Party" shall have the meaning ascribed to
such term in Section 8.03(c) of the Agreement.

      "Tax Items" shall have the meaning ascribed to such term in
Section 6.06(a) of the Agreement.

      "Tax Returns" shall have the meaning ascribed to such  term
in Section 4.10(a) of the Agreement.

      "Tax Sharing Agreements" shall have the meaning ascribed to
such term in Section 6.06(e) of the Agreement.

      "Taxes"  shall  mean all taxes, charges, imposts,  tariffs,
fees,   levies  or  other  similar  assessments  or  liabilities,
including   income  taxes,  ad  valorem  taxes,   excise   taxes,
withholding  taxes  or other taxes of or with  respect  to  gross
receipts,  premiums, real property, personal  property,  windfall
profits,  sales,  use, transfers, licensing, employment,  payroll
and  franchises imposed by or under any Law; and such terms shall
include  any interest, fines, penalties, assessments or additions
to  tax resulting from, attributable to or incurred in connection
with any such tax or any contest or dispute thereof.

      "TRC"  shall  mean  the Texas Railroad Commission  and  any
predecessors and successors thereto.

      "Trust"  shall have the meaning ascribed to  such  term  in
Section 6.10(f).

      "Working  Capital of the Company" shall  mean  the  current
assets  of  the  Company and its subsidiaries minus  the  current
liabilities  of  the  Company  and  its  subsidiaries,  each   as
determined in accordance with GAAP.

 B-1
                           ANNEX "B"
                      TRANSITION SERVICES

          (a) Consultation, analysis and advice in connection with
matters   relating  to  operations,  management,  financing   and
financial   planning,   engineering,   system   planning,    law,
governmental and general business problems or questions.

          (b) Consultation, analysis and advice in connection with
personnel relations and employee benefit plans.

          (c) Tax services relating to the preparation and filing of
returns for federal, state and local taxes, and the consolidation
of such returns.

          (d) Assistance in connection with audits or returns by, and
participation in discussions of such returns with,  the  Internal
Revenue Service and other taxing bodies or authorities.

          (e) Consultation, analysis and advice in connection with
accounting  matters  and  in  preparation  of  accounts  and  the
consolidation of such accounts.

          (f) Electronic data processing services, including
establishing  and operating a data processing center,  processing
of  customer billing, revenues and statistics, payrolls, property
accounting,  general  accounting,  cash  forecasts,   load   flow
studies, and various other business and engineering applications.

          (g) special services, in addition to those specified above,
as  may be required and which the Seller concludes it is equipped
to perform.

           In  supplying  the  above  services,  the  Seller  may
arrange,  where  it deems appropriate, for the services  of  such
experts,  consultants, advisers and other persons with  necessary
qualifications as are required for or pertinent to the  rendition
of such services. 

Basic Info X:

Name: AGREEMENTS
Type: Agreements
Date: May 15, 1996
Company: AEP TEXAS NORTH CO
State: Texas

Other info:

Date:

  • May 31 , 1996
  • July 1 , 1995
  • January 2 , 1991
  • April 15 , 1997
  • August 18 , 1988
  • November 1 , 1990
  • July 31 , 1996
  • June 30 , 1996
  • May 9 , 1996
  • December 31 , 1994
  • December 31 , 1995
  • December 31 , 1993 , 1994
  • February 9 , 1996
  • July 1 , 1993

Organization:

  • Vinson & Elkins L.L.P.
  • Secretary of State of the State of Oklahoma
  • Transok Gas Company
  • Delaware General Corporation Law
  • Transok , Inc.
  • the State of Delaware
  • Morgan Stanley & Co
  • Material Adverse Effect ; Conduct
  • Fixed Price Contract
  • Pension Benefit Guaranty Corporation
  • National Labor Relations Board
  • Upcoming Rate Proceedings
  • Pre-Closing Taxable Period
  • Employee Benefit Plans
  • Central and South West System Health Care Reimbursement Plan
  • Purchaser's Health Care Plan
  • Southwest System Voluntary Employees ' Beneficiary Association
  • CSW Health Care Plan
  • South West System Dependent Care Assistance Plan
  • CSW Dependent Care Plan
  • CSW Credit , Inc.
  • South West Services , Inc.
  • Public Service Company of Oklahoma
  • Final Purchase Price Calculation
  • New York Stock Exchange
  • Obligations of Each Party
  • Governmental Authority or Court
  • Board of Directors
  • Estimated Purchase Price
  • Tax Indemnifying Party
  • Tax Indemnified Party
  • Seller 's Group
  • Price Waterhouse L.L.P
  • South West Corporation 1616 Woodall Rodgers Freeway P.O
  • Tejas Gas Corporation 1301 McKinney Street
  • Consolidated Financial Statements
  • Federal Energy Regulatory Commission
  • Federal Power Commission
  • Statements of Financial Accounting Standards SFAS Nos
  • Commissioner of Conservation
  • Department of Natural Resources of the State
  • Oklahoma Corporation Commission
  • Palo Duro Pipeline Company , Inc.
  • Palo Duro Lease
  • Consolidated Balance Sheet
  • Texas Railroad Commission
  • Internal Revenue Service

Location:

  • Easements
  • States of Texas
  • Oklahoma
  • ERISA
  • Delaware
  • Dallas
  • Houston
  • United States
  • Louisiana

Money:

  • $ 690,000,000
  • $ 100.00
  • $ 150,000
  • $ 3,000,000
  • $ 3.2 million
  • $ 5,000,000
  • $ 250,000
  • $ 10,000,000
  • $ 500,000

Person:

  • James W. Whalen
  • E. R. Brooks Chairman
  • Charles R. Crisp
  • Arthur Andersen LLP

Time:

  • 10:00 a.m.

Percent:

  • 100 %
  • 50 %