<Page>
Exhibit 10.18
"Pages where confidential treatment has been requested are marked 'Confidential
Treatment Requested.' The redacted material has been separately filed with the
Commission, and the appropriate section has been marked at the appropriate
place and in the margin with a star (*)."
FRACTIONATION AGREEMENT
by and between
CEDAR BAYOU FRACTIONATORS, L.P.
and
WILLIAMS ENERGY MARKETING & TRADING COMPANY
EFFECTIVE OCTOBER 1, 1999
<Page>
<Table>
<Caption>
Page
----
ARTICLE I: DEFINITIONS ..............................................1
ARTICLE II: TERM .....................................................4
ARTICLE III: WILLIAMS PERFORMANCE .....................................4
ARTICLE IV: CBF'S PERFORMANCE.........................................6
ARTICLE V: TRANSFER OF CUSTODY ......................................7
ARTICLE VI: MEASUREMENT ..............................................8
ARTICLE VII: COMPENSATION TO CBF ......................................8
ARTICLE VIII: STORAGE SERVICES ........................................10
ARTICLE IX: FUEL AND ELECTRICITY SUPPLY OPTIONS .....................13
ARTICLE X: TAXES AND OTHER PAYMENTS ................................14
ARTICLE XI: ACCOUNTING AND AUDIT PROCEDURES .........................14
ARTICLE XII: BILLING AND PAYMENT .....................................15
ARTICLE XIII: FORCE MAJEURE ...........................................16
ARTICLE XIV: INDEMNIFICATION AND LIMITATION OF LIABILITY .............17
ARTICLE XV: MISCELLANEOUS ...........................................19
EXHIBIT "A" - WILLIAMS' DEDICATED PLANTS
EXHIBIT "B" - SPECIFICATIONS FOR SPECIFICATION PRODUCTS
EXHIBIT "C" - STORAGE OF SPECIFICATION PRODUCTS
</Table>
<Page>
FRACTIONATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the
3rd day of December, 1998, but effective as of September 1, 1999, by and
between. Cedar Bayou Fractionators. L.P., a Delaware limited partnership
(hereinafter referred to as "CBF"), and Williams Energy Marketing & Trading
Company, a Delaware corporation (hereinafter referred to as "Williams"),
sometimes also referred to individually as "Party" and collectively as
"Parties."
WITNESSETH:
WHEREAS, Williams owns, controls or has rights to certain volumes of
natural gas liquids recovered by various natural gas processing facilities
available for fractionation; and
WHEREAS, CBF owns a Fractionation Facility, hereinafter defined,
Situated In Mont Belvieu, Chambers County, Texas; and
WHEREAS, CBF has the right to store Specification Products
(hereinafter defined) in the Storage Facility (hereinafter defined) owned and
operated by Dynegy Midstream Services, Limited Partnership ("Dynegy"), and
situated in Mont Belvieu, Chambers County, Texas; and
WHEREAS, Williams has arranged for the transportation and delivery
of its owned and/or controlled Raw Product (hereinafter defined) to CBF at
the Storage Facility in Mont Belvieu, Texas; and
WHEREAS, CBF has arranged for the receipt of such Raw Product from
Williams, as well as Raw Product owned by third parties, at the Delivery
Point (hereinafter defined) for fractionation in the Fractionation Facility;
and
WHEREAS, it is the mutual desire of CBF and Williams that CBF
receive Williams' Raw Product at the Delivery Point and redeliver to
Williams, or its designee, Specification Products, (hereinafter defined), at
the Storage Facility or at other Mutually agreeable locations.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1: DEFINITIONS
When the following terms or expressions are used in this Agreement,
they shall have the meanings defined below:
"AFFILIATE" means, of any Person, a Person Controlling, Controlled by
or under common Control with, directly or indirectly, through one or
more intermediaries, such Person. Any
1
<Page>
Person Shall be deemed to be an Affiliate of any specified Person if
such Person owns 50% or more of the voting securities of the specified
Person if the specified Person owns fifty percent (50%) or more of the
voting securities of or if fifty percent (50%) or more of the voting
securities of the specified Person and such Person are under common
Control.
"BARREL" shall mean 42 Gallons.
"BASE RATE" shall mean a per annum rate of interest equal to the lower
of (i) the maximum rate of interest allowed by law or (ii) two percent
above the "prime rate" of interest as announced from time to time by
the First National Bank of Chicago.
"BUSINESS DAY" shall mean a Day on which Federal Reserve member banks
in New York City are open for business.
"CLAIMS" shall have the meaning as ascribed to it in Section 13
hereinafter.
"COMPONENT" shall mean the individual hydrocarbon constituents of Raw
Product, including but not limited to: methane, ethane, propane,
isobutane, normal butane, isopentane, normal pentane, hexanes and
heavier, as well as other non-hydrocarbon components authorized
hereunder.
"CONTROL" of a non-natural Person means the power, directly or
indirectly, to (i) elect, appoint or cause the election or appointment
of at least a majority of the members of the board of directors of such
Person (or if such Person is a non-corporate Person, Persons having
similar powers), or (ii) direct or cause the direction of the
management and policies of such Person, in either case through
beneficial ownership of the capital stock (or similar ownership
interests) of such Person or otherwise.
"DAY" OR "DAILY" shall mean a twenty-four (24) hour period commencing
7:00 a.m. Central Standard or Daylight Savings time, as applicable, and
extending until 7:00 a.m. Central Standard or Daylight Savings time, as
applicable, on the following Day.
"DELIVERY POINT" shall mean the custody transfer meter of the Pipeline
utilized to deliver Raw Product to CBF hereunder which is located near
the Storage Facility.
"DYNEGY" shall have the meaning ascribed to it in the recitals.
"FORCE MAJEURE" shall have the meaning ascribed to it in Section 12.2.
2
<Page>
"FRACTIONATION FACILITY" OR "FRACTIONATOR" shall mean the fractionation
unit owned by CBF situated in Mont Belvieu, Chambers County, Texas,
which is operated by Dynegy and which is used for the purpose of
fractionating Raw Product streams into Specification Products.
"FRACTIONATION VOLUME RESERVATION" shall mean the maximum amount of
fractionation capacity in the Fractionator that is reserved to
fractionate Williams' Raw Product which initially shall be 35,000 BPD,
and thereafter, may change in accordance with Section 4.2 hereinafter.
"GALLON" shall mean one U.S. liquid Gallon. which is the unit of
volume used for the purpose of measurement of liquid. One U.S. liquid
Gallon contains 231 cubic inches when the liquid is at a temperature of
60 degrees Fahrenheit and at the vapor pressure of the liquid being
measured.
"MONTH" OR "MONTHLY" shall mean the period commencing on the first Day
of a Month and ending on the last Day of such Month.
"OPERATOR" shall mean Dynegy Midstream Services, Limited Partnership.
"PERSON" means any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company
(whether domestic or foreign), joint venture, association, joint-stock
company, trust, estate, custodian, trustee, executor, administrator,
nominee, entity in a representative capacity, unincorporated,
organization, or governmental agency or authority.
"PIPELINE(S)" shall mean any pipeline which delivers Williams' Raw
Product to CBF as provided in this Agreement. Currently, the six
pipelines capable of delivering Raw Product to CBF hereunder are the
Seminole Pipeline, the Chaparral Pipeline, the West Texas Pipeline, the
Mobil Pipeline, Dynegy's 12" NGL pipeline from Lake Charles, and the
Black Lake Pipeline.
"PRIMARY TERM" shall have the meaning as ascribed to it in Article II.
"RAW PRODUCT" shall mean that mixture of natural gas liquid
hydrocarbons meeting the specifications established by the Pipeline(s)
as of December 1, 1998.
"REDELIVERY POINT" shall mean the point at which William's
Specification Products enter into the Storage Facility.
"SPECIFICATION PRODUCT(S)" shall mean the liquid hydrocarbons meeting
the specifications provided for in Exhibit "B", attached hereto,
fractionated from the Raw Product.
3
<Page>
'Confidential Treatment Requested'
"STORAGE FACILITY" shall mean the underground storage facilities owned
and operated by Dynegy at Mont Belvieu, Chambers County, Texas,
including, but not limited to, Specification Product storage caverns
and all related surface and subsurface equipment.
"YEAR" OR "YEARLY" shall mean a period of 365 consecutive Days;
provided, however that any Year which contains the date of February 29
shall consist of 366 consecutive Days.
ARTICLE II: TERM
2.1 This Agreement shall have a primary term commencing effective October
* 1, 1999, and ending [REDACTED] (the "Primary Term"), and shall
continue in effect from Year to Year thereafter; provided that either
Party shall have the right to terminate this Agreement effective at the
end of the Primary Term or any Yearly anniversary thereafter by giving
the other Party at least ninety (90) Days prior written notice of its
election to terminate this Agreement.
ARTICLE III: WILLIAMS' PERFORMANCE
3.1 Except as set forth in Section 3.2 and subject to the other terms of
this Agreement, Williams hereby commits for fractionation hereunder and
shall deliver or cause to be delivered to the Delivery Point the Raw
Product which it owns and/or controls and which is delivered to the
Pipeline(s) from the sources listed in Exhibit "A". Williams further
agrees that if at any time beginning January 1, 2000, and at any time
* thereafter, it has delivered less than [REDACTED] of the Fractionation
Volume Reservation based on the Daily average volume for the preceding
ninety (90) Days, then it will commit for fractionation hereunder and
will deliver or cause to be delivered to the Delivery Point during such
time period as necessary to enable Williams to meet the Fractionation
Volume Reservation, additional uncommitted volumes of Raw Product
which Williams owns or controls, if any, or may in the future have
available from sources that are not listed in Exhibit "A" and which
are delivered to any of the Mont Belvieu Fractionators (as defined
hereinafter). For the purpose of this Section 3.1, the term "Mont
Belvieu Fractionators" shall include all fractionation facilities
situated in or near Mont Belvieu, Texas, and the fractionation
facilities currently owned by Phillips Petroleum situated in Sweeney,
Texas, and by Mobil situated in Beaumont, Texas.
3.2 The following volumes of Raw Product shall be excepted from the
commitment set forth in Section 3.1 above.
(a) Raw Product produced from the gas plants listed in Exhibit "A"
and sold and delivered to local markets near such gas plants.
(b) Raw Product produced from the Kutz and Lybrook gas plants
which is currently or in the future may be dedicated to Amoco
pursuant to agreements between Williams or its Affiliates and
Amoco (the "Amoco Dedication"). Upon
4
<Page>
termination and/or expiration of such Amoco Dedication, the
volumes of Raw Product produced from the Kutz and Lybrook gas
plants shall be subject to the committment set forth in
Section 3.1 above unless and/or until such Raw Product is
subsequently dedicated to Amoco.
(c) Any volumes in excess of the Fractionation Volume Reservation
which CBF has elected not to accept pursuant to Section 4.1.
CBF agrees to notify Williams as to its election whether it
will accept such excess volumes within fifteen (15) days
of its receipt of notification from Williams as to the
availability of such excess volumes.
(d) Any volumes dedicated for fractionation in the Fractionator in
accordance with that certain "Option to Acquire Interest in
Cedar Bayou Fractionators, L.P." dated of even date herewith
between Williams Field Services Company and Dynegy Midstream
Services, Limited Partnership.
3.3 Williams shall direct Pipeline to prepare and furnish to CBF and CBF
shall prepare or cause to be prepared during each Month, an allocation
of ownership of the Pipeline's commingled Raw Product, by Components
actually delivered to CBF. Williams and CBF shall accept and rely on
such allocation, unless contested as described in Section 11.4.
3.4 Prior to the beginning of each Month, CBF will estimate the volumes of
Specification Products for which disposition instructions will be
required from Williams. Subject to Section 4.3 below, such estimates
will be established by utilizing the actual volumes of Raw Product
delivered to the Fractionation Facility during the most recent Month
for which actual volumes are available and adjusting for anticipated
variances as may be advised by Williams from time to time. As set forth
in Article X of this Agreement, CBF shall reconcile Monthly statements
detailing Williams' Specification Product movement no later than the
last Day of each succeeding Month following the Month in question.
3.5 Williams acknowledges that it is procuring the fractionation services
under this Agreement for the purpose of fractionating the Raw Product
set forth in Section 3.1 and not for the purpose of reselling such
fractionation services and agrees not to resell such services on a
stand-alone basis. Reselling of said fractionation services shall mean
Williams' transactions involving the purchase or exchange of Raw
Product for fractionation at the Fractionator with the intent of
profiting on such purchase or exchange/fractionation transactions
based in whole or in substantial part on the difference between the
fractionation fee defined or implied in such third party purchase or
exchange agreement and the fractionation fee charged to Williams under
this Agreement. Notwithstanding anything in this Section 3.5 to the
contrary, Williams may include fractionation service under this
Agreement in combination with other services which rely extensively on
the Mid-America Pipeline System, the Seminole Pipeline or the West
Texas LPG Pipeline.
5
<Page>
'Confidential Treatment Requested'
ARTICLE IV: CBF'S PERFORMANCE
4.1 CBF shall accept delivery of and provide fractionation for a maximum
volume of Raw Product committed by Williams hereunder equal to the
Fractionation Volume Reservation. The intial Fractionation Volume
Reservation shall be 35,000 Barrels per Day as determined on a Monthly
Daily average basis. Volumes above the Fractionation Volume Reservation
will be accepted by CBF for fractionation on a space available basis.
4.2 Williams may increase the Fractionation Volume Reservation set forth in
* Section 4.1 in increments of [REDACTED] Barrels per Day up to a maximum
* of [REDACTED] Barrels per Day by giving at least ninety (90) Days prior
written notice to CBF of its election to increase same. It is
understood and agreed that (i) there Must be at least ninety (90) Days
between successive notification dates and (ii) the Fractionation Volume
Reservation may only be exercised once during each ninety (90) Day
Period. Subsequent to January 1, 2000, Dynegy may decrease the
* Fractionation Volume Reservation to [REDACTED] of the Daily average
volume of Raw Product deliveries from Williams at the Delivery Point
for the preceding 90 days (excluding deliveries during the Month of
September, 1999) if (i) the Sources listed in Exhibit "A" have operated
at expected capacity in full ethane recovery mode for the preceding 90
days and (ii) the Daily average volume of Raw Product deliveries from
Williams at the Delivery Point for the preceding 90 days is less than
* [REDACTED] of the Fractionation Volume Reservation.
4.3 Notwithstanding anything in this Agreement to the contrary, during each
Month that Williams delivers Raw Product at the Delivery Point, CBF
shall re-deliver Specification Products ratably during that Month to
Williams (or its designee) at the Redelivery Point or at other
mutually-agreed locations. For purposes of this provision, CBF will
deem that the total volume of Williams Raw Product which has been
nominated for delivery at the Delivery Point during a Month has
actually been delivered ratably throughout that Month so long as at
* least [REDACTED] of such Williams-nominated volume has actually been
delivered at the Delivery Point before the twenty-first (21st) day of
that Month. If the Raw Product Volumes delivered by Williams by the
twenty-first (21st) day of such Month are less than the volumes of
Raw Product nominated by Williams for delivery during such Month, with
the result that there is an imbalance between the volume of Williams'
Raw Product deliveries at the Delivery Point and CBF's deliveries of
Specification Products to Williams (determined in accordance with
Section 4.5 below), CBF shall make ratable returns of Specification
* Products to Williams in the ratio of [[REDACTED] Specification Products
* to Williams] to [[REDACTED] of the Raw Products delivered by Williams
during the remainder of that Month and in the immediately succeeding
Months, as necessary] until any such imbalance is eliminated.
4.4 CBF shall not hold back Specification Products from Williams as a
minimum inventory requirement. However, CBF shall have the right to
allocate the distribution of Specification Products due Williams and
other customers during normal scheduled CBF
6
<Page>
fractionation plant turn-arounds which shall not exceed a total of
seven (7) Days per Year. The foregoing shall not apply during periods
of force majeure, as defined hereinafter.
4.5 The quantity of the five (5) Specification Products due Williams will
be as follows, based on the Pipelines' reported volumes of each
Component which have been delivered for Williams' account:
(1) E/P MIX (80/20): the volume will be equal to (a) 100% of the
ethane Component plus methane Component up to 1.5 liquid
volume percent of the ethane Component, (b) plus
propane Component equal to 25% of the volume in (a) above.
(2) PROPANE: the volume will be equal to 100% of the propane
Component minus the propane included in the EP Mix.
(3) ISOBUTANE: the volume will be equal to 100% of the
isobutane Component.
(4) NORMAL BUTANE: the volume will be equal to 100% of the normal
butane Component.
(5) NATURAL GASOLINE: the volume will be equal to 100% of the
isopentane and heavier Components.
ARTICLE V: TRANSFER OF CUSTODY
5.1 Williams warrants that it has the right to cause the Raw Product to be
fractionated hereunder. Custody of the Raw Product shall transfer to
CBF at the Delivery Point, subject to Williams' right to receive
allocated volumes of Specification Products as provided in Section 4.3
above. Subject to the foregoing, custody of Specification Products
shall be delivered to Williams or its designee at the points more
particularly described in Section 8.1(2) hereinafter.
5.2 It is understood and agreed that (i) title to the Raw Product and the
Specification Product(s) recovered therefrom and stored hereunder
pursuant to the provisions of Article VIII hereof shall remain in
Williams, subject to being commingled with like Raw Product and
Specification Product(s) in CBF's and/or Dynegy's custody, , which
Williams hereby grants unto CBF the right to do so, and (ii)
Specification Product(s) redelivered to Williams by CBF will be
redelivered from such commingled pool of Specification Products. With
respect to the Specification Product(s) stored hereunder pursuant to
the provisions of Article VIII hereof, it is specifically agreed as
follows:
(a) In the event there should be any loss of Specification
Product(s) from the Storage Facility, excluding normal
operating losses, and such loss is not attributable to the
7
<Page>
'Confidential Treatment Requested'
failure of CBF or its agent or representative to exercise that
degree of care as would be exercised by a reasonably careful
Person under like circumstances, then Williams shall be
prorated a portion of the remaining product by Dynegy on the
basis of the ratio of Williams' stored Specification
Product(s) to the total volumes of like stored
Specification Product(s) in such Facility, including, without
limitation, those volumes owned by Williams, CBF and Dynegy.
(b) In the event there should be a loss of William's Specification
Products excluding normal operating losses, and it is
ultimately determined that such loss was attributable to CBF's
or its agent's or representative's failure to exercise that
degree of care as would be exercised by a reasonably careful
Person under like circumstances, then, it is agreed that CBF
shall have the option, in its sole discretion, to replace
Williams' lost volumes as soon as reasonably possible with
like Specification Product(s) or to pay Williams the
replacement value of such lost specification Product(s) at the
time of the loss based on the Monthly average of the daily
high and low prices for such Specification Products as quoted
by OPIS for Mont Belvieu during the Month in which such loss
occured.
ARTICLE VI: MEASUREMENT
6.1 Volumes of Raw Product delivered at the Delivery Point shall be
measured and calculated in accordance with the delivering Pipeline
measurement procedures in effect for the Delivery Point.
6.2 Volumes of Specification Products delivered by CBF to Williams in
accordance with Article IV, shall be measured and calculated in
accordance with CBF's standard measurement procedures at Mont Belvieu
which shall conform to good measurement practices in the industry and
the then Current API Manual of Petroleum Measurement Standards
ARTICLE VII: COMPENSATION TO CBF
7.1 Subject to Article VIII, as full consideration for the fractionation
services provided hereunder, Williams shall pay to CBF a fractionation
fee ("Fractionation Fee") for each Gallon of Raw Product delivered at
the Delivery Point by, or on behalf of, Williams to CBF each Month.
Effective October 1, 1999 through December 31, 1999, the Fractionation
* Fee shall be fixed at [REDACTED] per Gallon. Beginning January 1, 2000,
the Fractionation Fee shall be determined on a calendar quarter basis
by the following formulas determined as of the first Day of such
calendar quarter:
* Fractionation Fee = [REDACTED]
Where:
8
<Page>
'Confidential Treatment Requested'
Fractionation Fee = the fee charged for fractionation
during such calendar quarter.
Fuel = The fuel cost (in $/MMBtu) equivalent to the average
Houston Ship Channel Index of INSIDE FERC'S GAS
MARKET REPORT for natural gas (large packages) for
the proceding calendar quarter.
Elec = The combined average actual cost of purchased
electricity (In CENTS/KWH) at the Fractionator for
the preceding calendar quarter.
CPIU = Consumer Price Index. All Urban Consumers --
("CPI-U"), U.S. city average, All items, for the last
Month of the preceding calendar quarter, as published
by the United States Bureau of Labor Statistics (the
"BLS") or any successor agency thereto (the "CPI-U
Index"). The CPI-U Index shall be taken from the data
published by the BLS, as of the date hereof,
electronically at the following Internet address:
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt,
or at any successor Internet address or as same is
published in hardcopy form.
7.2 During any calendar quarter in which Williams has elected to provide
Fuel pursuant to Article VIII, the Fractionation Fee shall be computed
the same as in Section 7.1, except that the value of "Fuel" in the
formula shall be zero (0).
7.3 During any calendar quarter in which Williams has elected to provide
electrical power pursuant to Article VIII, the Fractionation Fee shall
be computed the same as in Section 7.1, except that the value of
"Elec" in the formula shall be zero (0).
7.4 CBF will provide Williams an E/P Mix as described in Section 4.6 but
will insure Williams will not suffer devaluation of its ethane product
in the market by virtue of such ethane being delivered as E/P Mix
instead of purity ethane. Each calendar Month, a differential value
between purity ethane and E/P Mix shall be calculated by comparing (i)
* [REDACTED] as quoted by the Oil Price Information Service for Mont
* Belvieu during that Month to (ii), [REDACTED] as quoted by OPIS for
Mont Belvieu during that Month.
If the amount in (ii) above is greater than the amount in (i) above,
* then [REDACTED] Subject to the limitations set forth hereinafter, if
the amount in (i) above is greater than the amount in (ii) above,
* then [REDACTED] Williams shall not be required to
9
<Page>
pay to CBF a larger cumulative amount under this Section 7.4 than
the cumulative amount paid by CBF to Williams. If at the time the
calculation set forth in this Section 7.4 reflects that the amount in
(i) above is greater than the amount in (ii) above and if the
cumulative amount paid by CBF to Williams under this Section 7.4
is less than or equal to the cumulative amount paid by Williams to
CBF, then the amount that would otherwise be payable by Williams to CBF
shall instead be accrued by CBF as a credit against future amounts
payable by CBF to Williams under this Section 7.4.
ARTICLE VIII: STORAGE SERVICES
8.1 In connection with the fractionation services to he provided by CBF to
Williams as provided herein, subject to the following terms and
provisions. CBF shall store Williams' Specification Products in the
Storage Facility owned and operated by Dynergy:
(1) PRODUCT STORAGE. For and in consideration of the fees to be
paid by Williams to CBF as provided herein, CBF hereby agrees
to store up to, but not to exceed, the maximum quantity of
Specification Products set forth in Exhibit "C" which is
attached hereto and made a part hereof (the "Storage Volume").
(2) PRODUCT REDELIVERY. Specification Product(s) redelivered to
Williams out of the Storage Facility will only be made on the
request of Williams' designated representative or duty
authorized agent. CBF will not recognize sales, assignments
or transfers of title to Specification Product(s) while in
storage unless made in a manner approved by CBF and Dynegy
in advance and then only to another person or entity that has
entered into a valid storage agreement with Dynegy.
Specification Product(s) redelivered by CBF hereunder shall be
redelivered into any common carrier pipeline currently
connected to Dynegy's terminal facilities adjacent to its
underground storage Facilities ("Dynegy's Terminal").
CBF's redelivery of Specification Product(s) to Williams shall
be subject to operating conditions, rates of delivery,
delivery pressures, scheduling, etc. of the pipeline in which
Williams requests Specification Product(s) be delivered into
(the "Receiving Pipeline"). Custody of the Specification
Product(s) redelivered hereunder shall be deemed to be
transferred at the point where the Specification Product(s)
enters into the Receiving Pipeline and is measured. Williams
shall use its best efforts to give CBF reasonable notice of
withdrawals of Specification Product(s). Redelivery of
Specification Products shall always be subject to the physical
capabilities of Dynegy's Storage Facilities and Terminal.
Measurement of Specification Product(s) redelivered hereunder
shall take place as near to the points of redelivery as
practicable to CBF and shall be made by CBF in accordance with
Dynegy's standard measurement procedures which shall conform
to good measurement practices in the industry. All
measurements made by or on behalf of CBF shall be binding on
the parties hereto unless proven to be in error. Williams
shall have the right to witness all such measurements. Tank
cars and trucks will be handled on a first in first out
basis.
10
<Page>
(3) CERTIFICATION OF EQUIPMENT. If in the future Dynegy allows
redelivery of Specification Product(s) by tank cars and/or
trucks, Williams agrees that all tank cars and trucks used
to make withdrawals at the Dynegy Terminal shall meet or
exceed all federal, state and municipal safety, operating
and insurance requirements and further agrees to certify
same to CBF and Dynegy and provide copies of all government
approvals to it before the tank cars and trucks will be
accepted at Dynegy's Terminal and/or Facilities.
(4) STENCHING. CBF will odorize or cause to be odorized all
shipments of propane out of storage by tank car or truck
in accordance with standard industry practice (currently
1.5 pounds ethyl mercaptan per 10,000 Gallons), or as
required by governmental agencies having proper
jurisdiction, and will odorize shipments of other
Specification Product(s) if requested in writing by
Williams to do so. Williams agrees to pay CBF for providing
this odorization service the fees set forth in Exhibit "C".
Williams accepts all responsibility for improper amounts of
malodorant subsequent to shipment, the dissipation of
malodorant and, where CBF and/or Dynegy provides
documentation of the odorization required by this
Agreement. Williams agrees to defend, indemnify and hold
CBF and Dynegy and its parents, subsidiaries and Affiliates
and its and their agents, officers, directors, employees,
representatives, successors and assigns harmless from any
and all liabilities, losses, damages, demands, claims,
penalties, fines, actions, suits, legal, administrative or
arbitration or alternative dispute resolution proceedings,
judgments, orders, directives, injunctions, decrees or
awards of any jurisdiction, costs and expenses (including
attorney's fees and any cost or expense of incident
investigation) or any liability arising from any claims of
whatever kind due to injuries or damages which occur after
delivery to Williams and arise in connection with Williams'
or its customer's or their customer's transportation,
storage, use, handling, or resale of Specification
Product(s) covered hereunder. This indemnification
obligation includes among any other claims, those
comprising lack of or inadequate warning materials,
improper amounts, use or type of odorant, "odorant fading,"
lack of warning on supplemental warning systems (such as
gas detectors) and improper training or monitoring of
Williams', its customer's and/or their customer's warning
and/or training programs. Williams' indemnity obligation
shall be applicable even if such damages are determined to
have been partly caused by the fault of CBF and/or Dynegy
or if liability without fault is imposed on CBF and/or
Dynegy, the only exception to such obligation being
where the fault of CBF and/or Dynegy is determined to be
the sole cause of such damages.
(5) STORAGE AND HANDLING CHARGES.
11
<Page>
(a) Williams shall pay CBF Monthly the rates, fees and
charges set forth in Exhibit "C", including, but
not limited to, the Receipt Fee. Throughput Charges
and Redelivery Fees, as applicable.
(b) If at the end of any Month the total volume of all
Specification Products stored by Williams,
excluding undelivered volumes of Specification
Product(s) for which timely distribution
instructions have been given, exceeds the Storage
Volume, Williams shall pay to CBF the Excess
Storage fee as set forth in Exhibit "C". Williams
agrees to use all reasonable efforts to prevent
volumes of Specification Products stored hereunder
from exceeding the Storage Volume at any time during
each Month.
(c) If at the expiration or termination of this
Agreement Williams continues to have Specification
Product(s) in storage (which the parties expressly
do not contemplate and CBF in no way condones)
which was delivered into storage under the terms
of this Agreement and for which timely
distribution instructions have not been given,
then Williams shall pay to CBF the Excess Storage
fee as set forth in Exhibit "C" each Month
thereafter based on the highest balance of all
Specification Products held in storage at any time
during such Month. CBF's acceptance of funds
pursuant to this Section shall in no way be
construed as a renewal of this Agreement, PROVIDED,
HOWEVER, Williams shall continue to be bound by all
terms and conditions of this Agreement as long as
any of Williams' Specification Product(s) remains
in storage.
(d) In addition to the provisions of (c) above, in the
event Williams fails to remove its Specification
Product(s) at the expiration of the term of this
Agreement, CBF shall have the right to sell all or
any portion of such Specification Product(s) at
Mont Belvieu OPIS prices and on terms as CBF, in
its sole discretion, deems appropriate under the
then existing circumstances. If CBF sells all or a
portion of Williams' Specification Product(s)
under the terms of this Section 5(d), within
thirty (30) Days of its receipt of the proceeds
derived from the sale of such Specification
Product(s), CBF shall remit same to Williams less
(i) all of CBF's reasonable costs and expenses
associated with any such sale(s), (ii) a sales
commission equal to five percent (5%) of the
gross proceeds of such sale(s), and (iii) any fees
then due and owed by Williams to CBF.
(6) LIEN FOR UNPAID CHARGES. Williams hereby grants unto CBF a
lien against any Specification Product(s) of Williams
remaining in storage at any time for any overdue amounts
which may be owing by Williams to CBF hereunder which are
not disputed in writing by Williams in accordance with the
provisions of Section 12.1 hereof. CBF specifically
reserves the right to refuse to redeliver Specification
12
<Page>
'Confidential Treatment Requested'
Product(s) stored by Williams at any time that there
remains any overdue undisputed amounts due and owing by
Williams to CBF according to the terms hereof. Without
prejudice to any other remedies that CBF may have at law,
in equity and/or pursuant to the terms and provisions
hereof. Dynegy may enforce the lien granted herein by
public or private sale of any or all of Williams'
Specification Product(s) remaining in storage and at any
time or place and at Mont Belvieu OPIS prices after giving
Williams not less than fifteen (15) Days notice of such
sale.
ARTICLE IX: FUEL AND ELECTRICITY SUPPLY OPTIONS
9.1 Williams may, on a calendar quarter basis, elect to supply the
volume of fuel gas required to fractionate its Raw Product by giving
CBF thirty (30) Days prior written notice of such election ("Fuel
Gas Supply Option").
9.2 If Williams elects to exercise its Fuel Gas Supply Option, Williams
* shall supply to CBF, at Mont Belvieu, [REDACTED] Btus of fuel gas for
each Gallon of Raw Product delivered to CBF by Williams hereunder.
9.3 For each Month in which Williams elects to exercise its Fuel Gas
Supply Option, an estimated fuel supply requirement will be
determined by multiplying the estimated number of Gallons that
* Williams will deliver to CBF during said Month by [REDACTED] Btu's
per Gallon. CBF shall maintain an imbalance account to keep track of
under and over deliveries of fuel gas by Williams. The Month-end
balance in such imbalance account shall be cleared by (1) a cash
payment to CBF by Williams if Williams has, in the aggregate,
under-delivered fuel gas relative to its actual fuel gas requirements
for such Month or (2) a cash payment to Williams by CBF if Williams
has, in the aggregate, over-delivered fuel gas relative to its actual
fuel gas requirements for such Month. Such payment shall be calculated
by multiplying the total quantity of such imbalance times the Houston
Ship Channel Index for large packages (in $/MMBtu) for such Month as
published in INSIDE F.E.R.C.'S GAS MARKET REPORT.
9.4 If, and to the extent that, CBF incurs any transportation charges or
penalties from any natural gas transporter as a result of over- or
under-deliveries by Williams of fuel gas to such transporter
relative to Williams's estimate of its fuel gas requirements for
such Month, CBF shall bill Williams for such charges or penalties on
CBF's Monthly bill under Article XII, and Williams shall pay such
amount as specified therein.
9.5 Williams reserves the right to elect to supply CBF the amount of
electrical power required to fractionate its Raw Product by giving
CBF thirty (30) Days' prior written notice of such election
("Electricity Supply Option"); provided, however, such Electricity
Supply Option shall only become available and be implemented through
mutually
13
<Page>
'Confidential Treatment Requested'
agreeable procedures negotiated in good faith by the Parties after
there is an industry mechanism in place to allow for same.
9.6 If Williams elects to exercise its Electricity Supply Option,
* Williams shall supply to CBF, at Mont Belvieu, [REDACTED] of a
Kilowatt-hour (KWH) of electricity for each Gallon of Raw Product
delivered to CBF by Williams hereunder.
ARTICLE X: TAXES AND OTHER PAYMENTS
10.1 Williams shall be responsible for the payment of any royalties
overriding royalties, and other similar payments due or to become
due on the Raw Products or the Specification Products which are
subject to this Agreement. Any tax applicable to the
production, ownership or transfer of the Raw Products or the
Specification Products or the services provided by CBF hereunder,
including but not limited to any tax applicable to stored volumes of
Specification Products, shall be borne and paid by Williams unless
such tax is by law imposed upon CBF, in which event, such tax shall
be paid by CBF and reimbursed by Williams upon receipt of invoice
for same. Williams shall indemnify and hold CBF and their respective
Affiliate's directors, officers, agents and employees harmless from
and against any and all claims, demands or causes of action of any
kind, together with all loss, damage and expense (including court
costs and attorney's fees) arising with respect to the payment of
any taxes, royalties, overriding royalties and other payments due or
to become due on the services, Raw Products or Specification
Products which are subject to this agreement.
ARTICLE XI: ACCOUNTING AND AUDIT PROCEDURES
11.1 Williams or its designee shall furnish the following reports to CBF:
(i) Williams' share of Components in the Raw Product delivered each
Month for the Month in question by the tenth (10) Day of the next
succeeding Month; (ii) instructions for delivery of Specification
Products for the Month in question during the Month in question, as
set forth in Section 3.4; and (iii) twelve (12) Month forecast of
Raw Product projected to be delivered under this Agreement, as
requested by CBF from time to time.
11.2 CBF shall furnish each Month for the preceding Month, the following
reports to Williams: (i) volumes of Williams' Specification Products
attributable to the Raw Product delivered to CBF each Month, in
accordance with the reconciliation described in Section 3.4; (ii)
volumes of Specification Products delivered to Williams or its
designee each Month in accordance with the reconciliation described
in Section 3.4; and (iii) Williams' inventories of Specification
Product(s) each Month, in accordance with the reconciliation
described in Section 3.4. CBF shall furnish initial reports of these
items by the twentieth (20) Day of the Month succeeding, the Month
and shall fully complete volume and money reconciliations as
described in Section 11.3 below.
14
<Page>
11.3 Volume and money reconciliation shall be prepared by CBF on a
Monthly basis. Williams and CBF shall cooperate to identify and
reconcile volume balances and amounts owed. As CBF completes each
Month's reconciliation, a copy of the reconciliation shall be sent
to Williams but no later than the last Day of the Month succeeding
the Month in question. The intent of the parties is that any
imbalances between volumes of Raw Product delivered at the Delivery
Point by Williams and volumes of Specification Products delivered by
CBF to Williams at the Redelivery Point (as any such imbalances are
determined in accordance with Section 4.5) shall be resolved on a
volumetric basis as set forth in Section 4.3. No monetary resolution
of any such imbalance shall be effective unless both parties have
agreed, in writing, thereto.
11.4 All invoices or statements issued by CBF and any volume and money
reconciliation reports, or balancing reports, during any calendar
Year shall conclusively be presumed to be true and correct after
twenty-four (24) Months following the end of any such calendar
Year, unless within the said twenty-four (24) Month period the other
Party takes written exception thereto and makes claim on the Party
issuing the invoice, statement or report for adjustment.
11.5 Williams, upon at least thirty (30) Days prior written notice to
CBF, shall have the right to audit CBF's records pertaining to
performance under this Agreement, for any calendar Year within the
twenty-four (24) Month period following the end of such calendar
Year; provided, however, the making of an audit shall not extend
the time for the taking of written exception to and the adjustments
provided for in Section 11.4. Williams shall make every reasonable
effort to conduct an audit in a manner which will result in a
minimum of inconvenience to CBF. CBF shall reply in writing to an
audit report within ninety (90) Days after receipt of such report.
11.6 CBF shall retain all financial and volume records for a minimum of
thirty-six (36) Months following the end of any calendar Year.
ARTICLE XII: BILLING AND PAYMENT
12.1 After receiving allocation information from Pipeline at mid-Month
and again at the end of each Month, CBF shall furnish to Williams an
invoice reflecting all applicable fees and charges due under this
Agreement and Williams shall pay to CBF via electronic funds
transfer the amounts due no later than ten (10) Days after Williams'
receipt of invoice. If the Day on which any payment is due is not a
Business Day, then the relevant payment shall be due upon the
immediately succeeding Business Day. Any amounts which remain due
and owing after the due date shall bear interest thereon at the Base
Rate. If a good faith dispute arises as to the amount payable in any
statement, the amount not in dispute shall be paid. If Williams
elects to withhold any payment otherwise due as a consequence of a
good faith dispute, Williams shall provide CBF with written notice
of its reasons for withholding payment and, if the amount of such
invoice is equal to or greater than ten thousand dollars ($10,000)
or the total aggregate amount of all invoices
15
<Page>
in which Williams has withheld payment and is outstanding at any
time is greater than or equal to fifty thousand dollars ($50,000).
Williams shall simultaneously place the disputed amount into an
escrow account at a mutually acceptable commercial bank, pending
resolution of the dispute. Williams' election to withhold payment
from CBF and escrow same as provided herein shall be exercised
within thirty (30) Days from Williams' receipt of the invoice giving
rise to such good faith dispute, otherwise, Williams' right to
withhold payment and escrow same as provided herein shall terminate.
If it is subsequently determined, whether by mutual agreement of the
Parties or otherwise, that (i) Williams is required to pay all or
any portion of the disputed amounts to CBF or (ii) Williams is
entitled to reimbursement for an invoice it paid, in addition to
paying such amounts, the Party making such payment also shall pay
interest accrued on such amounts at the Base Rate from (1) the
original due date until paid in full, if Williams is required to pay,
or (2) the date Williams paid the disputed invoice, until paid in
full, if CBF is required to pay.
ARTICLE XIII: FORCE MAJEURE
13.1 In the event either Party hereto is rendered unable, wholly or in
part, by reason of Force Majeure to carry out its obligations under
this Agreement, upon such Party's giving notice and reasonably full
particulars of such Force Majeure in writing to the other Party
after the occurrence of the cause relied on, then the obligations of
such Party, other than the obligation to pay money due hereunder,
insofar and only insofar as they are affected by such Force Majeure,
shall be suspended during the continuance of any inability so caused,
but for no longer period; and such cause shall, so far as reasonably
possible, be remedied with all reasonable dispatch.
13.2 The term "Force Majeure" shall mean any causes, whether the kind
enumerated herein or otherwise, which are not within the control of
the Party claiming suspension and which by the exercise of due
diligence such Party is unable to prevent or overcome and may
include acts of God, strikes, lockouts or other industrial disputes
or disturbances, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, tornadoes, hurricanes, storms, and warnings for any of the
foregoing which may necessitate the precautionary shut-down of
wells, plants, pipelines, gathering systems, loading facilities,
terminals, the Fractionator or any portion thereof, or other related
facilities, floods, washouts, arrests and restraints of governments
(either federal, state, civil or military), civil disturbances,
explosions, sabotage, breakage or accidents to equipment, machinery,
plants, the Fractionator or any portion thereof, or lines of pipe,
the lack or failure of brine or brine handling capacity, the making
of repairs or alterations to any of the foregoing, inability to
secure labor or materials, partial or entire failure of wells or gas
supply, electric power shortages or outages, necessity for
compliance with any court order, or any law, statute, ordinance,
rule, regulation or order promulgated by a governmental authority
having or asserting jurisdiction, inclement weather that
necessitates extraordinary measures and expense to construct
facilities and/or maintain operations. Such term shall likewise
include, in those instances where either Party hereto
16
<Page>
is required to obtain servitudes, rights-of-way, grants, permits or
licenses to enable such Party to fulfill its obligations hereunder,
the inability of such Party to acquire, or delays on the part of
such Party in acquiring, at a reasonable cost and after the
exercise of reasonable diligence, such servitudes, rights-of-way
grants, permits or licenses, and in those instances where either
Party hereto is required to furnish materials and supplies for the
purpose of constructing or maintaining facilities to enable such
Party to fulfill its obligations hereunder, the inability of such
Party to acquire, or delays on the part of such Party in acquiring,
at reasonable cost and after the exercise of reasonable diligence,
such materials and supplies. The term "Force Majeure" shall also
include any event of force majeure occurring with respect to the
facilities or services of either Party's suppliers or customers
providing a service or providing any equipment, goods, supplies or
other items necessary to the performance of such Party's
obligations, and shall also include curtailment or interruption of
deliveries or services by such third-party suppliers or customers as
a result of an event defined as Force Majeure hereunder.
13.3 Notwithstanding Section 12.1 above, it is understood and agreed that
the settlement of strikes or lockouts shall be entirely within the
discretion of the Party having the difficulty, and that the above
requirement that any Force Majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes or
lockouts by acceding to the demands of the opposing Party when such
course is inadvisable in the discretion of the Party having the
difficulty.
13.4 During any period of force majeure claimed by CBF, Williams shall
have the right to make alternative arrangements for the
fractionation of Raw Product dedicated to CBF provided that, by so
doing, Williams shall not prejudice Williams' rights and obligations
after termination of such force majeure to resume fractionating such
Raw Product hereunder and shall not relieve CBF of any rights and
obligations to provide fractionation hereunder.
ARTICLE XIV: INDEMNIFICATION AND LIMITATION OF LIABILITY
14.1. WILLIAMS' INDEMNITIES: REGARDLESS OF THE PRESENCE OR ABSENCE OF ANY
INSURANCE COVERAGE MAINTAINED BY EITHER PARTY HERETO, WILLIAMS
HEREBY RELEASES, AND AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS, CBF, ITS OPERATOR, PARTNERS AND ITS PARTNERS' AFFILIATES
AND THOSE ENTITIES' RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS AND REPRESENTATIVES ("CBF PARTIES") FROM AND AGAINST ANY AND
ALL CLAIMS, DEMANDS, CAUSES OF ACTION, LIABILITY, LOSS, DAMAGE,
PENALTIES, FINES, COST AND EXPENSE, INCLUDING COURT COSTS AND
REASONABLE ATTORNEY'S FEES IN CONNECTION THEREWITH ("CLAIMS"),
ARISING OUT OF OR RELATED TO:
17
<Page>
(1) DESTRUCTION, LOSS OR CONTAMINATION OF WILLIAMS' RAW PRODUCT
AND SPECIFICATION PRODUCTS ARISING FROM ANY CAUSE OTHER THAN
DYNEGY'S FAILURE TO EXERCISE THAT DEGREE OF CARE AS WOULD BE
EXERCISED BY A REASONABLY CAREFUL PERSON UNDER LIKE
CIRCUMSTANCES: and
(2) Any Claims arising from injuries or damages to persons or
properties arising from damages to the tangible physical
property in connection with Williams', or its contractors,
handling and possession of Williams' Raw Product or
Specifications Products prior to delivery of same to CBF and
after delivery of same from CBF back to Williams or its
designated representative to the extent of Williams' or its
contractor's negligence or legal fault for same.
14.2 CBF INDEMNITIES: REGARDLESS OF THE PRESENCE OR ABSENCE OF ANY INSURANCE
COVERAGE MAINTAINED BY EITHER PARTY HERETO, CBF HEREBY RELEASES, AND
AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS, WILLIAMS, AND
ITS AFFILIATES, AND AGENTS AND THOSE ENTITIES' RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES ("WILLIAMS PARTIES")
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION,
LIABILITY, LOSS, DAMAGE, PENALTIES, FINES, COST AND EXPENSE, INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL AND INCLUDING COURT COSTS AND
REASONABLE ATTORNEY'S FEES IN CONNECTION THEREWITH ("CLAIMS"), ARISING
FROM:
(1) INJURIES (INCLUDING DEATH) OR DAMAGES TO PERSONS (INCLUDING,
WITHOUT LIMITATION, THE WILLIAMS PARTIES) OR PROPERTY ARISING
FROM OR IN CONNECTION WITH CBF'S, OR ITS CONTRACTORS',
HANDLING AND POSSESSION OF WILLIAMS' RAW PRODUCT OR
SPECIFICATION PRODUCTS WHILE SAME ARE IN CBF'S POSSESSION AND
PRIOR TO DELIVERY OF SAME TO WILLIAMS AT THE STORAGE FACILITY
TO THE EXTENT OF CBF'S OR ITS CONTRACTOR'S NEGLIGENCE OR LEGAL
FAULT FOR SAME; and
(2) DESTRUCTION, LOSS OR CONTAMINATION OF WILLIAMS' RAW PRODUCT OR
SPECIFICATION PRODUCTS ARISING FROM DYNEGY'S FAILURE TO
EXERCISE THAT DEGREE OF CARE AS WOULD BE EXERCISED BY A
REASONABLE CAREFUL PERSON UNDER LIKE CIRCUMSTANCES.
14.3 LIMITATION OF LIABILITY:
(a) EXCEPT AS TO THIRD PARTY CLAIMS COVERED BY THE INDEMNITY
PROVISIONS OF SECTIONS 13.1 AND 13.2, NEITHER CBF, CBF'S
OPERATOR NOR WILLIAMS SHALL BE
18
<Page>
RESPONSIBLE OR LIABLE TO THE OTHER, OR TO THEIR AGENTS, FOR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
ARISING OUT OF THIS AGREEMENT OR ANY BREACH HEREOF, REGARDLESS
OF THE CAUSES OF SAME, INCLUDING ANY SITUATION WHERE SUCH
DAMAGES ARE CAUSED BY THE NEGLIGENCE OR FAULT OF THE PARTY
WHOSE LIABILITY IS LIMITED HEREBY.
(b) NOTWITHSTANDING ANYTHING TO CONTRARY SET FORTH IN THIS
AGREEMENT, , CBF SHALL NOT BE RESPONSIBLE FOR ANY LOSSES,
INJURIES OR DAMAGES HEREUNDER, HOWEVER CAUSED, INCLUDING,
WITHOUT LIMITATION, LOSSES, INJURIES OR DAMAGES COVERED UNDER
THE INDEMNITY PROVISIONS SET FORTH ABOVE, IN EXCESS OF THE
FEES AND RATES PAID BY WILLIAMS TO CBF AS PROVIDED HEREIN
DURING THE EIGHTEEN MONTHS IMMEDIATELY PRECEDING THE DATE ON
WHICH SUCH LOSS, INJURY OR DAMAGE OCCURRED.
14.4 NOTICE OF CLAIM AND FILING OF SUIT. Claims by Williams and all other
Persons claiming, by, through or under Williams with respect to the
Specification Product stored in the Storage Facility, must be presented
in writing to CBF within a reasonable time, and in no event later than
sixty (60) Days after (i) Williams' Specification Product(s) is
redelivered or removed from the Storage Facility or (ii) Williams is
notified by Dynegy that loss of or injury to the Specification
Product(s) has occurred, whichever is shorter. No action may be
maintained by Williams and any other Persons claiming by, through or
under Williams, against CBF for loss of or injury to Specification
Product(s) stored in the Storage Facility unless a written claim
therefor is received by CBF within the time periods set forth herein
and such action is commenced within nine (9) Months after (a) Williams'
Specification Product(s) is redelivered or removed from the Storage
Facility or (b) Williams is notified by CBF that loss of or injury to
Specification Product(s) has occurred, whichever is shorter. In the
situation where CBF notifies Williams of a loss or injury to
Specification Product(s), the time limits for making written claims and
the maintaining of actions after notice, as set forth herein, begin on
the date such notice is sent by CBF.
ARTICLE XV: MISCELLANEOUS
15.1 EXISTING LAWS AND REGULATIONS. This Agreement and the operations
hereunder shall be subject to the applicable federal and state laws and
the applicable orders, laws, rules and regulations of any state or
federal authority having or asserting jurisdiction, but nothing
contained herein shall be construed as a waiver of any right to
question or contest any such order, law, rule or regulation. The
parties shall be entitled to regard all such laws, rules, regulations
and orders as valid and may act in accordance therewith until such time
as the same may be invalidated by final judgment in a court of
competent jurisdiction.
15.2 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES
ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED,
ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, AS THE SAME MAY BE AMENDED FROM
<Page>
TIME TO TIME, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW
PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS.
15.3 WAIVER. No waiver by either Party of any default under this Agreement
or any of the provisions of this Agreement shall be deemed to be a
waiver of any future default or any other provision hereof, whether of
a like or a different character. No waiver shall be effective unless
made in writing and signed by the Party to be charged with such waiver,
nor shall waiver constitute a continuing waiver unless expressly
provided by the Party to be charged with such waiver.
15.4 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors
and assigns. Notwithstanding the foregoing, neither Party may assign
this Agreement, nor any interest herein, without the prior written
consent of the other Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that a Party may from time to
time (i) designate an Affiliate to perform this Agreement, either in
whole or in part, such performance being considered that of the Party
hereto, or (ii) assign this agreement to an Affiliate without obtaining
the other Party's consent thereto. It is understood, however, that by
such designation or assignment, said Party hereto does not thereby
avoid obligations imposed by the terms and provisions hereof, past
present or future. Williams further specifically agrees that it will
not assign its interest in the volumes of Raw Product dedicated to this
Agreement without the prior written consent of CBF, which consent
shall not be unreasonably withheld; provided such assignment is made
subject to this Agreement and any Assignee ratifies and adopts this
Agreement in writing.
15.5 EXHIBITS. Unless specifically otherwise provided, if any term or
condition expressed or implied in any Exhibit to this Agreement
conflicts or is at variance with any term or condition of this
Agreement, this Agreement shall prevail. All Exhibits as referenced
herein are attached hereto and made a part hereof.
15.6 DTPA WAIVER. THE PARTIES CERTIFY THAT THEY ARE NOT "CONSUMERS" WITHIN
THE MEANING OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION
ACT, SUBCHAPTER E OF CHAPTER 17, SECTIONS 17.42, ET SEQ., OF THE TEXAS
BUSINESS AND COMMERCE CODE, AS AMENDED ("DTPA"). THE PARTIES COVENANT,
FOR THEMSELVES AND FOR AND ON BEHALF OF ANY SUCCESSOR OR ASSIGNEE,
THAT, IF THE DTPA IS APPLICABLE, (a) THE PARTIES ARE "BUSINESS
CONSUMERS" AS THAT TERM IS DEFINED IN THE DTPA, (b) OTHER THAN SECTION
17.555 OF THE TEXAS BUSINESS AND COMMERCE CODE, EACH PARTY HEREBY
WAIVES AND RELEASES ALL OF ITS RIGHTS AND REMEDIES UNDER THE DTPA AS
APPLICABLE TO THE OTHER PARTY AND ITS SUCCESSORS AND ASSIGNS, AND (c)
EACH PARTY SHALL DEFEND AND INDEMNIFY THE OTHER FROM AND AGAINST ANY
AND ALL CLAIMS OF OR BY THAT PARTY OR ANY OF ITS SUCCESSORS AND ASSIGNS
OR ANY OF ITS OR THEIR AFFILIATES BASED IN WHOLE OR IN
<Page>
PART ON THE DTPA, ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTION
SET FORTH IN THIS AGREEMENT.
15.7 HEADINGS, ARTICLES AND SECTIONS. All references to "Articles" and
"Sections" herein pertain to Articles and Sections of this Agreement,
unless expressly Stated otherwise. Headings are for purposes of
reference only and shall not be used to construe the meaning of this
Agreement.
15.8 PRINCIPLES OF CONSTRUCTION AND INTERPRETATION. In construing this
Agreement, the following principles shall be followed:
(i) no consideration shall be given to the fact or presumption
that one Party had a greater or lesser hand in drafting this
Agreement:
(ii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate:
(iii) the word "includes" and its syntactical variants mean
"includes, but is not limited to" and corresponding
syntactical variant expressions: and
(iv) the plural shall be deemed to include the singular and vice
versa, as applicable.
15.9 NOTICES. Any notice, request, instruction, correspondence, or other
documentation to be given hereunder by either Party to the other shall
be in writing and delivered personally or mailed by registered or
certified mail, postage prepaid and return receipt requested, or
facsimile as follows:
FOR CBF:
To: Cedar Bayou Fractionators, L.P.
c/o Dynegy Midstream Services, Limited
Partnership
Attention: Vice President, Asset Marketing and Services
At: 1000 Louisiana, Suite 5800
Houston, Texas 77002-5050
Phone: (713) 507-3843
FAX: (713) 767-8286
21
<Page>
With a copy to: Vice President and General Counsel
Dynegy Midstream Services, Limited Partnership
1000 Louisiana, Suite 5800
Houston, TX 77002-5050
Phone: 713-507-3725
Fax: 713-507-6987
FOR WILLIAMS (EXCEPT ACCOUNTING MATTERS):
To: Williams Energy Marketing & Trading Company
Attention: Vice President, Energy Marketing and Trading
At: One Williams Center
Tulsa, Oklahoma 74172
Phone: (918) 573-8525
With a copy to: Williams Energy Marketing & Trading Company
Attention: Director of Margins Management
At: 1800 S. Baltimore Avenue
P.O. Box 645
Tulsa, Oklahoma 74101-0645
Phone: (918) 599-3771
FAX (918) 581-1495
FOR WILLIAMS ACCOUNTING MATTERS:
To: Williams Energy Marketing & Trading Company
Attention: Senior Distribution Representative
At: One Williams Center
Tulsa, Oklahoma 74172
Phone: (918) 573-2919
A notice sent by facsimile shall be deemed to have been receive by the
close of the first Business Day following the Day on which it was
transmitted and confirmed by transmission report or such earlier time
as confirmed orally or in writing by the receiving Party. Notice by
U.S. Mail, whether by U.S. Express Mail, registered mail or certified
mail, or by overnight Courier shall be deemed to have been received by
the close of the second Business Day after the Day upon which its was
sent, or such earlier time as is confirmed orally or in writing by the
receiving Party. Any Party may change its address or facsimile number
by giving notice of such change in accordance with herewith.
15.10 NO THIRD PARTY BENEFICIARY. This Agreement is for the sole benefit of
the Parties and their respective successors and permitted assigns, and
shall not inure to the benefit of any other person whomsoever, it being
the intention of the Parties that no third person shall
22
<Page>
be deemed a third party beneficiary of this Agreement or otherwise have
any rights hereunder.
15.11 SEVERABILITY. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under the present or future laws effective
during the term of this Agreement, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a
part of this Agreement, and (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected
by the illegal, invalid, or unenforceable provision or by its severance
from this Agreement. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there will be added automatically as a part of
this Agreement a provision similar in terms to such illegal, invalid,
or unenforceable provision as may be possible and as may be legal,
valid, and enforceable. If a provision, the foregoing event shall not
affect the validity or enforceability in that jurisdiction of any
other provision of this Agreement nor the validity or enforceability in
other jurisdictions of that or any other provision of this Agreement.
15.12 ENTIRE AGREEMENT AND AMENDMENT. This Agreement, including, without
limitation, all exhibits hereto, integrates the entire understanding
between the Parties with respect to the subject matter covered and
supersedes all prior understandings, drafts, discussions, or
statements, whether oral or in writing, expressed or implied, dealing
with the same subject matter. This Agreement may not be amended or
modified in any manner except by a written document signed by both
parties that expressly amends this Agreement.
15.13 SETOFFS AND COUNTERCLAIMS. Except as otherwise provided herein, each
Party reserves to itself all rights, set-offs, counterclaims, and
other remedies and/or defenses which that Party is or may be entitled
to arising from or out of this Agreement or as otherwise provided by
law.
15.14 NO PARTNERSHIP OR ASSOCIATION. Nothing contained in this Agreement
shall be construed to create an association, trust, partnership, or
joint venture or impose a trust or partnership duty, obligation, or
liability on or with regard to either Party.
15.15 NO COMMISSIONS, FEES OR REBATES. Except as expressly authorized by this
Agreement, no director, employee or agent of either Party shall give or
receive any commission, fee, rebate gift or entertainment of
significant cost or value in connection with this Agreement. Any
representative or representative(s) authorized by either Party may
audit the applicable records of the other Party for the purpose of
determining whether there has been compliance with this Section.
15.16 WILLIAMS' OPTION TO TERMINATE EARLY. If by the close of business
February 15, 1999, Williams and Dynegy have not reached a mutually
agreeable accord on one or more of the Ancillary Deals identified in
the Letter Agreement dated July 13, 1998, between
23
<Page>
Dynegy and Williams, then Williams shall have the right during the
succeeding thirty (30) Day period to terminate this Agreement
effective as April 1, 2000. If Williams' elects to exercise this
termination option, the fractionation fee described in Section 7.1
shall be changed to 1.88 cents per Gallon. To exercise this option,
Williams must provide written notification of its election to
terminate this Agreement early to the other party prior to March 1,
1999.
15.17 DYNEGY BOARD OF DIRECTORS APPROVAL. Notwithstanding the execution of
this Agreement by representatives of CBF as set forth below, it is
understood and agreed that this Agreement is being entered into by the
Parties hereto in connection with other Agreements entered into or to
be entered into by one or more of the parties hereto and others,
including, but not limited to, an Option Agreement between CBF and an
affiliate of Williams, an Option Agreement between an affiliate of
Williams and Dynegy, and a Storage Agreement between CBF and Seminole
Pipeline Company (collectively, the "Related Agreements"), all of
which, including this Agreement, are subject to the approval by the
senior management of Dynegy and/or the Board of Directors of Dynegy's
ultimate parent, Dynegy, Inc. It is understood and agreed that if the
senior management of Dynegy and the Board of Directors of Dynegy,
Inc., if required, fails to approve all of the Related Agreements, and
this Agreement by December 31, 1998, then, upon written notification by
Dynegy, this Agreement shall become null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Day and Year first above written.
CEDAR BAYOU FRACTIONATORS, L.P.
By: DYNEGY MIDSTREAM SERVICES,
LIMITED PARTNERSHIP, Operator
By: DYNEGY MIDSTREAM G. P., INC., ITS General Partner
By: /s/ Stephen A. Furbacher
------------------------------
Title: PRESIDENT
----------------------------
WILLIAMS ENERGY MARKETING & TRADING COMPANY
By: /s/ Steven Malcolm
------------------------------
Title: President and CEO
---------------------------
24
<Page>
EXHIBIT "A"
to
Fractionation Agreement
by and between
Cedar Bayou Fractionators, L.P.
and
Williams Energy Marketing & Trading Company
WILLIAMS' DEDICATED PLANTS
<Table>
<Caption>
GAS PLANTS LOCATION
- ---------- --------
Echo Springs Carbon County, Wyoming
Ignacio La Plata County, Colorado
Kutz San Juan County, New Mexico
Lybrook Rio Arriba County, New Mexico
Opal Lincoln County, Wyoming
Lisbon San Juan County, Utah
</Table>
OTHER SOURCES:
Any other injection points along the Mid America Pipeline System or the
Seminole Pipeline in which Raw Product owned and/or controlled by Williams is
injected and which is to be transported to and fractionated at Mont Belvieu,
Texas.
25
<Page>
EXHIBIT "B"
to
Fractionation Agreement
by and between
Cedar Bayou Fractionators, L. P.
and
Williams Energy Marketing & Trading Company
ETHANE-PROPANE
80-20 MIXTURE
SPECIFICATION
Product characteristics with test methods are herein specified for
ethane-propane 80-20 mixtures received by Cedar Bayou Fractionators, L.P..
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Methane (Percent of Ethane) 2.0 GPA 2177
Ethylene (Percent of Ethane) 1.0
Methane, Ethane & Ethylene 78.0 82.0
Propane, Propylene, & Butanes 18.0 22.0 ASTM D-2163
Propylene 1.0
Butanes 0.8
2. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor
is used.)
Corrosion Additive or Inhibitor.
PPM by Weight 1 Applicable Industry
Practices
3. TOTAL SULFUR
PPM by Weight in Liquid 120 ASTM D-3246
4. DRYNESS No Free Water Visual
5. CARBON DIOXIDE
PPM by Weight in Liquid 1.000 GPA 2177
</Table>
PRODUCT ACCOUNTING
For accounting purposes, methane and ethylene shall be considered ethane,
propylene and butanes shall be considered propane within the above listed
specification limits.
Any excess of these hydrocarbon Components above the specification limits
shall not be accounted for.
1
<Page>
PROPANE SPECIFICATION
Product characteristics with test methods are herein specified for propane
received by Cedar Bayou Fractionators, L.P.. This product meets the
requirement of the GPA HD-5 propane specification.
<Table>
<Caption>
TEST METHODS LATEST
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM REVISION
- ----------------------- ------- ------- -------------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume Ethane As limited by
other Components
& vapor pressure.
Propane 90.0 100
Propylene 5.0 ASTM D-2163
Butanes & Heavier 2.5
2. VAPOR PRESSURE
Psig @ 100 DEG. F 208 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor. PPM by Weight. 1 Applicable Industry Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 120 ASTM D-3246
5. HYDROGEN SULFIDE
PPM by Weight in Liquid 1 Field - Length of Stain Tube
(Lab test required if field Lab Chromatography with Flame
test is positive.) Photometric Detector
6. CARBONYL SULFIDE
PPM by Weight in Liquid 2 Field - Length of Stain Tube
(Field test invalid if C(4) +
exceeds 1.0 LV%)
(Lab test required if Lab - UOP 212 or UOP 791
field test is positive.) Lab - Gas Chromatography with
Flame Photometric Detector
7. NON-VOLATILE RESIDUE
a) Milliliters @ 100 DEG. F 0.05 ASTM D-2158
b) Oil Stain Pass
THE FOLLOWING TESTS ARE OPTIONAL,
DEPENDING UPON THE PRODUCT SOURCE:
8. DRYNESS
Freeze Valve, Seconds 60 (Note 2) ASTM D-2713
9. VOLATILE RESIDUE
95% Evaporated - Temperature, -37 ASTM D-1837
DEG. F
10. AMMONIA
PPM by Weight in Liquid 1 Field - Length of Stain Tube
Lab - UOP 430
11. FLUORIDES
PPM by Weight in Liquid as 5 Field - Length of Stain Tube
Monatomic Fluorine
12. OTHER DELETERIOUS SUBSTANCES
(PPM BY WEIGHT IN LIQUID)
Includes but not limited to 1 Gas chromatography with flame
(Isoprene, Butadiene, Vinyl ionization or electron capture
Chloride, glycol, amine, caustic) detection or other
</Table>
NOTES: (1) The test methods for items 2 and 7 are not necessary if a
compositional analysis is available which indicates compliance with
these requirements.
(2) The addition of methanol in the distribution system should be on a
spot basis and must not exceed a rate of 5 Gallons per 10,000 Gallons
of product.
2
<Page>
NORMAL BUTANE SPECIFICATION
Product characteristics with test methods are herein specified for normal
butane received by Cedar Bayou Fractionators, L.P..
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Isobutane and Lighter 5.0 ASTM D-2163
Butylene (Percent of N. Butane) 1.0
N. Butane & Butylene 95.0 100 GPA 2165
Pentanes & Heavier 2.0
2. VAPOR PRESSURE
Psig @ 100 DEG. F 50 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor is
used.)
Corrosion Additive or Inhibitor, PPM
by Weight 1 Applicable Industry
Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
5. VOLATILE RESIDUE
95% Evaporated - Temperature, DEG. F +36 ASTM D-1837
6. DRYNESS No Free Water Visual
</Table>
NOTE: The test methods for Items 2 and 5 are not necessary if a compositional
analysis indicates compliance with these requirements.
3
<Page>
ISOBUTANE SPECIFICATION
Product characteristics with test methods are herein specified for isobutane
received by Cedar Bayou Fractionators, L.P..
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Propane, Propylene and Lighter 3.0 ASTM D-2163
Isobutane 96.0 100
Butylene, Normal Butane & Heavier 4.0
2. VAPOR PRESSURE
Psig @ 100 DEG. F 62 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor is
used.)
Corrosion Additive or Inhibitor, PPM
by Weight 1 Applicable Industry Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
5. VOLATILE RESIDUE
95% Evaporated - Temperature DEG. F +16 ASTM D-1837
6. DRYNESS No Free Water Visual
</Table>
NOTE: The test methods for Items 2 and 5 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
4
<Page>
NATURAL GASOLINE SPECIFICATION
Product characteristics with test methods are herein specified for natural
gasoline received by Cedar Bayou Fractionators, L.P..
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Butanes and Lighter 3.0 GPA 2165
Pentanes & Heavier 97 100
2. VAPOR PRESSURE
Psi @ 100 DEG. F, Reid 14 ASTM D-323
3. CORROSION
Copper Strip @ 104 DEG. F 1-b ASTM D-130
(Invalid if additive or
inhibitor is used.)
Corrosion Additive or
Inhibitor, PPM by Weight. 1 Applicable Industry Practices
4. DOCTOR TEST Negative GPA 1138
5. DRYNESS No Free Water Visual
6. COLOR +25 No Color Field White Cup Method
Lab - ASTM D-156
7. DISTILLATION
End Point, DEG. F 375 ASTM D-216
</Table>
NOTE: The test methods for Items 2 and 7 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
5
<Page>
'Confidential Treatment Requested'
EXHIBIT "C"
to
Fractionation Agreement
by and between
Cedar Bayou Fractionators, L.P.
and
Williams Energy Marketing & Trading Company
STORAGE OF SPECIFICATION PRODUCTS
1. STORAGE Williams shall have the right to store during any calendar
VOLUME: Month a total volume of Specification Products equal to the
component volume of Specification Products contained in the
Raw Product delivered to Cedar Bayou Fractionators, L.P.
("CBF") in the preceding calendar Month.
* 2. STORAGE [REDACTED] per Month
RATE:
3. RECEIPT FEE: None. All volumes of Specification Products will be
delivered from the CBF Fractionator
4. EXCESS For all volumes of Specification Products in Williams'
STORAGE: account at Month-end in excess of the Storage Volume,
excluding undelivered volumes for which timely
distribution instructions have been given, CBF has the
* right to charge an excess storage fee of [REDACTED] per
Gallon. Williams shall be required to obtain CBF's consent
prior to exceeding the Storage Volume.
* 5. RETURN [REDACTED].
PERCENTAGE:
6. REDELIVERY No charge for redelivery of Specification Product(s)
FEES: to the following locations: Texas Eastern Transmission,
Enron, Enterprise and Diamond-Koch. Williams shall have
the right to tender propane (subject to Dynegy's allocation
procedures) into the Dixie Pipeline for a delivery fee
* of [REDACTED] cents per Barrel. Such Dixie Pipeline
tenders shall be limited to the lesser of (i) the amount of
propane component in the Raw Product delivered by Williams
* to CBF in the preceding calendar Month, (ii) [REDACTED]
Barrels or (iii) the maximum amount allowed based on
Dynegy's allocation procedures. No charge for in-storage
transfers made by Williams to third parties who have the
right to store Specification Product(s) in the Storage
Facility.
1
<Page>
'Confidential Treatment Requested'
7. TRUCK AND CBF will load or cause to be loaded Specification Product(s)
* TANK CAR into trucks and tank cars for [REDACTED] cents per Gallon.
LOADING For any Specification Product(s) which are odorized by or
AND on behalf of CBF, Williams shall pay a fee to CBF of
* UNLOADING [REDACTED] cents per Gallon.
FEES:
* 8. THROUGHPUT [REDACTED]
CHARGES
9. SCHEDULING Williams shall be required to schedule all movements of
Specification Products through Dynegy's Product Movement
Group. For physical deliveries of Specification Products
out of the Storage Facility, Williams must give distribution
instructions to Dynegy's Product Movement Group on or prior
to the 12th Day of the Month to assure deliveries of such
Specification Products by the end of such Month. For title
transfers of Specification Products within the Storage
Facility, Williams must give Dynegy transfer instructions
on or prior to the last Day of the Month to assure transfers
of such Specification Products by the end of such Month.
2