AGREEMENT AND PLAN OF MERGER

Execution Version

AGREEMENT AND PLAN OF MERGER

among

HH GP HOLDING, LLC,

HPGP MERGERCO, LLC,

HILAND PARTNERS GP HOLDINGS, LLC

and

HILAND HOLDINGS GP, LP

Executed June 1, 2009

TABLE OF CONTENTS

Exhibit A — Form of Confidentiality Agreement

AGREEMENT AND PLAN OF MERGER

          This AGREEMENT AND PLAN OF MERGER, executed this 1st day of June, 2009 (this “ Agreement ”), is entered into among HH GP Holding, LLC, an Oklahoma limited liability company (“ Parent ”), HPGP MergerCo, LLC, a Delaware limited liability company and a subsidiary of Parent (“ Merger Sub ” and, together with Parent, the “ Parent Parties ”), Hiland Partners GP Holdings, LLC, a Delaware limited liability company and the general partner of Holdings (“ Holdings GP ”), and Hiland Holdings GP, LP, a Delaware limited partnership (“ Holdings ” and, together with Holdings GP, the “ Holdings Parties ”).

WITNESSETH :

          WHEREAS, the parties intend that Merger Sub be merged with and into Holdings, with Holdings surviving that merger on the terms and subject to the conditions set forth in this Agreement (the “ Merger ”);

          WHEREAS, it is contemplated that, on the Closing Date (as defined herein), HLND MergerCo, LLC, a Delaware limited liability company and a subsidiary of Parent (“ HLND Merger Sub ”), be merged with and into Hiland Partners, LP, a Delaware limited partnership (“ Hiland ”), with Hiland surviving that merger (the “ Hiland Merger ”) on the terms and subject to the conditions set forth in the Agreement and Plan of Merger, dated as of the date hereof (the “ Hiland Agreement ”), among Parent, HLND Merger Sub, Hiland Partners GP, LLC, a Delaware limited liability company and the general partner of Hiland (“ Hiland GP ” and, together with Hiland, the “ Hiland Parties ”), and Hiland;

          WHEREAS, the board of directors of Holdings GP (the “ Board of Directors ”), acting upon the unanimous recommendation of its Conflicts Committee, has (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair to and in the best interests of Holdings and the holders of Common Units (other than Harold Hamm, his Affiliates (including Continental Gas Holdings, Inc., a Delaware corporation (“ Continental Gas ”)) and the Trusts), (ii) approved the execution, delivery and performance of this Agreement by the Holdings Parties and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend approval of this Agreement and the Merger by the holders of Common Units (excluding Common Units owned by Mr. Hamm, his Affiliates (including Continental Gas) and the Trusts);

          WHEREAS, the Trusts and certain Affiliates of Parent are parties to a Support Agreement, dated the date hereof (the “ Support Agreement ”), with Holdings and Holdings GP pursuant to which the Trusts and such Affiliates have, among other things: (i) agreed that the Partnership Interests of which they are the record and beneficial owners will not be converted into the right to receive the Merger Consideration and will remain outstanding as Partnership Interests of the Surviving Entity (as defined herein) in the Merger, and (ii) agreed to vote the Common Units of which they are the record and beneficial owners in favor of the approval of this Agreement and the Merger;

          WHEREAS, the board of directors of each of Parent and Merger Sub and the sole member of Merger Sub have unanimously approved this Agreement and declared it advisable for Parent and Merger Sub, respectively, to enter into this Agreement; and

          WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the transactions contemplated by this Agreement and also to prescribe certain conditions to the Merger as specified herein.

          NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger Sub, Holdings GP and Holdings hereby agree as follows:

ARTICLE I

THE MERGER

          Section 1.1 The Merger . At the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the Delaware Revised Uniform Limited Partnership Act (“ DRULPA ”) and the Delaware Limited Liability Company Act (“ DLLCA ”), Merger Sub shall be merged with and into Holdings, whereupon the separate existence of Merger Sub shall cease, and Holdings shall continue as the surviving entity in the Merger (the “ Surviving Entity ”).

          Section 1.2 Closing . The closing of the Merger (the “ Closing ”) shall take place at the offices of Baker Botts L.L.P. at 910 Louisiana Street, Houston, Texas at 10:00 a.m., local time, on a date to be specified by the parties (the “ Closing Date ”) which shall be no later than the third Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other place, date and time as Holdings and Parent may agree in writing.

          Section 1.3 Effective Time . At the Closing, Holdings shall cause the Merger to be consummated by executing and filing a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware in accordance with Section 17-211 of the DRULPA and Section 18-209 of the DLLCA. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later date or time as may be agreed by Parent and Holdings in writing and specified in the Certificate of Merger in accordance with the DRULPA and the DLLCA (such time as the Merger becomes effective is referred to herein as the “ Effective Time ”).

          Section 1.4 Effects of the Merger . The Merger shall have the effects set forth in this Agreement, the Partnership Agreement and the applicable provisions of the DRULPA and DLLCA.

          Section 1.5 Partnership Agreement of the Surviving Entity . The Partnership Agreement, as in effect immediately prior to the Effective Time, shall remain the partnership agreement of the Surviving Entity and shall continue in effect until thereafter changed or amended in accordance with the provisions thereof and applicable Law.

          Section 1.6 Admission of Additional Limited Partners . Upon the conversion of the limited liability company interests in Merger Sub (“ Merger Sub LLC Interests ”), which are denominated in units (“ Merger Sub LLC Units ”), into Common Units pursuant to Section 2.1(c) and the recording of the name of the holder thereof as a limited partner of Holdings on the books and records of Holdings, such Person shall automatically and effective as of the Effective Time be admitted to Holdings as an additional Limited Partner and be bound by the Partnership Agreement as such.

ARTICLE II

CONVERSION OF PARTNERSHIP INTERESTS; EXCHANGE OF CERTIFICATES

          Section 2.1 Effect on Partnership Interests . At the Effective Time, by virtue of the Merger and without any action on the part of Holdings, Merger Sub or the holders of any securities of Holdings or Merger Sub:

          (a) Conversion of Common Units . Subject to Sections 2.1(b) and 2.1(d), each Common Unit issued and outstanding immediately prior to the Effective Time, other than any Common Units included among the Rollover Interests, shall thereupon be converted automatically into and shall thereafter represent the right to receive $2.40 in cash without any interest thereon (the “ Merger Consideration ”). Immediately prior to the Effective Time, each award of Restricted Units (as defined in the Hiland Holdings GP, LP Long-Term Incentive Plan (the “ Holdings LTIP ”)) issued and outstanding to any nonemployee member of the Board of Directors shall become fully vested as Common Units and shall thereupon be converted automatically into and shall thereafter represent the right to receive the Merger Consideration. All Common Units that have been converted into the right to receive the Merger Consideration as provided in this Section 2.1 shall be automatically cancelled and shall cease to exist, and the holders of such Common Units immediately prior to the Effective Time (whether certificated or non-certificated and represented in book-entry form) shall cease to have any rights with respect to such Common Units other than the right to receive the Merger Consideration.

          (b) Rollover of Certain Partnership Interests . The following Partnership Interests shall be treated in the Merger as follows:

               (i) each of the 8,481,350 Common Units owned by Continental Gas Holdings, Inc., a Delaware corporation (“ Continental Gas ”), shall be unchanged and remain outstanding as Common Units of the Surviving Entity, and no consideration shall be delivered in respect thereof;

               (ii) each of the 2,757,390 Common Units owned by the Harold Hamm DST Trust (or Bert Harold Mackie, as trustee thereof) shall be unchanged and remain outstanding as Common Units of the Surviving Entity, and no consideration shall be delivered in respect thereof;

               (iii) each of the 1,839,712 Common Units owned by the Harold Hamm HJ Trust (or Bert Harold Mackie, as trustee thereof) shall be unchanged and remain outstanding

as Common Units of the Surviving Entity, and no consideration shall be delivered in respect thereof;

               (iv) each of the 59,600 Common Units owned by Harold Hamm shall be unchanged and remain outstanding as Common Units of the Surviving Entity, and no consideration shall be delivered in respect thereof; and

               (v) the General Partner Interest, which is owned by Holdings GP, shall be unchanged and remain outstanding as the General Partner Interest of the Surviving Entity, and no consideration shall be delivered in respect thereof.

The Partnership Interests described in this Section 2.1(b) are referred to in this Agreement as “ Rollover Interests ,” and the record and beneficial owners of such Rollover Interests are referred to in this Agreement as the “ Rollover Parties .”

          (c) Conversion of Merger Sub Limited Liability Company Interests . At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each Merger Sub LLC Unit issued and outstanding immediately prior to the Effective Time shall be converted into and become one Common Unit of the Surviving Entity, which Common Units shall be duly authorized and validly issued in accordance with applicable Laws and the Partnership Agreement and shall be fully paid (to the extent required by the Partnership Agreement) and nonassessable (except to the extent such nonassessability may be affected by Sections 17-607 and 17-804 of DRULPA). Immediately after the Effective Time, such Common Units and the Rollover Interests will constitute the only outstanding Partnership Interests of the Surviving Entity. From and after the Effective Time, any certificates or other evidence representing the Merger Sub LLC Units shall be deemed for all purposes to represent the number of Common Units of the Surviving Entity into which such Merger Sub LLC Units were converted in accordance with this Section 2.1(c). Holdings GP hereby agrees and acknowledges that conversion of the Merger Sub LLC Units to Common Units of the Surviving Entity as provided herein shall constitute a duly authorized, accepted, executed and countersigned delivery of such Common Units, without any further action by Holdings GP or any other person.

          (d) Adjustments . If between the date of this Agreement and the Effective Time, the outstanding Common Units, including securities convertible or exchangeable into or exercisable for Common Units, shall be changed into a different number of units or other securities by reason of any split, combination, merger, consolidation, reorganization, reclassification, recapitalization or other similar transaction, or any distribution payable in Partnership Interests shall be declared thereon with a record date within such period, the Merger Consideration shall be appropriately adjusted to provide the holders of Common Units the same economic effect as contemplated by this Agreement prior to such event; provided that nothing herein shall be construed to permit Holdings to take any action with respect to its securities that is expressly prohibited by the terms of this Agreement.

          Section 2.2 Exchange of Certificates .

          (a) Paying Agent . Prior to the mailing of the Proxy Statement (as defined herein), Parent shall appoint a U.S. bank or trust company agreeable to the Conflicts Committee

to act as paying agent (the “ Paying Agent ”) for the holders of Common Units (other than the Rollover Parties) in connection with the Merger and to receive and pay out the Merger Consideration to which such holders shall become entitled pursuant to Section 2.1. At or prior to the Effective Time, the Parent Parties shall deposit, or shall cause to be deposited, in trust with the Paying Agent, for the benefit of holders of Common Units (other than the Rollover Parties), cash in an amount sufficient to pay the aggregate Merger Consideration in exchange for all Common Units outstanding immediately prior to the Effective Time (other than Common Units included among the Rollover Interests), payable upon due surrender of the certificates that immediately prior to the Effective Time represented Common Units (“ Certificates ”) (or effective affidavits of loss in lieu thereof) or non-certificated Common Units represented in book-entry form (“ Book-Entry Common Units ”) pursuant to the provisions of this Article II (such cash hereinafter referred to as the “ Exchange Fund ”).

          (b) Payment Procedures .

               (i) As soon as reasonably practicable after the Effective Time and in any event not later than the fifth Business Day following the Effective Time, Parent shall cause the Paying Agent to mail to each holder of record of Common Units whose Common Units were converted into the Merger Consideration pursuant to Section 2.1(a), (A) a letter of transmittal (the “ Letter of Transmittal ”) (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or effective affidavits of loss in lieu thereof) to the Paying Agent or, in the case of Book-Entry Common Units, upon adherence to the procedures set forth in the Letter of Transmittal, and shall be in such customary form and have such other provisions as Parent and the Holdings Parties shall reasonably determine) and (B) instructions for use of the Letter of Transmittal in effecting the surrender of the Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Common Units in exchange for the Merger Consideration.

               (ii) Upon surrender of a Certificate (or an effective affidavit of loss in lieu thereof) or Book-Entry Common Units to the Paying Agent together with such Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Paying Agent, the holder of such Certificate or Book-Entry Common Units shall be entitled to receive in exchange therefor a check in an amount equal to the product of (x) the number of Common Units represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Common Units multiplied by (y) the Merger Consideration. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Common Units on the Merger Consideration payable in respect of the Certificates or Book-Entry Common Units. In the event of a transfer of ownership of Common Units that is not registered in the unit transfer register of Holdings, a check for any cash to be paid upon due surrender of the Certificate may be paid to such a transferee if the Certificate formerly representing such Common Units is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable unit transfer or other Taxes have been paid or are not applicable.

               (iii) Parent, the Surviving Entity and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable under this Agreement to any

holder of Common Units such amounts as are required to be withheld or deducted under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of federal, state, local or foreign Tax Law with respect to the making of such payment. To the extent that amounts are so withheld or deducted and paid over to the applicable Governmental Entity, such withheld or deducted amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Common Units in respect of which such deduction and withholding were made.

          (c) Closing of Transfer Register . At the Effective Time, the unit transfer register of Holdings shall be closed, and there shall be no further registration of transfers on the unit transfer register of the Surviving Entity of Common Units (other than the Rollover Interests) that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Common Units provided for in Section 2.1(a) are presented to the Surviving Entity or Parent for transfer, they shall be cancelled and exchanged for a check in the proper amount pursuant to and subject to the requirements of this Article II.

          (d) Termination of Exchange Fund . Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to the former holders of Common Units for twelve months after the Effective Time shall be delivered to the Surviving Entity upon demand, and any former holders of Common Units who have not surrendered their Certificates or Book-Entry Common Units provided for in Section 2.1(a) in accordance with this Section 2.2 shall thereafter look only to the Surviving Entity for payment of their claim for the Merger Consideration, without any interest thereon, upon due surrender of their Certificates or Book-Entry Common Units.

          (e) No Liability . Notwithstanding anything herein to the contrary, none of Parent, Merger Sub, Holdings, Holdings GP, the Surviving Entity, the Paying Agent or any other person shall be liable to any former holder of Common Units for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

          (f) Investment of Exchange Fund . The Paying Agent shall invest the Exchange Fund as reasonably directed by Parent; provided , however , that any investment of such Exchange Fund shall be limited to direct short-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the U.S. government and that no such investment or loss thereon shall affect the amounts payable to holders of Common Units that converted into the right to receive the Merger Consideration pursuant to Section 2.1. Any interest and other income resulting from such investments shall be paid to the Surviving Entity pursuant to Section 2.2(d).

          (g) Lost Certificates . In the event that any Certificate representing Common Units provided for in Section 2.1(a) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Paying Agent, the posting by such person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate a check in the amount of the number of Common Units represented by such lost, stolen or destroyed Certificate multiplied by the Merger Consideration.

          Section 2.3 Timing for Rollover Interests . For the avoidance of doubt, the parties acknowledge and agree that the Rollover Commitments shall be deemed to become effective and irrevocable immediately prior to the Effective Time and prior to any other event described above in this Article II.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE HOLDINGS PARTIES

          Except as disclosed (a) in (i) the Holdings SEC Documents (as defined herein) or (ii) the Hiland SEC Documents (as defined in the Hiland Agreement), in each case filed on or after December 31, 2008 and prior to the date of this Agreement (excluding any disclosures included in any risk factor section of such documents and any other disclosures in such documents to the extent that they are cautionary, predictive or forward-looking in nature) or (b) in a section of the disclosure schedule delivered concurrently herewith by the Holdings Parties to Parent (the “ Holdings Disclosure Schedule ”) corresponding to the applicable sections of this Article III to which such disclosure applies ( provided , however , that any information set forth in one section of such Holdings Disclosure Schedule also shall be deemed to apply to each other section of this Agreement to which its relevance is reasonably apparent), the Holdings Parties hereby represent and warrant, jointly and severally, to the Parent Parties as follows:

          Section 3.1 Qualification, Organization, Subsidiaries, Etc.

          (a) Section 3.1(a) of the Holdings Disclosure Schedule sets forth, as of the date hereof, a true and complete list of the Holdings Parties and each direct or indirect Subsidiary and Partially Owned Entity of Holdings (collectively, the “ Holdings Group Entities ”), together with (i) the nature of the legal organization of such person, (ii) the jurisdiction of organization or formation of such person, (iii) the name of each Holdings Group Entity that owns beneficially or of record any equity or similar interest in such person, and (iv) the capital stock or other ownership interest owned by each such Holdings Group Entity in such other persons.

          (b) Each Holdings Party is a legal entity validly existing and in good standing under the Laws of its respective jurisdiction of formation. Each Holdings Party has all requisite limited partnership, limited liability company or corporate, as the case may be, power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted in all material respects.

          (c) Each Holdings Party is duly registered or qualified to do business and is in good standing as a foreign limited partnership, limited liability company or corporation, as the case may be, in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such registration or qualification, except where the failure to be so registered, qualified or in good standing would not, individually or in the aggregate, have a Holdings Material Adverse Effect. The organizational or governing documents of the Holdings Parties, as previously made available to Parent, are in full force and effect. None of the Holdings Parties is in violation of its organizational or governing documents.

          Section 3.2 Capitalization .

          (a) Holdings GP is the sole general partner of Holdings. Holdings GP is the record and beneficial owner of the 0% non-economic General Partner Interest in Holdings, and such General Partner Interest has been duly authorized and validly issued in accordance with applicable Laws and the Partnership Agreement. Holdings GP owns all of the General Partner Interest free and clear of any Encumbrances except pursuant to the organizational or governing documents of any of the Holdings Parties. Parent is the record owner of all of the limited liability company interests in Holdings GP. Such limited liability company interests in Holdings GP have been duly authorized and validly issued in accordance with applicable Laws and the limited liability company agreement of Holdings GP and are fully paid (to the extent required by the limited liability company agreement of Partnership GP) and nonassessable (except to the extent such nonassessability may be affected by Sections 18-607 and 18-804 of DLLCA).

          (b) As of the date of this Agreement (the “ Execution Date ”), Holdings has no Partnership Interests issued and outstanding other than the following:

               (i) 21,607,500 Common Units; and

               (ii) the General Partner Interest.

Each of such limited partner interests described in clause (i) above has been duly authorized and validly issued in accordance with applicable Laws and the Partnership Agreement, and is fully paid (to the extent required under the Partnership Agreement) and non-assessable (except to the extent such nonassessability may be affected by Sections 17-607 and 17-804 of DRULPA). Such limited partner interests were not issued in violation of any preemptive or similar rights or any other agreement or understanding binding on Holdings. As of the date of this Agreement, except for outstanding awards for the issuance of 16,500 Restricted Units pursuant to the Holdings LTIP and except pursuant to the organizational or governing documents of any of the Holdings Parties, (A) there are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements, arrangements or commitments (preemptive, contingent or otherwise) obligating any of the Holdings Parties to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or encumber any equity interest in any of the Holdings Parties; (B) there are no outstanding securities or obligations of any kind of any of the Holdings Parties that are convertible into or exercisable or exchangeable for any equity interest in any of the Holdings Parties or any other person, and none of the Holdings Parties has any obligation of any kind to issue any additional securities or to pay for or repurchase any securities; (C) there are not outstanding any equity appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based on the value of the equity, book value, income or any other attribute of any of the Holdings Parties; (D) there are no outstanding bonds, debentures or other evidences of indebtedness of any of the Holdings Parties having the right to vote (or that are exchangeable for or convertible or exercisable into securities having the right to vote) with the holders of Common Units on any matter; and (E) except as described in the organizational or governing documents of the Holdings Parties or the Support Agreement, there are no Unitholder agreements, proxies, voting trusts, rights to require registration under securities Laws or other arrangements or commitments to which any of the Holdings Parties is a party or to the knowledge of the Holdings Parties by which any of their securities are bound with respect to the voting, disposition or registration of any outstanding securities of any of the Holdings Parties.

          (c) All of the outstanding limited liability company, partnership or other equity interests of each Subsidiary of Holdings (but, for purposes of this Section 3.2(c), not including Subsidiaries of Hiland) (i) have been duly authorized and validly issued in accordance with applicable Laws and its governing documents and are fully paid (to the extent required by its governing documents) and nonassessable (except to the extent such nonassessability may be affected by applicable Laws, including Sections 17-607 and 17-804 of DRULPA) and (ii) are owned directly or indirectly by Holdings in the amounts set forth in Section 3.1(a) of the Holdings Disclosure Schedule, free and clear of any Encumbrance except pursuant to the organizational or governing documents of any of the Holdings Group Entities (not including Subsidiaries and Partially Owned Entities of Hiland) and other than Encumbrances securing the obligations of Holdings under the Holdings Credit Agreement and Hiland Operating, LLC under the Hiland Operating Credit Agreement.

          (d) All of the outstanding equity interests of each Partially Owned Entity of Holdings (but, for purposes of this Section 3.2(d), not including Partially Owned Entities of Hiland) (i) have been duly authorized and validly issued in accordance with applicable Laws and its governing documents and are fully paid (to the extent required by its organizational or governing documents) and nonassessable (except to the extent such nonassessability may be affected by applicable Laws), and (ii) are owned directly or indirectly by Holdings in the respective amounts shown on Section 3.1(a) of the Holdings Disclosure Schedule, free and clear of any Encumbrance except pursuant to the organizational or governing documents of any of the Holdings Group Entities (not including Subsidiaries and Partially Owned Entities of Hiland).

          (e) Except with respect to the ownership of any equity or long-term debt securities between or among the Holdings Group Entities, none of the Holdings Parties owns or will own at the Closing Date, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity.

          (f) Except as provided in the Partnership Agreement, no holder of Partnership Interests in any of the Holdings Parties has any right to have such Partnership Interests registered under the Securities Act of 1933, as amended (the “ Securities Act ”), by Holdings.

          Section 3.3 Authority; No Violation; Consents and Approvals .

          (a) Each of the Holdings Parties has all requisite limited liability company or limited partnership power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by each Holdings Party of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite limited liability company or limited partnership action on the part of such Holdings Party, except for (i) Unitholder Approval of this Agreement and the Merger and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware; and no other vote or approval by any holders of Partnership Interests or limited liability company interests in Holdings GP or other corporate, limited liability company, partnership or other organizational votes, approvals or proceedings in respect of the Holdings Parties are necessary to consummate the transactions contemplated by this Agreement. Notwithstanding the foregoing, no representation or warranty is made concerning whether the consent of Holdings GP, to the extent reserved to Parent

pursuant to Section 7.1(d) of the Amended and Restated Limited Liability Company Agreement of Holdings GP (the “ Holdings GP LLC Agreement ”), was validly adopted by Parent.

          (b) This Agreement has been duly executed and delivered by each Holdings Party and, assuming the due authorization, execution and delivery hereof by the Parent Parties, constitutes a legal, valid and binding agreement of such Holdings Party, enforceable against such Holdings Party in accordance with its terms (except insofar as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)).

          (c) Except for matters expressly contemplated by this Agreement and matters described in clauses (ii), (iii) or (iv) below that would not, individually or in the aggregate, have a Holdings Material Adverse Effect, neither the execution and delivery by the Holdings Parties of this Agreement, nor the consummation by the Holdings Parties of the transactions contemplated hereby and the performance by the Holdings Parties of this Agreement will (i) violate or conflict with any provision of the organizational or governing documents of the Holdings Group Entities; (ii) require any consent, approval, authorization or permit of, registration, declaration or filing with, or notification to, any Governmental Entity or any other person; (iii) result in any breach of or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, cancellation, amendment or acceleration of any obligation or the loss of any benefit under any agreement or instrument to which any of the Holdings Group Entities is a party or by or to which any of their properties are bound; (iv) result in the creation of an Encumbrance upon any of the assets of any of the Holdings Group Entities; or (v) violate or conflict in any material respect with any material Law applicable to the Holdings Group Entities. Notwithstanding the foregoing, no representation or warranty is made concerning whether the consent of Holdings GP, to the extent reserved to Parent pursuant to Section 7.1(d) of the Holdings GP LLC Agreement was validly adopted by Parent.

          (d) Section 3.3(d) of the Holdings Disclosure Schedule identifies all consents, approvals and authorizations of any Governmental Entity or third party that are required to be obtained by any Holdings Group Entity in connection with (1) the execution and delivery by the Holdings Parties of this Agreement or (2) the consummation by the Holdings Parties of the transactions contemplated by this Agreement, in each case except for such consents, approvals and authorizations that, if not obtained, would not, individually or in the aggregate, have a Holdings Material Adverse Effect.

          Section 3.4 SEC Reports and Compliance .

          (a) The Holdings Parties have filed or furnished all forms, documents, statements and reports required to be filed or furnished prior to the date hereof by them with the Securities and Exchange Commission (the “ SEC ”) since January 1, 2007 (the forms, documents, statements and reports filed with or furnished to the SEC since January 1, 2007 and those filed or furnished with the SEC subsequent to the date of this Agreement, if any, including any amendments thereto, the “ Holdings SEC Documents ”). As of their respective dates, or, if amended, as of the date of the last such amendment prior to the date hereof, the Holdings SEC

Documents complied, and each of the Holdings SEC Documents filed or furnished subsequent to the date of this Agreement will comply, in all material respects with the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), as the case may be, and the applicable rules and regulations promulgated thereunder, and complied or will comply, as applicable, in all material respects with the then-applicable accounting standards and the rules and regulations of the SEC with respect thereto. None of the Holdings SEC Documents so filed or furnished or that will be filed or furnished subsequent to the date of this Agreement contained or will contain, as the case may be, any untrue statement of a material fact or omitted or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

          (b) As of the date hereof, there are no outstanding comments from, or unresolved issues raised by, the SEC with respect to the Holdings SEC Documents.

          (c) The financial statements (including all related notes and schedules) of Holdings and its Subsidiaries included in or incorporated by reference into the Holdings SEC Documents (the “ Holdings Financial Statements ”) fairly present, in all material respects, the financial position of Holdings and its Subsidiaries, taken as a whole, as at the respective dates thereof, and the results of their operations and their cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto) in conformity with United States generally accepted accounting principles (“ GAAP ”) (except, in the case of the unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be specified therein or in the notes thereto).

          Section 3.5 No Undisclosed Liabilities . Neither Holdings nor any of Holdings’ Subsidiaries has any indebtedness or liability (whether absolute, accrued, contingent or otherwise) of any nature that is not accrued or reserved against in the Holdings Financial Statements filed prior to the execution of this Agreement or reflected in the notes thereto, other than (a) liabilities incurred or accrued in the ordinary course of business consistent with past practice since December 31, 2008 or (b) liabilities of Holdings or any of Holdings’ Subsidiaries that would not, individually or in the aggregate, have a Holdings Material Adverse Effect.

          Section 3.6 Compliance with Law . Each of the Holdings Parties is in compliance with all applicable Laws, other than any noncompliance which would not, individually or in the aggregate, have a Holdings Material Adverse Effect.

          Section 3.7 Employee Benefits .

          (a) Except as would not have, individually or in the aggregate, a Holdings Material Adverse Effect, no Holdings Party and no company or other entity that is required to be treated as a single employer together with a Holdings Party under Section 414 of the Code (each, an “ ERISA Affiliate ”) maintains or has ever maintained or been obligated to contribute to or has any liability (secondary or otherwise) to an Employee Benefit Plan that is (1) subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), or the minimum funding requirements of Section 412 of the Code or Section 302 of ERISA, (2) a plan

of the type described in Section 4063 of ERISA or Section 413(c) of the Code, (3) a “multiemployer plan” (as defined in Section 3(37) of ERISA) or (4) a multiple employer welfare arrangement (as defined in Section 3(40) of ERISA).

          (b) Except as would not have, individually or in the aggregate, a Holdings Material Adverse Effect, the Employee Benefit Plans of the Holdings Parties and their affiliates (A) have been maintained (in form and in operation) in all respects in accordance with their terms and with ERISA, the Code and all other applicable Laws, (B) if intended to be qualified under Section 401(a) of the Code, have been maintained, and are currently, in compliance with the Code’s qualification requirements in form and operation, and (C) do not provide, and have not provided, any post-retirement welfare benefits or coverage, except as required under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (or similar state or local law).

          Section 3.8 Absence of Certain Changes or Events . Since December 31, 2008, (a) except as otherwise required or expressly provided for in this Agreement, (i) the businesses of the Holdings Parties have been conducted, in all material respects, in the ordinary course of business consistent with past practice and (ii) none of the Holdings Parties has taken or permitted to occur any action that, were it to be taken from and after the date hereof, would require approval of Parent pursuant to Section 5.1(b) and (b) there has not been a Holdings Material Adverse Effect.

          Section 3.9 Investigations; Litigation . Except as disclosed in Section 3.9 of the Holdings Disclosure Schedule, there are no (a) investigations or proceedings pending (or, to the Knowledge of the Holdings Parties, threatened) by any Governmental Entity with respect to the Holdings Parties or (b) actions, suits, inquiries, investigations or proceedings pending (or, to the Knowledge of the Holdings Parties, threatened) against or affecting any Holdings Party, or any of their respective properties at law or in equity before, and there are no orders, judgments or decrees of, or before, any Governmental Entity, in each case of clause (a) or (b), which would have (if adversely determined), individually or in the aggregate, a Holdings Material Adverse Effect.

          Section 3.10 Proxy Statement; Other Information . None of the information contained in the Proxy Statement will at the time of the mailing of the Proxy Statement to the Unitholders of Holdings, at the time of the Partnership Meeting (as defined herein) (as such Proxy Statement shall have been amended or supplemented prior to the date of the Partnership Meeting), and at the time of any amendments thereof or supplements thereto, and none of the information supplied or to be supplied by Holdings for inclusion or incorporation by reference in the Schedule 13E-3 (as defined herein) to be filed with the SEC concurrently with the filing of the Proxy Statement, will, at the time of its filing with the SEC, and at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that no representation is made by Holdings with respect to information supplied by a Parent Party, its controlling Affiliates, Continental Gas, the Trusts or a Hiland Party for inclusion therein. The Proxy Statement will comply as to form in all material respects with the Exchange Act, except that no representation is made by Holdings with respect to information supplied by a Parent Party, its controlling Affiliates, Continental Gas, the Trusts or a Hiland Party for inclusion

therein. The letter to Unitholders, notice of meeting, proxy statement and forms of proxy to be distributed to Unitholders in connection with the Merger to be filed with the SEC in connection with seeking the adoption and approval of this Agreement and the Merger are collectively referred to herein as the “ Proxy Statement .” The Rule 13E-3 Transaction Statement on Schedule 13E-3 to be filed with the SEC in connection with seeking the adoption and approval of this Agreement and the Merger is referred to herein as the “ Schedule 13E-3 .”

          Section 3.11 Tax Matters .

          (a) (i) There is no action, suit, proceeding, investigation, audit or claim now pending against, or with respect to, any of the Holdings Parties in respect of any material Tax or material Tax assessment, nor has any claim for additional material Tax or material Tax assessment been asserted in writing or been proposed by any Tax authority;

               (ii) no written claim has been made by any Tax authority in a jurisdiction where any of the Holdings Parties does not currently file a Tax Return that it is or may be subject to any material Tax in such jurisdiction, nor has any such assertion been threatened or proposed in writing;

               (iii) none of the Holdings Parties has been a member of an affiliated group filing a consolidated federal income Tax Return or has any liability for the Taxes of any Person (other than a Holdings Party) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by contract, or otherwise.

          (b) In each tax year since the formation of Holdings up to and including the current tax year, at least 90% of the gross income of Holdings has been income which is “qualifying income” within the meaning of Section 7704(d) of the Code.

          Section 3.12 Labor Matters . Except as disclosed in Section 3.12 of the Holdings Disclosure Schedule, no Holdings Party, other than Holdings GP, has or has ever had employees. Except for such matters which would not have, individually or in the aggregate, a Holdings Material Adverse Effect, no Holdings Party has received written notice during the past two years of the intent of any Governmental Entity responsible for the enforcement of labor, employment, occupational health and safety or workplace safety and insurance/workers compensation laws to conduct an investigation of the Holdings Parties and, to the Knowledge of the Holdings Parties, no such investigation is in progress. Except for such matters which would not have, individually or in the aggregate, a Holdings Material Adverse Effect, (i) there are no (and have not been during the two-year period preceding the date hereof) strikes or lockouts with respect to any employees of, or providing services to, the Holdings Parties (“ Employees ”), (ii) to the Knowledge of the Holdings Parties, there is no (and has not been during the two-year period preceding the date hereof) union organizing effort pending or threatened against the Holdings Parties, (iii) there is no (and has not been during the two-year period preceding the date hereof) unfair labor practice, labor dispute or labor arbitration proceeding pending or, to the Knowledge of the Holdings Parties, threatened against the Holdings Parties, and (iv) there is no (and has not been during the two-year period preceding the date hereof) slowdown or work stoppage in effect or, to the Knowledge of the Holdings Parties, threatened with respect to Employees. No Holdings Party has any liabilities under the Worker Adjustment and Retraining Act and the

regulations promulgated thereunder or any similar state or local law as a result of any action taken by a Holdings Party that would have, individually or in the aggregate, a Holdings Material Adverse Effect. No Holdings Party is a party to any collective bargaining agreements.

          Section 3.13 Assets of the Holdings Parties . Other than assets and properties that are both individually and in the aggregate not material to the business of the Holdings Parties, the only assets and properties owned by the Holdings Parties are the ownership interests in Hiland and Hiland GP set forth in Section 3.1(a) of the Holdings Disclosure Schedule.

          Section 3.14 Opinion of Financial Advisor . The Conflicts Committee has received the written opinion of Barclays Capital, Inc., dated as of the date of this Agreement, to the effect that, as of the date hereof, the Merger Consideration is fair to the holders of Common Units (excluding Common Units owned by Mr. Hamm, his Affiliates (including Continental Gas) and the Trusts) from a financial point of view.

          Section 3.15 Required Approvals . Holdings GP has approved this Agreement and the transactions contemplated by this Agreement and directed that this Agreement and the Merger be submitted to a vote of Unitholders as required under Section 17-211 of the DRULPA and under Articles XIII and XIV of the Partnership Agreement; provided , however , that no representation or warranty is made concerning whether the consent of Holdings GP, to the extent reserved to Parent pursuant to Section 7.1(d) of the Holdings GP LLC Agreement, was validly adopted by Parent. The Board of Directors, upon the unanimous recommendation of its Conflicts Committee, at a meeting duly called and held, has, (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair to and in the best interests of Holdings and the holders of Common Units (excluding Common Units owned by Mr. Hamm, his Affiliates (including Continental Gas) and the Trusts), (ii) approved the Merger and this Agreement and (iii) recommended that this Agreement and the Merger be approved by holders of Common Units (excluding Common Units owned by Mr. Hamm, his Affiliates (including Continental Gas) and the Trusts)(including the Conflicts Committee’s recommendation, the “ Recommendation ”).

          Section 3.16 Material Contracts .

          (a) Except for this Agreement or as designated as an exhibit to Holdings’ annual report on Form 10-K for the year ended December 31, 2008 or to a Holdings SEC Document filed thereafter and prior to the date of this Agreement, neither Holdings nor any of its Subsidiaries is a party to or bound by, as of the date hereof, any Contract (whether written or oral) which is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in this Section 3.16(a) being referred to herein as “ Material Contracts ”).

          (b) (i) Each Material Contract to which a Holdings Party is a party is valid and binding on such Holdings Party and in full force and effect, except where the failure to be valid, binding and in full force and effect, either individually or in the aggregate, would not have a Holdings Material Adverse Effect, (ii) each Holdings Party has in all material respects performed all obligations required to be performed by it under each Material Contract to which it is a party, except where such noncompliance, either individually or in the aggregate, would not

have a Holdings Material Adverse Effect, and (iii) no Holdings Party knows of, or has received notice of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of any Holdings Party under any such Material Contract, except where such default, either individually or in the aggregate, would not have a Holdings Material Adverse Effect.

          Section 3.17 State Takeover Laws . No approvals are required under state takeover or similar laws in connection with the performance by the Holdings Parties or their Affiliates of their obligations under this Agreement, the Support Agreement, the Rollover Commitments or the transactions contemplated hereby or thereby.

          Section 3.18 Finders or Brokers . Except for Barclays Capital, Inc., none of the Holdings Parties (including through its respective board of directors (or similar governing body) or any committee thereof) has engaged any investment banker, broker or finder in connection with the transactions contemplated by this Agreement who would be entitled to any fee or any commission in connection with or upon consummation of the Merger or the other transactions contemplated hereby.

          Section 3.19 No Other Representations or Warranties . Except for the representations and warranties contained in this Article III and except as otherwise expressly set forth in this Agreement or in the agreements or certificates entered into in connection herewith or contemplated hereby, none of the Holdings Parties nor any other Person on behalf of the Holdings Parties makes any other representation or warranty of any kind or nature, express or implied, in connection with this Agreement or the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES

          Except as disclosed in a section of the disclosure schedule delivered concurrently herewith by Parent to the Holdings Parties immediately prior to the execution of this Agreement (the “ Parent Disclosure Schedule ”) corresponding to the applicable sections of this Article IV to which such disclosure applies ( provided , however , that any information set forth in one section of such Parent Disclosure Schedule also shall be deemed to apply to each other section of this Agreement to which its relevance is reasonably apparent), the Parent Parties hereby represent and warrant, jointly and severally, to the Holdings Parties as follows:

          Section 4.1 Qualification; Organization .

          (a) Each of the Parent Parties is a legal entity validly existing and in good standing under the Laws of its respective jurisdiction of formation. Each of the Parent Parties has all requisite limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted in all material respects.

          (b) Each of the Parent Parties is duly registered or qualified to do business and is in good standing as a foreign limited liability company in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such registration or qualification, except where the failure to be so registered, qualified or in

good standing would not, individually or in the aggregate, have a Parent Material Adverse Effect. The organizational or governing documents of the Parent Parties, as previously made available to the Holdings Parties, are in full force and effect. None of the Parent Parties is in violation of its organizational or governing documents.

          Section 4.2 Authority; No Violation; Consents and Approvals .

          (a) Each of the Parent Parties has all requisite limited liability company power and authority to enter into this Agreement and to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by each Parent Party of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of such Parent Party, and no other limited liability company proceedings on the part of a Parent Party are necessary to consummate the transactions contemplated by this Agreement. Parent has, in its capacity as the sole member of Holdings GP, duly authorized by all requisite limited liability company action on the part of Parent, the execution, delivery and performance by Holdings GP of this Agreement and the consummation of the transactions contemplated hereby.

          (b) This Agreement has been duly executed and delivered by each Parent Party and, assuming the due authorization, execution and delivery hereof by the Holdings Parties, constitutes a legal, valid and binding agreement of such Parent Party, enforceable against such Parent Party in accordance with its terms (except insofar as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)).

          (c) Except for matters expressly contemplated by this Agreement and matters described in clauses (ii), (iii) or (iv) below that would not, individually or in the aggregate, have a Parent Material Adverse Effect, neither the execution and delivery by the Parent Parties of this Agreement, nor the consummation by the Parent Parties of the transactions contemplated hereby and the performance by the Parent Parties of this Agreement will (i) violate or conflict with any provision of the governing documents of the Parent Parties; (ii) require any consent, approval, authorization or permit of, registration, declaration or filing with, or notification to, any Governmental Entity or any other person; (iii) result in any breach of or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, cancellation, amendment or acceleration of any obligation or the loss of any benefit under any agreement or instrument to which any of the Parent Parties is a party or by or to which any of their properties are bound; (iv) result in the creation of an Encumbrance upon any of the assets of any of the Parent Parties; or (v) violate or conflict in any material respect with any material Law applicable to the Parent Parties.

          (d) Section 4.2(d) of the Parent Disclosure Schedule identifies all material consents, approvals and authorizations of any Governmental Entity or third party that are required to be obtained by any Parent Parties in connection with (1) the execution and delivery by the Parent Parties of this Agreement or (2) the consummation by the Parent Parties of the transactions contemplated by this Agreement, except for such consents, approvals and

authorizations that, if not obtained, would not, individually or in the aggregate, have a Parent Material Adverse Effect.

          Section 4.3 Proxy Statement; Other Information . None of the information supplied or to be supplied by the Parent Parties, their controlling Affiliates, Continental Gas or the Trusts in writing for inclusion in the Proxy Statement will at the time of the mailing of the Proxy Statement to the Unitholders of Holdings, at the time of the Partnership Meeting (as such Proxy Statement shall have been amended or supplemented prior to the date of the Partnership Meeting), and at the time of any amendments thereof or supplements thereto, and none of the information supplied or to be supplied by the Parent Parties, their controlling Affiliates, Continental Gas or the Trusts in writing for inclusion in the Schedule 13E-3 to be filed with the SEC concurrently with the filing of the Proxy Statement, will, at the time of its filing with the SEC, and at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

          Section 4.4 Funding . On the Closing Date, the Parent Parties will have sufficient cash to enable them to make payment of the aggregate Merger Consideration and the Parent Parties’ related fees and expenses (the “ Funding ”). For the avoidance of doubt, it shall not be a condition to the obligations of th