ASSET PURCHASE AGREEMENT

                                     between

                               ATRION CORPORATION

                                       and

                         MIDCOAST ENERGY RESOURCES, INC.

<PAGE>



                                TABLE OF CONTENTS


1.       DEFINITIONS..................................................  1

2.       PURCHASE AND SALE............................................  4

3.       PURCHASE PRICE; PAYMENT......................................  4
         (a)      Purchase Price......................................  4
         (b)      Consolidated Net Book Value Determination...........  5
         (c)      Adjustment to Purchase Price........................  7
         (d)      Contingent Deferred Purchase Price..................  7

4.       REPRESENTATIONS AND WARRANTIES AS TO SELLER..................  8
         (a)      Organization and Existence..........................  8
         (b)      Approvals...........................................  8
         (c)      Consents............................................  8
         (d)      No Violation........................................  8
         (e)      Validity and Binding Effect.........................  9
         (f)      Shares..............................................  9
         (g)      No Brokers..........................................  9
         (h)      Public Utility Holding Company Act..................  9

5.       REPRESENTATIONS AND WARRANTIES AS TO SUBSIDIARIES............  9
         (a)      Organization and Existence..........................  9
         (b)      Capitalization...................................... 10
         (c)      No Violation........................................ 10
         (d)      Financial Statements................................ 10
         (e)      Taxes............................................... 11
         (f)      Title to Properties................................. 11
         (g)      Gas Purchase Contracts, Gas Sales Contracts, Gas
                  Storage Contracts and Gas Transportation Agreements
                   ................................................... 12
         (h)      No Leases........................................... 12
         (i)      No Defaults......................................... 12
         (j)      Compliance with Applicable Law...................... 12
         (k)      Insurance........................................... 13
         (l)      Litigation.......................................... 13
         (m)      Employee Matters.................................... 13
         (n)      Patents, Copyrights, Trademarks, Etc................ 14
         (o)      Employee Benefit Plans.............................. 14
         (p)      Environmental Matters............................... 14
         (q)      Real Property....................................... 15
         (r)      Changes............................................. 15
         (s)      Tariffs............................................. 16

                                        i

<PAGE>
         (t)      Material Misstatements or Omissions................. 16
         (u)      Assets Owned........................................ 16
         (v)      No Partnership...................................... 17
         (w)      No Customer Curtailments............................ 17
         (x)      Gas Imbalances...................................... 17


6.       BUYER'S REPRESENTATIONS AND WARRANTIES....................... 17
         (a)      Organization and Existence.......................... 17
         (b)      Approvals........................................... 17
         (c)      Consents............................................ 17
         (d)      No Violation........................................ 17
         (e)      Validity and Binding Effect......................... 18
         (f)      Financial Wherewithal............................... 18
         (g)      No Brokers.......................................... 18
         (h)      Material Misstatements or Omissions................. 18
         (i)      Investment Representation........................... 18

7.       COVENANTS.................................................... 19
         (a)      Seller's Covenants.................................. 19
         (b)      Certain Restructurings.............................. 20
         (c)      Audited Financial Statements........................ 21
         (d)      Schedules........................................... 22
         (e)      Fulfillment of Conditions........................... 22
         (f)      Stockholder Approval................................ 22

8.       CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO CLOSE......... 22
         (a)      Representations and Warranties...................... 22
         (b)      Covenants........................................... 22
         (c)      Legal Opinion....................................... 23
         (d)      Deliveries of Consents.............................. 23
         (e)      No Litigation....................................... 23
         (f)      No Material Adverse Change.......................... 23
         (g)      Officers' Certificates.............................. 23
         (h)      Regulatory Approvals................................ 23
         (i)      Resignations........................................ 23
         (j)      Stockholder Approval................................ 23

9.       CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE......... 23
         (a)      Representations and Warranties...................... 24
         (b)      Covenants........................................... 24
         (c)      Legal Opinion....................................... 24
         (d)      No Litigation....................................... 24
         (e)      Officer's Certificate............................... 24
         (f)      Regulatory Approvals................................ 24

                                       ii

<PAGE>



         (g)      Stockholder Approval................................ 24

10.      CLOSING...................................................... 24

11.      TRANSACTIONS AT CLOSING...................................... 25
         (a)      Deliveries By the Sellers to the Buyer.............. 25
         (b)      Deliveries by the Buyer to the Sellers.............. 25
         (c)      Deliveries by the Seller, Buyer and Subsidiaries.... 26

12.      TERMINATION RIGHTS........................................... 26
         (a)      Termination......................................... 26
         (b)      Effect of Termination............................... 26


13.      INDEMNITY.................................................... 27
         (a)      By the Seller....................................... 27
         (b)      By Buyer............................................ 27
         (c)      Limitations......................................... 27
         (d)      Indemnification Procedure........................... 28
         (e)      Attorneys Fees...................................... 29
         (f)      Insurance........................................... 29
         (g)      Exclusive Remedy.................................... 29

14.      SPECIFIC PERFORMANCE......................................... 29

15.      PUBLIC ANNOUNCEMENTS......................................... 30

16.      POST-CLOSING COVENANTS....................................... 30
         (a)      Necessary Action.................................... 30
         (b)      Access To Books and Records......................... 30
         (c)      Rights of Way....................................... 30
         (d)      Severance Policy.................................... 30
         (e)      Office Space........................................ 31
         (f)      Guaranteed Obligations.............................. 31
         (g)      Special Account..................................... 31
         (h)      Termination of Gas Contract......................... 32

17.      TAXES........................................................ 33
         (a)      Obligations Regarding Taxes......................... 33
         (b)      Section 338(h)(10) Election......................... 33

18.      ARBITRATION.................................................. 34

19.      CASUALTY LOSSES.............................................. 35


                                       iii

<PAGE>



20.      PROHIBITED ACTIVITIES OF SELLER.............................. 35

21.      MISCELLANEOUS................................................ 36
         (a)      Notices............................................. 36
         (b)      Binding Effect...................................... 36
         (c)      Expenses............................................ 37
         (d)      Merger.............................................. 37
         (e)      Waiver.............................................. 37
         (f)      Counterpart Execution............................... 37
         (g)      Governing Law....................................... 37
         (h)      Survival of Warranties, Representations, and
                  Agreements.......................................... 37
         (i)      Including........................................... 38
         (j)      Gender.............................................. 38
         (k)      Captions............................................ 38
         (l)      Knowledge Defined................................... 38
         (m)      Schedules........................................... 38
         (n)      Further Assurances.................................. 38
         (o)      Severability........................................ 38
         (p)      No Third Party Beneficiary.......................... 38

                                       iv

<PAGE>



                            ASSET PURCHASE AGREEMENT



ASSET PURCHASE AGREEMENT made this ___ day of ___________, 1997, by and between
ATRION CORPORATION and MIDCOAST ENERGY RESOURCES, INC.


                              W I T N E S S E T H:


WHEREAS, the Seller is the owner of all of the issued and
outstanding capital stock of the Subsidiaries;

WHEREAS, each of ATNG and TRIGAS is engaged in the business of owning and
operating natural gas pipelines and ATEMCO is engaged in the business of natural
gas marketing (each Subsidiary's business as described being hereinafter
referred to as the "Business" and the Subsidiaries' businesses being sometimes
hereinafter referred to, collectively, as the "Businesses"); and

WHEREAS, the Seller desires to sell the Shares to the Buyer, and the Buyer
desires to purchase the Shares from the Seller, upon the terms and conditions
hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:

1.       DEFINITIONS.  The following terms, wherever used in this
Agreement, shall have the respective meanings indicated below:

(a)      "Actual Value" means the Consolidated Net Book Value as
determined in accordance with Section 3(b)(iii)(C).

(b)      "Agreement" means this Stock Purchase Agreement.

(c)      "ATEMCO" means AlaTenn Energy Marketing Company, Inc., an
Alabama corporation.

(d)      "ATNG " means Alabama-Tennessee Natural Gas Company, an
Alabama corporation.

(e)      "Business" or "Businesses" shall have the meaning described in
the recitals to this Agreement.


                                        1

<PAGE>
(f)      "Buyer" means Midcoast Energy Resources, Inc., a Nevada
corporation.

(g)      "Buyer's Value" shall have the meaning set forth in Section
3(b)(ii).

(h)      "Closing" means the closing of the purchase and sale of the
Shares as described in Section 10.

(i)      "Closing Date" means the date of Closing as provided in
Section 10.

(j) "Closing Date Balance Sheet" means the Draft Closing Date Balance Sheet
together with any revisions thereto as described in Section 3(b).

(k)      "Code" shall mean the Internal Revenue Code of 1986, as
amended.

(l) "Consolidated Net Book Value" shall mean the consolidated net book value of
the Subsidiaries as of the Closing Date as reflected in the Closing Date Balance
Sheet.

(m)      "Contingent Deferred Purchase Price" shall have the meaning
set forth in Section 3(d).

(n)      "Contracts" means any and all contracts, leases, commitments,
licenses, permits and other agreements of the Subsidiaries.

(o)      "Contract Year" shall have the meaning set forth in Section
3(d).

(p) "Damages" means all debts, obligations, losses, costs of defense, damages,
liabilities, claims, judgments, awards, settlements, taxes, penalties,
assessments, and other costs and expenses (including attorneys fees as provided
in Section 13(e) and any prejudgment interest in any litigated or arbitrated
matter) which may be incurred, made or levied against the Subsidiaries, or any
of them, the Buyer or the Seller; provided, however, that such term shall not
include any special, punitive, exemplary, consequential or indirect damages,
except that it shall include damages for lost profits which flow as a direct
result of the loss and, provided further, that each of the parties shall have a
duty to exercise reasonable diligence and ordinary care in attempting to

                                        2

<PAGE>
minimize all such damages as would a person of ordinary prudence under the same
or similar circumstances.

(q)      "Draft Closing Date Balance Sheet" shall have the meaning set
forth in Section 3(b)(i).

(r)      "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

(s)      "Escrow Agent" means Mercantile Bank, N.A.

(t) "Escrow Deposit" means the cash and other property held by the Escrow Agent
pursuant to the Escrow Agreement among the Escrow Agent, the Seller and the
Buyer executed contemporaneously herewith.

(u)      "FERC" means the Federal Energy Regulatory Commission.

(v)      "Fiduciary Out" shall have the meaning set forth in Section
12.

(w) "Financial Statements" means the unaudited financial statements of the
Subsidiaries (including balance sheets and statements of income and expense) for
the calendar years ended December 31, 1994, December 31, 1995 and December 31,
1996.

(x)      "HSR Act" refers to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

(y) "Hazardous Substances" means asbestos, any other substance, product,
chemical or chemical byproduct, waste or material defined, or regulated or
designated as hazardous, toxic or dangerous by any federal, state or local
statute, regulation or ordinance presently in effect or that may be promulgated
in the future, as such statutes, regulations and ordinances may be amended from
time to time.

(z) "Indemnification Claim" means any claim, demand, action, lawsuit,
proceeding, event or condition with respect to which a claim for indemnification
may be made pursuant to Section 13.

(aa)     "Indemnification Payments" shall have the meaning set forth in
Section 13(a).


                                                         3

<PAGE>
(bb) "Material Adverse Effect" means an adverse effect which would result in
Damages in the aggregate amount of Fifteen Thousand Dollars ($15,000) or more.

(cc)     "Original Value" shall have the meaning set forth in Section
3(b)(iii)(C).

(dd) "Plans" means all "employee benefit plans" (as such term is defined in
Section 3(3) of ERISA) sponsored or maintained by any of the Subsidiaries on the
date of execution of this Agreement.

(ee)     "Preliminary Purchase Price" means Thirty-Nine Million Three
Hundred Seventy-Three Thousand Dollars ($39,373,000).

(ff)     "Pro Rata" shall have meaning set forth in Section 3(d).

(gg)     "Public Announcements" shall have the meaning set forth in
Section 15.

(hh)     "Purchase Price" means the Preliminary Purchase Price adjusted
pursuant to Sections 3(b) and 3(c).

(ii) "Section 338(h)(10) Election" means a joint election under Code Section
338(h)(10) with respect to the purchase of the Shares pursuant to this
Agreement.

(jj)     "Seller" means Atrion Corporation, a Delaware corporation.

(kk)     "Shares" means all of the shares of capital stock of the
Subsidiaries.

(ll)     "Subsidiary" or "Subsidiaries" means ATNG, TRIGAS and  ATEMCO.

(mm) "Third Party Claim" means an Indemnification Claim involving a claim,
demand, action, lawsuit or proceeding by a third party.

(nn)     "TRIGAS" means Tennessee River Intrastate Gas Company, an
Alabama corporation.

2. PURCHASE AND SALE. Subject to the terms and conditions set forth in this
Agreement and based upon the representations and warranties made herein, at the
Closing, the Seller shall sell, assign and deliver the Shares to the Buyer and
the Buyer shall purchase and acquire the Shares from the Seller.


                                        4

<PAGE>
3.       PURCHASE PRICE; PAYMENT.

(a) PURCHASE PRICE. The purchase price for the Shares shall be the Preliminary
Purchase Price, as adjusted in the manner provided in Sections 3(b) and 3(c)
below, plus the Contingent Deferred Purchase Price as described in Section 3(d)
below. At Closing, Buyer shall pay the Seller the Preliminary Purchase Price
less the Escrow Deposit, in cash, by wire transfer to an account designated by
the Seller. Contemporaneously herewith, the Buyer has deposited with Escrow
Agent the sum of Two Million Dollars ($2,000,000). The parties agree to cause
the Escrow Agent to pay the Escrow Deposit, by wire transfer to an account
designated by the applicable party, on the following basis:

         (i)      if the Closing occurs, the Escrow Deposit shall be paid
to the Seller at Closing as part of the Purchase Price;

         (ii) if the Closing does not occur due to the failure of one or more
conditions precedent in Section 8 hereof to be satisfied and the Buyer
terminates this Agreement pursuant to Section 12(a)(ii)(A) or 12 (a)(ii)(B)
hereof, then the Escrow Deposit shall be paid to the Buyer within three (3)
business days following termination;

         (iii) if the Closing does not occur due to a termination of this
Agreement which results from the exercise by the Seller of the Fiduciary Out or
the failure of the stockholders of the Seller to approve this Agreement at a
meeting of the stockholders held to consider such approval, then the Escrow
Deposit shall be paid to the Buyer within three (3) business days following
termination;

         (iv) if the Closing does not occur due to the failure of one or more
conditions precedent in Sections 9(a), (b), (c) or (e) hereof to be satisfied
or, with respect to Section 9(d), the failure of said condition to be satisfied
on account of an action brought by a creditor or stockholder of the Buyer, and
this Agreement is terminated by the Seller pursuant to Section 12(a)(ii)(A) or
12(a)(ii)(B) hereof, then the Escrow Deposit shall be paid to the Seller within
three (3) business days following termination;

         (v) if the Closing does not occur by July 3, 1997 and this Agreement is
terminated by either the Seller or the Buyer pursuant to Section 12(a)(ii)(B)
hereof for any reason whatsoever other than due to the failure of one or more
conditions precedent in Sections

                                        5

<PAGE>
9(a), (b), (c) or (e) hereof, or, with respect to Section 9(d), other than due
to the failure of said condition to be satisfied on account of an action brought
by a creditor or stockholder of the Buyer, then the Escrow Deposit shall be paid
to the Buyer within three (3) business days following termination; or

         (vi) if the Closing does not occur due to the Buyer's termination of
this Agreement pursuant to Section 19 hereof, then the Escrow Deposit shall be
paid to the Buyer within three (3) business days following termination.

         (vii) Notwithstanding Sections 3(a)(i) through (vi) above, to the
extent the Escrow Deposit exceeds Two Million Dollars ($2,000,000), such excess
shall be the property of and be paid to the Buyer at Closing or, if Closing does
not occur, within three (3) business days following termination of this
Agreement.

(b)      CONSOLIDATED NET BOOK VALUE DETERMINATION.

         (i) Within forty-five (45) days after the Closing Date, the Seller
         shall prepare and deliver to the Buyer a draft consolidated balance
         sheet for the Subsidiaries as of 9:00 a.m. Central Time on the Closing
         Date (the "Draft Closing Date Balance Sheet"). The Seller will prepare
         the Draft Closing Date Balance Sheet in accordance with generally
         accepted accounting principles applied on a basis consistent with the
         preparation of the pro forma balance sheet attached hereto as Exhibit A
         utilizing the same adjustments used in preparing said attached pro
         forma balance sheet including the removal of all prepaid insurance
         amounts.

         (ii) If the Buyer has any objections to the Draft Closing Date Balance
         Sheet, it shall deliver a detailed statement describing its objections
         to the Seller within thirty (30) days after receiving the Draft Closing
         Date Balance Sheet and including therein the Buyer's calculation of
         Consolidated Net Book Value (the "Buyer's Value"). The Buyer and the
         Seller shall use reasonable efforts to resolve any such objections
         themselves. If the parties do not obtain a final resolution within
         thirty (30) days after the Seller has received the statement of
         objections, however, the Buyer and the Seller shall select an
         accounting firm mutually acceptable to them which shall resolve any
         remaining objections. If the Buyer and the Seller are unable to agree
         on the choice of an accounting firm, they shall select a
         nationally-recognized

                                        6

<PAGE>
         accounting firm by lot (after excluding their respective regular
         outside accounting firms). The determinations made by the accounting
         firm so selected shall be set forth in writing and shall be conclusive
         and binding upon the parties. The Seller shall revise the Draft Closing
         Date Balance Sheet as appropriate to reflect the resolution of any
         objections thereto pursuant to this Section 3(b).

         (iii) In the event the parties submit any unresolved objections to an
         accounting firm for resolution as provided in Section 3(b)(ii) above,
         the Buyer and the Seller shall share responsibility for the fees and
         expenses of the accounting firm as follows:

         (A)      if the accounting firm resolves all of the remaining
                  objections in favor of the Buyer, the Seller shall be
                  responsible for all of the fees and expenses of the accounting
                  firm;

         (B)      if the accounting firm resolves all of the remaining
                  objections in favor of the Seller, the Buyer shall be
                  responsible for all of the fees and expenses of the accounting
                  firm; and

         (C)      if the accounting firm resolves some of the remaining
                  objections in favor of the Buyer and the rest of the
                  remaining objections in favor of the Seller (the
                  Consolidated Net Book Value so determined shall be
                  referred to herein as the "Actual Value"), the Seller
                  shall be responsible for that fraction of the fees and
                  expenses of the accounting firm equal to (x) the
                  difference between the consolidated net book value of the
                  Subsidiaries reflected in the Draft Closing Date Balance
                  Sheet (the "Original Value") and the Actual Value over
                  (y) the difference between the Original Value and the
                  Buyer's Value, and the Buyer shall be responsible for the
                  remainder of the fees and expenses.

         (iv) The Buyer shall make the books, records and financial staff of the
         Subsidiaries available to the Seller and its accountants and other
         representatives and shall generally cooperate with Seller in the
         preparation of the Draft Closing Date Balance Sheet, and the Seller
         will make the work papers and backup materials used in preparing the
         Draft Closing Date Balance Sheet available to the Buyer and its
         accountants and

                                        7

<PAGE>
         other representatives, in each case at reasonable times and upon
         reasonable notice at any time during (A) the preparation by the Seller
         of the Draft Closing Date Balance Sheet, (B) the review by the Buyer of
         the Draft Closing Date Balance Sheet and (C) the resolution by the
         parties of any objections thereto.

(c)      ADJUSTMENT TO PURCHASE PRICE.  The Purchase Price shall be
adjusted as follows:

         (i) If the Consolidated Net Book Value, as finally determined pursuant
         to Section 3(b) above, exceeds Fourteen Million Four Hundred Thirty-Six
         Thousand Dollars ($14,436,000), upward by an amount equal to such
         excess;

         (ii) If the Consolidated Net Book Value, as finally determined pursuant
         to Section 3(b) above, is less than Fourteen Million Four Hundred
         Thirty-Six Thousand Dollars ($14,436,000), downward by an amount equal
         to such deficiency;

         (iii) Downward by the amount of a casualty loss to physical assets of
         the Subsidiaries suffered through the Closing Date, as to which the
         insurance proceeds or other rights of Seller against third parties
         arising from such casualty are not assignable to Buyer; as provided in
         Section 19 of this Agreement;

         (iv) Downward by any excess of (A) the amount of liabilities reflected
         on the pro forma balance sheet attached hereto as Exhibit A which are
         relieved and taken into income by Seller for the period from December
         31, 1996 to the Closing Date, reduced by the federal and state income
         tax liability associated therewith, over (B) One Hundred Fifty Thousand
         Dollars ($150,000); and

         (v) Downward by the product of Thirteen Thousand Dollars ($13,000) and
         the number of days, if any, which elapses from the later of (A) May 19,
         1997 and (B) the first date on which all of the conditions set forth in
         Sections 9(a), (b), (c), (e) and the first sentence of Section 9(d) are
         satisfied, to the Closing Date.

The net amount owing by Buyer to Seller or by Seller to Buyer, as applicable by
reason of such adjustments to the Preliminary Purchase Price shall be paid in
immediately available funds by wire

                                        8

<PAGE>
transfer or other means within three (3) business days after such determinations
have been made.

(d)      CONTINGENT DEFERRED PURCHASE PRICE.  The Contingent Deferred
Purchase Price, up to a maximum of Two Million Dollars
($2,000,000), shall be paid as provided on Schedule 3(d).

4.       REPRESENTATIONS AND WARRANTIES AS TO SELLER.  The Seller
hereby represents and warrants to the Buyer as of the date hereof
as follows:

(a) ORGANIZATION AND EXISTENCE. The Seller is a corporation, duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite power and authority to enter into and perform its obligations under
this Agreement. Seller is duly qualified to do business and is in good standing
in all jurisdictions where the nature of properties owned or leased by the
Seller or the activities conducted by the Seller make such qualification
necessary except where a failure to be so qualified would not have a Material
Adverse Effect on the operations, assets or financial condition of the Seller or
any of the Subsidiaries, individually or collectively.

(b) APPROVALS. Subject to stockholder approval, if necessary, the Seller's
execution, delivery and performance of this Agreement has been duly authorized
by all necessary corporate and other action and no further corporate or other
action is necessary on the part of the Seller for it to execute and deliver this
Agreement and to consummate and perform its obligations hereunder.

(c) CONSENTS. Except as set forth in Schedule 4(c) of the Disclosure Schedule
delivered contemporaneously herewith (the "Disclosure Schedule"), no consent,
approval or authorization of, or the making of any declaration or filing with,
any governmental authority or any other person is necessary in connection with
the execution, delivery or performance by the Seller of this Agreement (other
than pursuant to the HSR Act), except such consents, approvals, authorizations,
declarations and filings which, if not obtained or made, would not prevent or
impede the consummation of the transactions contemplated hereby or have a
Material Adverse Effect on the operations, assets or financial condition of the
Buyer or any of the Subsidiaries, individually or collectively.

(d)      NO VIOLATION.  Except as set forth in Schedule 4(d) of the
Disclosure Schedule, neither the execution and delivery of this

                                        9

<PAGE>
Agreement by the Seller nor the fulfillment of or compliance with the terms or
provisions hereof will: (i) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of the Seller, (ii) conflict with, result in
any breach or violation of, constitute a default under, give rise to a right of
termination, cancellation or acceleration under or result in the creation of any
lien, security interest or loss of a benefit under any contract or other
agreement, mortgage, lease, license or other instrument or obligation to which
the Seller is a party or by which it or any of its assets is bound, except where
such conflicts, breaches, violations, defaults, terminations or other events
would not, individually or in the aggregate, prevent or impede the consummation
of the transactions contemplated hereby; or (iii) result in the violation of any
provision of any applicable law, rule, regulation or ordinance or any order,
decree, writ or injunction of any court, administrative agency or governmental
authority by which the Seller is bound, except where such violations would not
prevent or impede the consummation of the transactions contemplated hereby.

(e) VALIDITY AND BINDING EFFECT. This Agreement has been duly executed and
delivered on behalf of the Seller and, assuming the valid and binding execution
of this Agreement by the Buyer, constitutes the legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) the availability of specific performance and other equitable remedies
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).

(f) SHARES. The Seller holds of record and owns all of the Shares, free and
clear of all liens, security interests, restrictions, pledges, claims and
encumbrances of every nature. The Seller is not a party to any option, warrant,
right or other contract or commitment that would require the Seller to sell any
of the Shares. The Seller is not a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of the Shares.

(g) NO BROKERS. Neither the Seller nor any Subsidiary has employed any broker,
finder, investment banker or consultant in connection with this Agreement that
would be entitled to a broker's, finder's or similar fee or commission in
connection herewith.

                                       10

<PAGE>
(h) PUBLIC UTILITY HOLDING COMPANY ACT. Seller is not a "holding company" or a
"subsidiary company" of a "holding company" or an affiliate of a "holding
company", or an "affiliate" of a "subsidiary company" of a "holding company," in
each case within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

5.       REPRESENTATIONS AND WARRANTIES AS TO SUBSIDIARIES.  The Seller
hereby represents and warrants to the Buyer as of the date hereof
as follows:

(a) ORGANIZATION AND EXISTENCE. Each Subsidiary is a corporation, duly
organized, validly existing and in good standing under the respective laws of
its state of incorporation and has all requisite power and authority to enter
into and perform its obligations under this Agreement. Each Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation in all
jurisdictions where the nature of the properties owned or leased or the
activities conducted by such Subsidiary make such qualification necessary and
where a failure to be so qualified would have a Material Adverse Effect on the
assets, operations or financial condition of such Subsidiary. The Subsidiaries
have all requisite power and authority and all licenses, permits and
authorizations necessary to own, lease and operate their respective properties
and to carry on their respective Businesses as such Businesses are presently
being conducted, except where the failure to obtain such licenses, permits and
authorizations would not have a Material Adverse Effect on the operations,
assets or financial condition of the Subsidiaries, individually or collectively.

(b) CAPITALIZATION. The entire authorized capital stock of ATNG consists of Five
Thousand Four Hundred (5,400) shares, of which Five Thousand Four Hundred
(5,400) shares are issued and outstanding. The entire authorized capital stock
of TRIGAS consists of One Thousand (1,000) shares, of which One Thousand (1,000)
shares are issued and outstanding. The entire authorized capital stock of ATEMCO
consists of One Thousand (1,000) shares, of which One Thousand (1,000) shares
are issued and outstanding. The Seller is the owner of all of the issued and
outstanding shares of each of the Subsidiaries and all such shares have been
duly authorized, are validly issued, fully paid, nonassessable and free of
preemptive rights. There are no outstanding or authorized options, warrants,
purchase rights, subscriptions rights, conversion rights, exchange rights or
other contracts or

                                       11

<PAGE>
commitments that would require any Subsidiary to issue, sell or otherwise cause
to become outstanding any of its capital stock.

(c) NO VIOLATION. Except as set forth in Schedule 5(c) of the Disclosure
Schedule, neither the execution and delivery of this Agreement by the Seller nor
the fulfillment of or compliance with the terms or provisions hereof will: (i)
violate or conflict with any provision of the Articles of Incorporation or
Bylaws of any Subsidiary (ii) conflict with, result in any breach or violation
of, constitute a default under, give rise to a right of termination,
cancellation or acceleration under or result in the creation of any lien,
security interest or loss of a benefit under any contract or other agreement,
mortgage, lease, license or other instrument or obligation to which any
Subsidiary is a party or by which it or any of its assets is bound; or (iii)
result in the violation of any provision of any applicable law, rule, regulation
or ordinance or any order, decree, writ or injunction of any court,
administrative agency or governmental authority by which any Subsidiary is
bound.

(d) FINANCIAL STATEMENTS. The Seller has furnished Buyer with copies of the
Financial Statements. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods indicated, except as adjusted to reflect elimination of
inter-company assets and liabilities among the Seller (including any affiliates
of the Seller) and the Subsidiaries which items have been reclassified as equity
and except as otherwise disclosed therein, and fairly present the financial
position of the Subsidiaries taken as a whole. Except as and to the extent (x)
reflected or reserved against in the Financial Statements, (y) disclosed in one
or more Schedules to this Agreement or (z) of liabilities and obligations
incurred in the ordinary course of business since December 31, 1996, none of the
Subsidiaries, as of the date of this Agreement has any material liability or
obligation of any nature (whether absolute, accrued, contingent or otherwise)
which should be reflected as a liability on the Financial Statements under
generally accepted accounting principles consistently applied.

(e) TAXES. Except as disclosed in Schedule 5(e) of the Disclosure Schedule, (i)
all federal, state, county and local tax returns and reports, of whatever type,
required to be filed by or with respect to each Subsidiary, as of the date
hereof and as of the Closing Date, have been or will have been filed and all
taxes (including, without limitation, penalties, interest, assessments and other

                                       12

<PAGE>
charges imposed thereon) shown to be due on said returns and reports have been
paid; (ii) none of the Subsidiaries is delinquent in the payment of any taxes,
assessments or penalties due and payable by such entity to the United States or
any other taxing authority with respect to any period ended prior to the date
hereof; (iii) none of the federal income tax returns for any tax year after 1991
of any of the Subsidiaries has been audited by the Internal Revenue Service;
(iv) there are no federal, state or local tax liens upon any property or assets
of any of the Subsidiaries, except for liens for taxes not yet due and payable;
(v) there are no present disputes with any taxing authority relating to taxes of
any nature payable by or affecting any of the Subsidiaries; and (vi) no waivers
of statutes of limitations as to any tax matters have been given or requested
with respect to any Subsidiary.

(f) TITLE TO PROPERTIES. Except as otherwise specified in Schedule 5(f) of the
Disclosure Schedule and except such title matters which do not have a Material
Adverse Effect on the operations, assets or financial condition of the
Subsidiaries, individually or collectively, each of the Subsidiaries has: (i)
good and marketable title to its assets, free and clear of all liens, mortgages,
security agreements, options, pledges, charges, covenants, conditions,
restrictions and other encumbrances and claims of any kind or character
whatsoever (other than tax liens for taxes not yet due and payable); and (ii)
all rights-of-way and easements necessary to own, operate and maintain its
Business as presently conducted. Except as set forth in Schedule 5(f) of the
Disclosure Schedule, no person has any right, title or interest or any claim
thereto in any of such properties or assets, the existence of which, either
individually or in the aggregate, would prevent or impede the consummation of
the transactions contemplated hereby or have a Material Adverse Effect on the
operations, assets or financial condition of any of the Subsidiaries,
individually or collectively.

(g) GAS PURCHASE CONTRACTS, GAS SALES CONTRACTS, GAS STORAGE CONTRACTS AND GAS
TRANSPORTATION AGREEMENTS. All Gas Purchase Contracts, Gas Sales Contracts, Gas
Storage Contracts and Gas Transportation Contracts to which any of the
Subsidiaries is a party or is otherwise bound are listed in Schedule 5(g) of the
Disclosure Schedule. Copies of all such Contracts, together with all amendments,
modifications, revocations and notices pertaining thereto have been delivered or
made available to Buyer. Except as set forth on Schedule 5(g) of the Disclosure
Schedule, no Subsidiary is party to any arrangement under which it will be

                                       13

<PAGE>
obligated, by virtue of a prepayment arrangement, a "take-or-pay" arrangement or
any other arrangement, to transport or deliver hydrocarbons at some future time
without then or thereafter receiving full payment therefor, or to pay for
hydrocarbons or their transportation without then receiving such hydrocarbons.

(h) NO LEASES. Except as set forth in Schedule 5(h) of the Disclosure Schedule,
all the equipment and real property (other than rights-of-way, licenses, permits
and easements) which are material to the operations of each of the Subsidiaries
is owned by such Subsidiary and not leased or rented.

(i) NO DEFAULTS. None of the Subsidiaries is in breach or default under any term
or provision of any of its Contracts except where such breaches or defaults
would not, either individually or in the aggregate, prevent or impede the
consummation of the transactions contemplated hereby or have a Material Adverse
Effect on the assets, operations or financial condition of any of the
Subsidiaries. All of the Contracts are in full force and effect, and constitute
legal, valid and binding obligations of the applicable Subsidiary except where
the failure to be in full force and effect and legal, valid and binding would
not, either individually or in the aggregate, have a Material Adverse Effect on
the assets, operations or financial condition of such Subsidiary. None of the
Subsidiaries has received any written notice from any other party indicating any
intent to rescind or dishonor any material provision contained in any of the
Contracts. Except as set forth in Schedule 5(i) of the Disclosure Schedule, none
of the Subsidiaries is a party to any contract to sell any portion of its assets
other than in the ordinary course of business.

(j) COMPLIANCE WITH APPLICABLE LAW. Except as set forth in Schedule 5(j) of the
Disclosure Schedule, to the Seller's knowledge, the Subsidiaries are in
compliance with every applicable law, rule, regulation, ordinance, license,
permit and other governmental action and authority and every order, writ, and
decree of every court, administrative agency or other governmental authority in
connection with the ownership, operation and maintenance of their Businesses,
properties and assets, except where the non-compliance with which, either
individually or in the aggregate, would not prevent or impede the consummation
of the transactions contemplated hereby or have a Material Adverse Effect on the
operations, assets or financial condition of the Subsidiaries. All filings and
notices required to be made by the Subsidiaries with the regulatory agencies of
the federal government

                                       14

<PAGE>
and any state, county or municipality have been made or given, except where the
failure to make such filings and notices, either individually or in the
aggregate, would prevent or impede the consummation of the transactions
contemplated hereby or have a Material Adverse Effect on the operations, assets
or financial condition of the Subsidiaries, individually or collectively.

(k) INSURANCE. The Subsidiaries maintain in effect insurance on their respective
assets as described in Schedule 5(k) of the Disclosure Schedule. Such insurance
policies are in full force and effect on the date hereof and will remain in
effect through the Closing; provided, however, that the parties acknowledge that
the Seller may cancel all or any portion of such insurance policies at Closing.
None of the Subsidiaries is in default with respect to any provision contained
in any insurance policy covering any portion of its assets, except where such
default would not prevent or impede the consummation of the transactions
contemplated hereby or have a Material Adverse Effect on the operations, assets
or financial condition of the Subsidiaries, individually or collectively.

(l) LITIGATION. Except as set forth in Schedule 5(l) of the Disclosure Schedule,
there are no pending suits, actions or proceedings, against or involving any of
the Subsidiaries and, to the knowledge of the Seller, there are no
investigations or threatened suits, actions or proceedings against or involving
such Subsidiaries, except such suits, actions, proceedings or investigations
which would not, either individually or in the aggregate, have a Material
Adverse Effect on the operations, assets or financial condition of any of the
Subsidiaries. No Subsidiary is in default with respect to any judgment, order,
writ, injunction, decree or award from any court or other governmental
instrumentality or arbitrator having jurisdiction over such Subsidiary which
default or violation has had or will have a Material Adverse Effect on the
operations, assets or financial condition of such Subsidiary.

(m) EMPLOYEE MATTERS. Except as set forth in Schedule 5(m) of the Disclosure
Schedule, none of the Subsidiaries is a party to any written employment
contract, brokerage commission contract or consulting contract or any union or
collective bargaining contract. To the Seller's knowledge, each Subsidiary is in
compliance with all laws relating to the employment of labor, including, without
limitation, provisions thereof relating to wages, hours, equal opportunity and
the payment of social security and other taxes

                                       15

<PAGE>
where the noncompliance with which would either individually or in the aggregate
have a Material Adverse Effect on the assets, operations or financial condition
of the Subsidiaries. The Seller is not aware of any union organization effort,
strike, walk-out, boycott, slow-down, sick-out, work stoppage or similar labor
relations problem relating to the Business of any Subsidiary.

(n) PATENTS, COPYRIGHTS, TRADEMARKS, ETC. Except as set forth in Schedule 5(n)
of the Disclosure Schedule, to the Seller's knowledge, the present conduct of
the Business of each Subsidiary does not conflict with, infringe upon or violate
the patents, trademarks, servicemarks, trade names, copyrights or trade secrets
or other intangible assets of any other person or entity, and none of the
Subsidiaries has received any notice of any infringement thereof, except where
such conflicts, infringements and violations would not, either individually or
in the aggregate, have a Material Adverse Effect on the operations, assets or
financial condition of the Subsidiaries, individually or collectively.

(o) EMPLOYEE BENEFIT PLANS. All Plans are set forth in Schedule 5(o) of the
Disclosure Schedule. To the Seller's knowledge, the Plans have been operated,
administered and funded in compliance in all material respects with the
applicable provisions of ERISA, the Code and all applicable regulations
promulgated thereunder (including the minimum funding requirements of Section
302 of ERISA and Section 412 of the Code). Without limiting the generality of
the foregoing:

         (i) To the Seller's knowledge, no Subsidiary has any liability with
respect to any other "employee benefit plan" and has never sponsored,
maintained, made or been required to make contribution to any "multi-employer
plan" as such term is defined in Section 3(37) of ERISA).

         (ii) To the Seller's knowledge, no "reportable event" (as such term is
defined in Section 4043(a) of ERISA) and no transaction described in Section 406
of ERISA has occurred with respect to any of the Plans.

         (iii) There are no pending claims by, against or on behalf of the Plans
other than routine claims by participants and beneficiaries for benefits due and
owing under the Plans.

         (iv)     None of the assets of any of the Subsidiaries is subject
to a lien pursuant to Section 302(f) or Section 4068 of ERISA.

                                       16

<PAGE>
         (v) To the Seller's knowledge, no Subsidiary nor any affiliate of any
Subsidiary has engaged in any transaction or is a successor to or parent
corporation of any party which has engaged in any transaction which would
subject it to liability under Section 4069 of ERISA.

(p) ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5(p) of the
Disclosure Schedule, (i) to the Seller's knowledge, there are no Hazardous
Substances present upon any real property owned or occupied by any Subsidiary;
(ii) to the Seller's knowledge, there has been no spill, release, discharge,
dispersal, deposit, storage or disposal of any Hazardous Substances by any
Subsidiary which has not been corrected; (iii) none of the Subsidiaries is
subject to any order, permit or directive, directed to it as opposed to the
industry in general, relating to the generation, recycling, reuse, sale,
storage, handling, transport or disposal of Hazardous Substances or directing
cleanup of or payment of cleanup costs of Hazardous Substances, the cost of
compliance with which, either individually or in the aggregate, would have a
Material Adverse Effect on the operations, assets or financial condition of such
Subsidiary; (iv) there are no notices, claims, orders, directives, litigation,
administrative or other proceedings, judgments or orders of which the Seller is
aware relating to any Hazardous Substances or other forms of pollution relating
in any way to any above-mentioned property of any Subsidiary with which such
Subsidiary has not complied in all material respects, except where the cost of
compliance with which, either individually or in the aggregate, would have a
Material Adverse Effect on the operations, assets or financial condition of such
Subsidiary; and (v) to the Seller's knowledge, no persons have been exposed to a
Hazardous Material through activities, conditions, or circumstances pertaining
to any of the Subsidiaries such that the Subsidiaries (or their assets) are
reasonably likely to incur liability to such persons for personal injuries,
damages or death resulting from such exposure.

(q) REAL PROPERTY. The Seller has no knowledge of any threatened termination or
reduction of the current access to or from the real property used by any
Subsidiary in its Business to existing roads or the sewer or other utility
services presently serving such real property. No Subsidiary has received any
notice that its real property is in violation of any zoning, laws, statutes,
ordinances or building or use restrictions applicable to such real property or
which prohibit the use of such real property for its current use or uses.

                                       17

<PAGE>
(r)      CHANGES.  Except as set forth in Schedule 5(r) of the
Disclosure Schedule, since December 31, 1996 each of the
Subsidiaries has:

         (i)      conducted the operation of its Business only in the
ordinary course of business consistent with past practice;

         (ii)     preserved its corporate existence and retained its
business organization intact;

         (iii) paid all compensation and other obligations to its
employees when the same were due and payable;

         (iv)     not mortgaged, pledged, subjected to lien, charged,
encumbered or granted a security interest in or to any of its
assets;

         (v)      not sold or transferred any of its assets except for
sales of inventory in the ordinary course of business;

         (vi) not suffered any material damage, destruction or loss
(whether or not covered by insurance) affecting its assets;

         (vii) not waived any right of substantial value; and

         (viii) not terminated any contract, agreement or arrangement with any
customer or supplier or received notice of termination with respect to any such
material contract, agreement or arrangement.

(s) TARIFFS. Except as set forth in Schedule 5(s) of the Disclosure Schedule, to
the extent that the operations of any of the Subsidiaries are subject to a
tariff approved by FERC, those operations are in compliance with each such
tariff, except where such noncompliance would not have a Material Adverse Effect
on the assets, operations or financial condition of the Subsidiaries taken as a
whole. Seller has no knowledge of any refund claim of any customers or any
refund obligation of any Subsidiary imposed under an order issued by FERC and,
except as set forth in Schedule 5(s) of the Disclosure Schedule, has no
knowledge of any facts or circumstances which would give rise to any such refund
claim or refund obligation. Except as set forth in Schedule 5(s) hereto, there
are no customer complaints pending or, to Seller's knowledge, threatened against
any Subsidiary before FERC, which would, either individually or in the
aggregate, have a Material Adverse Effect on

                                       18

<PAGE>
the operations, assets or financial condition of the Subsidiaries
taken as a whole.

(t) MATERIAL MISSTATEMENTS OR OMISSIONS. No statement, representation, warranty
or covenant made by the Seller in this Agreement or in any Exhibit or Schedule
to this Agreement contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.

(u) ASSETS OWNED. The Subsidiaries own, or have rights of way, licenses, leases,
permits or easements with respect to, all of the material assets used in the
Businesses or held in storage for use in the Businesses, including those
described in Schedule 5(u) of the Disclosure Schedule, and they own the various
other assets described or referred to in said Schedule 5(u). Other than sales or
assignments to their customers and among themselves, the Subsidiaries have not
sold or assigned any rights of way, licenses, leases, permits or easements, in
whole or in part, or any undivided interest therein, to any parties whatsoever,
except as disclosed in said Schedule 5(u).

(v)      NO PARTNERSHIP.  None of the Subsidiaries is a party to any
partnership or joint ventures.

(w) NO CUSTOMER CURTAILMENTS. Except as set forth on Schedule 5(w) of the
Disclosure Schedule, neither Seller nor any of the Subsidiaries has received
written notice of any threatened or planned plant closings of customers of the
Subsidiaries or the curtailment by such customers of future gas purchases by
such customers from the Subsidiaries.

(x) GAS IMBALANCES. Except as accrued for on the Draft Closing Date Balance
Sheet and reserved for thereon, there will be no gas imbalances as of the
Closing Date for which the Subsidiaries, or any of them, shall have any
liability or other obligation which is not offset by a corresponding receivable.

6.       BUYER'S REPRESENTATIONS AND WARRANTIES.  The Buyer hereby
represents and warrants to the Seller as of the date hereof as
follows:

(a)      ORGANIZATION AND EXISTENCE.  The Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of

                                       19

<PAGE>
Nevada and has all requisite power and authority to enter into and perform its
obligations under this Agreement. The Buyer is duly qualified to do business and
is in good standing in all jurisdictions where the nature of properties owned or
leased by the Buyer or the activities conducted by the Buyer make such
qualification necessary and except where a failure to be so qualified would have
a Material Adverse Effect on the assets, operations or financial condition of
the Seller.

(b) APPROVALS. The Buyer's execution, delivery and performance of this Agreement
has been duly authorized by all necessary and other corporate action and no
further corporate or other action is necessary on the part of the Buyer for it
to execute and deliver this Agreement and to consummate and perform its
obligations hereunder.

(c) CONSENTS. Except as set forth in Schedule 6(c) hereto, no consent, approval
or authorization of, or the making of any declaration or filing with, any
governmental authority or any other person is necessary in connection with the
execution, delivery or performance by the Buyer of this Agreement (other than
pursuant to the HSR Act), except such consents, approvals, authorizations,
declarations and filings which, if not obtained or made, would not prevent or
impede the consummation of the transactions contemplated hereby.

(d) NO VIOLATION. Except as set forth in Schedule 6(d) of the Disclosure
Schedule, neither the execution and delivery of this Agreement by the Buyer nor
the fulfillment of or compliance with the terms or provisions hereof will: (i)
violate or conflict with any provision of the Articles of Incorporation or
Bylaws of the Buyer, (ii) conflict with, result in any breach or violation of,
constitute a default under, give rise to a right of termination, cancellation or
acceleration under or result in the creation of any lien, security interest or
loss of a benefit under any contract or other agreement, mortgage, lease,
license or other instrument or obligation to which the Buyer is a party or by
which it or any of its assets is bound, except where such conflicts, breaches,
violations,defaults, terminations and other events would not, individually or in
the aggregate, prevent or impede the consummation of the transactions
contemplated hereby; or (iii) result in the violation of any provision of any
applicable law, rule, regulation or ordinance or any order, decree, writ or
injunction of any court, administrative agency or governmental authority by
which the Buyer is bound, except where such violations

                                       20

<PAGE>
would not prevent or impede the consummation of the transactions
contemplated hereby.

(e) VALIDITY AND BINDING EFFECT. This Agreement has been duly executed and
delivered on behalf of the Buyer and, assuming the valid and binding execution
of this Agreement by the Seller, constitutes the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) the availability of specific performance and other equitable remedies
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).

(f)      FINANCIAL WHEREWITHAL.  The Buyer has the financial ability to
consummate the transactions contemplated by this Agreement.

(g)      NO BROKERS.  The Buyer has not employed any broker, finder,
investment banker or consultant in connection with this Agreement
that would be entitled to a broker's, finder's or similar fee or
commission in connection herewith.

(h) MATERIAL MISSTATEMENTS OR OMISSIONS. No statement, representation, warranty
or covenant made by the Buyer in this Agreement or in any Exhibit or Schedule to
this Agreement, contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary in order to make the
statements herein or therein in the light of circumstances under which they were
made, not misleading.

(i) INVESTMENT REPRESENTATION. Buyer is purchasing the Shares for investment
purposes only and not with a view to any distribution thereof in violation of
the Securities Act of 1933, as amended, or any applicable state securities law.
Buyer has such knowledge and experience in business and financial affairs in
general, and of the Businesses of the Subsidiaries as conducted and regulated in
the states where they are located in particular, as to be capable of evaluating
the merits and risks of purchasing the Shares, taking into account the accuracy
of the representations and warranties contained in Sections 4 and 5 hereof, and
also the accuracy of any other information provided to Buyer.

7.       COVENANTS.


                                       21

<PAGE>
(a)      SELLER'S COVENANTS.  The Seller covenants and agrees that from
and after the execution and delivery of this Agreement to and
including the Closing Date:

         (i) ACCESS; DELIVERY OF DOCUMENTS. The Seller shall cause the
Subsidiaries to give the Buyer and its representatives access during normal
business hours and upon reasonable notice to the properties and the books and
records of the Subsidiaries and shall furnish or cause to be furnished such
information concerning the Subsidiaries as the Buyer may reasonably request. The
Buyer agrees not to disturb the normal operations of the Subsidiaries. In
addition, upon the Buyer's request, the Seller shall provide to the Buyer or
cause to be provided to the Buyer copies of any and all agreements relating to
the respective Businesses of the Subsidiaries. Buyer shall maintain the
confidentiality of all information furnished to Buyer pursuant to this Section
7(a)(i) and, in the event this Agreement is terminated, shall return copies of
any such information to Seller or, at Seller's request, shall destroy such
materials.

         (ii)     CONDUCT OF BUSINESS.

                  (A)      AFFIRMATIVE REQUIREMENTS.  Except as otherwise
         contemplated by this Agreement, the Seller shall cause each of
         the Subsidiaries to:

                           (1) carry on its business in the ordinary course

                           (2) maintain its assets in as good working order
                  and condition as at present, ordinary wear and tear
                  excepted;

                           (3) perform all of its obligations in all material
                  respects under agreements relating to or respecting its
                  assets, properties and rights;

                           (4) use its good faith reasonable efforts to keep
                  in full force and effect present insurance coverage;

                           (5) use its good faith reasonable efforts (consistent
                  with its ordinary course of business) to maintain and preserve
                  its Business intact, retain its present employees and maintain
                  its relationships with customers and others having business
                  relations with it;


                                       22

<PAGE>
                           (6) use its good faith reasonable efforts to
                  maintain all licenses and certifications necessary to
                  conduct its Business; and

                           (7) respond to any reasonable inquiry by the Buyer
                  concerning the conduct and operation of its Business.

                  (B) PROHIBITIONS. Except as otherwise contemplated by this
         Agreement, the Seller shall cause each Subsidiary to not, without the
         prior written consent of the Buyer:

                           (1) enter into any material contract or commitment
                  or incur or agree to incur any material liability or
                  indebtedness except in the ordinary course of business;

                           (2) increase in any material respect the
                  compensation payable after the date hereof to any
                  salaried employee or agent of such Subsidiary;

                           (3) purchase, sell, assign, lease or otherwise
                  acquire, transfer or dispose of any material property or
                  equipment, except in the ordinary course of business;

                           (4) enter into or agree to enter into any material
                  agreements or arrangements which are outside the ordinary
                  course of business which grant any rights to purchase any of
                  its material assets;

                           (5) except as identified in Schedule 7(a)(ii)(B)(5)
                  of the Disclosure Schedule, commit to, authorize or engage in
                  any material capital projects or capital expenditures relating
                  to its Business or its assets;

                           (6) merge or consolidate into or with any other
                  corporation or other entity;

                           (7) engage in any business other than the Business;

                           (8) enter into any transaction other than in the
                  ordinary course of business; or

                           (9) commit or agree to do any of the actions
                  described in Sections 7(a)(ii)(B)(1) through (8) above.


                                       23

<PAGE>
(b)      CERTAIN RESTRUCTURINGS.  The parties acknowledge and agree
that the Seller and the Buyer shall cause the following actions to
be taken with respect to the Subsidiaries:

         (i)      certain benefit plans shall be restructured as follows:

                  (1) the Atrion Thrift Plan shall be partially terminated with
         respect to participants employed by the Subsidiaries in accordance with
         the provisions of Exhibit B hereto and their account balances shall be
         distributed to such participants;

                  (2) the liabilities of the Subsidiaries under the Atrion
         Supplemental Executive Thrift Plan shall be transferred to and assumed
         by the Seller and certain assets of the Atrion Supplemental Executive
         Thrift Plan Trust shall be transferred to and accepted by a trust
         established by the Seller in accordance with the provisions of Exhibit
         C hereto;

                  (3) the Atrion Retirement Plan shall be partially terminated
         with respect to participants employed by the Subsidiaries in accordance
         with the provisions of Exhibit D hereto and their accrued benefits
         shall be distributed to such participants;

                  (4) the ATNG Post-Retirement, Medical and Health Voluntary
         Employee Benefit Association (the "VEBA") shall be continued by the
         Buyer as provided in Exhibit E hereto; provided, however, that on or
         before the Closing Date, Seller shall cause ATNG to amend such VEBA to
         provide that no further funding shall be made for the benefits provided
         under the VEBA and that, once the funds in the VEBA have been
         exhausted, no further benefits will be provided to retirees thereunder;
         and

                  (5) the liabilities of the Subsidiaries under the Atrion
         Supplemental Executive Retirement Plan shall be transferred to and
         assumed by the Seller in accordance with the provisions of Exhibit F
         hereto;

         (ii)  the liability of ATNG for deferred director fees payable
to J. Kenneth Smith shall be assumed by Seller; and

         (iii) the following assets and liabilities shall be assigned
to the Seller or one of its non-Subsidiary affiliates:


                                       24

<PAGE>
                  (A)      the computer equipment, software and other property
         listed and described on Exhibit G hereto;

                  (B)      the liability for accrued and unused vacation of
         those persons listed on Exhibit H hereto; and

                  (C) any deferred tax assets and liabilities relating to the
         items assumed or assigned pursuant to this Section 7(b).

(c) AUDITED FINANCIAL STATEMENTS. Prior to Closing, Seller shall allow
accountants selected by Buyer to prepare and deliver to Buyer audited balance
sheets and statements of income and expense of the Subsidiaries for the fiscal
years ended December 31, 1995 and December 31, 1996, at Buyer's expense. Seller
shall cause the Subsidiaries to fully cooperate with such accountants and grant
them such access to information as shall be reasonably necessary to perform such
work.

(d) SCHEDULES. It is understood and agreed that from time to time prior to
Closing the parties may deliver to one another modifications or supplements to
the Schedules of the Disclosure Schedule relating to the respective parties'
representations and warranties; provided, however, except as provided in the
following sentence, no such modification or supplement will affect the rights or
obligations of the parties to this Agreement (including without limitation a
party's rights to terminate this Agreement if the other party fails to meet the
condition that its representations and warranties be true and correct in all
material respects without such modification or supplement having been made)
until after the Closing Date. Notwithstanding any other provision hereof, if the
Closing occurs, any such supplement or amendment of any Schedule will be
effective to cure and correct for indemnification purposes (but only for such
purposes) any breach of any representation, warranty or covenant that would have
existed by reason of such party not having made such supplement or amendment.

(e) FULFILLMENT OF CONDITIONS. Each of the parties shall use its good faith
reasonable efforts to satisfy the conditions to the closing of the transactions
contemplated hereby, including, without limitation, complying promptly with all
requirements of the HSR Act.

(f)      STOCKHOLDER APPROVAL.  Seller shall call a meeting of its
stockholders to consider approval of this Agreement and the
transactions contemplated hereby, which meeting shall be held as

                                       25

<PAGE>
soon as reasonably practicable after the execution of this
Agreement.

8.       CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO CLOSE.  The
obligations of the Buyer under this Agreement with respect to the
purchase and sale of the Shares shall be subject to the fulfillment
on or prior to the Closing Date of each of the following
conditions:

(a) REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of
the Seller contained in this Agreement shall be true and correct in all material
respects when made and as of the Closing Date as if made on such date. The
parties acknowledge and agree that the dollar limitation in the definition of
the term "Material Adverse Effect" shall not be taken into account and shall
have no relevance in determining whether said representations and warranties are
true and correct in all material respects.

(b) COVENANTS. The Seller shall have complied with and performed in all material
respects all of the agreements, covenants and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.

(c)      LEGAL OPINION.  The Buyer shall have been furnished with an
opinion of the Seller's counsel, dated the Closing Date, in the
form of Exhibit I attached hereto.

(d) DELIVERIES OF CONSENTS. The Seller shall have delivered to the Buyer such
instruments, consents and approvals of third parties as are necessary to
consummate the transactions contemplated by this Agreement.

(e) NO LITIGATION. There shall not have been instituted by any creditor of the
Seller or other third party any suit or proceeding to restrain or invalidate
this transaction which would involve expense or lapse of time that would be
materially adverse to the Buyer's interest.

(f)      NO MATERIAL ADVERSE CHANGE.  There shall not have occurred
(after the date hereof) any material adverse change, whether or not
covered by insurance, in the operations, assets or financial
condition of the Subsidiaries, individually or collectively.

(g)      OFFICERS' CERTIFICATES.  At the Closing, the Seller shall have
furnished to the Buyer a certificate dated the Closing Date signed

                                       26

<PAGE>
by the Chief Executive Officer and the Chief Financial Officer of the Seller,
the Controller, the Vice President of Operations and Engineering, and the Vice
President of Regulatory Affairs and Customer Service of ATNG and the President
of ATEMCO to the effect that all of the representations and warranties of the
Seller contained in the Agreement remain in all material respects true and
correct as of the Closing Date after taking into account any modifications or
supplements to the Schedules hereto delivered by the Seller to the Buyer and
that the Seller has performed and satisfied in all material respects all
covenants and conditions required by this Agreement to be performed or satisfied
by the Seller on or prior to Closing.

(h) REGULATORY APPROVALS. All regulatory approvals shall have been obtained and
all applicable waiting periods (and any extensions thereof) under the HSR Act
shall have expired or otherwise been terminated by the parties.

(i)      RESIGNATIONS.   The Buyer shall have received the resignations
of the officers and directors of the Subsidiaries set forth on
Schedule 8(i) of the Disclosure Schedule.

(j)      STOCKHOLDER APPROVAL.  The stockholders of the Seller shall
have approved this Agreement and the transactions contemplated
hereby.

9.       CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.  The
obligations of the Seller under this Agreement with respect to the
purchase and sale of the Shares shall be subject to the fulfillment
on or prior to the Closing Date of each of the following
conditions:

(a) REPRESENTATIONS AND WARRANTIES. All of the representations and warranties by
the Buyer contained in this Agreement shall be true and correct in all material
respects when made and as of the Closing Date as if made on such date.

(b) COVENANTS. The Buyer shall have complied with and performed in all material
respects all of the agreements, payments, assumptions, covenants and conditions
required by this Agreement to be performed and complied with by it on or prior
to the Closing Date.


                                       27

<PAGE>
(c)      LEGAL OPINION.  The Seller shall have been furnished with an
opinion of the Buyer's counsel, dated the Closing Date, in the form
of Exhibit J attached hereto.

(d) NO LITIGATION. There shall not have been instituted by any creditor or
stockholder of the Buyer any suit or proceeding to restrain or invalidate this
transaction which would involve expense or lapse of time that would be
materially adverse to the Seller's interest. In addition, there shall not have
been instituted by any third party any suit or proceeding to restrain or
invalidate this transaction which would involve expense or lapse of time that
would be materially adverse to the Seller's interest.

(e) OFFICER'S CERTIFICATE. At the Closing, the Buyer shall have furnished to the
Seller a certificate dated the Closing Date signed by the Chief Executive
Officer, the Chief Financial Officer, and the Vice President of Operations of
the Buyer to the effect that all of the representations and warranties of the
Buyer, contained in the Agreement remain in all material respects true and
correct as of the Closing Date after taking into account any modifications or
supplements to the Schedules hereto delivered by the Buyer to the Seller and
that the Buyer has performed and satisfied in all material respects all
covenants and conditions required by this Agreement to be performed or satisfied
on or prior to Closing.

(f) REGULATORY APPROVALS. All regulatory approvals shall have been obtained and
all applicable waiting periods (and any extensions thereof) under the HSR Act
shall have expired or otherwise been terminated by the parties.

(g)      STOCKHOLDER APPROVAL.   The stockholders of the Seller shall
have approved this Agreement and the transactions contemplated
hereby.

10. CLOSING. The Closing shall be held at the offices of Berkowitz, Lefkovits,
Isom & Kushner, A Professional Corporation, at 1600 SouthTrust Tower,
Birmingham, Alabama at 10:00 a.m. local time on the third business day following
the date on which all the conditions specified in Sections 8(h) and 8(j) hereof
shall have been satisfied or on such other date as the parties hereto shall
mutually agree (the "Closing Date"). For all purposes hereof, the Closing of the
purchase and the sale of the Shares and the transfer of the benefits and burdens
of ownership thereof shall be deemed to occur at 9:00 a.m. Central Time on the
Closing Date.


                                       28

<PAGE>
11.      TRANSACTIONS AT CLOSING.

(a)      DELIVERIES BY THE SELLERS TO THE BUYER.  At the Closing, the
Seller shall deliver (or cause to be delivered) the following to
the Buyer:

         (i)      stock certificates evidencing the Shares duly endorsed
for transfer to the Buyer or accompanied by appropriate assignment
documents;

         (ii) resolutions of the Board of Directors and stockholders of the
Seller certified as true and correct by the Secretary of the Seller, authorizing
and approving the execution of this Agreement by the Seller and the sale and
delivery of the Shares;

         (iii) the legal opinion of the Seller's legal counsel;

         (iv)     consents and approvals with respect to the transfer of
the Shares, if any;

         (v)      certificate of the applicable officers of the Seller and
the Subsidiaries dated the Closing Date, as described in Section
8(g) hereof; and

         (vi) the pipeline agreements attached as Exhibit K; and

         (vii) Certificates of Good Standing as to Seller and the Subsidiaries
for their respective states of incorporation, and Certificates of Good Standing
as to the Subsidiaries for those states in which the Subsidiaries are qualified
to do business.

(b)      DELIVERIES BY THE BUYER TO THE SELLERS.  At the Closing, the
Buyer shall deliver (or cause to be delivered) the following to the
Seller:

         (i) by wire transfer to Seller's account an amount of cash equal to the
Preliminary Purchase Price, less the Escrow Deposit, as described in Section
3(a) hereof;

         (ii) resolutions of the Board of Directors of the Buyer, certified as
true and correct by the Secretary of the Buyer, authorizing and approving the
execution of this Agreement by the Buyer and the purchase of the Shares;

         (iii)  the legal opinion of counsel for the Buyer;

                                       29

<PAGE>
         (iv) certificate of the officers of the Buyer dated the
Closing Date, as described in Section 9(e) hereof; and

         (v)  the pipeline agreements attached as Exhibit K.

(c) DELIVERIES BY THE SELLER, BUYER AND SUBSIDIARIES. The parties shall cause
all of the notices and other documents described in Sections 16(g) and 16(h) to
be delivered to the appropriate parties.

12.      TERMINATION RIGHTS.

(a) TERMINATION. In addition to the termination rights provided in Section 19
hereof, this Agreement may be terminated by the Seller if the Board of Directors
of the Seller receives a proposal to purchase the Shares or substantially all of
the assets of the Subsidiaries (an "Acquisition Proposal") and the Seller
notifies the Buyer in writing of all the material terms, conditions and other
provisions of the Acquisition Proposal and that the Seller desires to consider
acceptance of such proposal and Buyer does not make, within ten (10) business
days following receipt of the Seller's notice, an offer which the Board of
Directors of the Seller believes, in good faith, to be at least as favorable to
the stockholders of the Seller as said Acquisition Proposal (the "Fiduciary
Out"). In addition to the Fiduciary Out and any termination rights granted to
the parties elsewhere in this Agreement, this Agreement may be terminated by
either the Buyer or the Seller upon written notice to the other party if (i) the
stockholders of the Seller at a stockholders meeting held to consider such
approval do not approve this Agreement; or (ii) provided the terminating party
is not then in breach of any provision of this Agreement, upon the occurrence of
any of the following:

(A) If on the Closing Date any of the conditions precedent to the obligations of
the terminating party set forth in this Agreement have not been satisfied or
waived in writing; or

(B) If the Closing does not occur on or before July 3, 1997.

(b) EFFECT OF TERMINATION. In the event this Agreement is terminated, the Escrow
Deposit shall be paid as provided in Section 3(a). In addition, in the event
this Agreement is terminated due to the exercise of the Fiduciary Out or the
failure of the stockholders of the Seller to approve this transaction at a

                                       30

<PAGE>
stockholders meeting held to consider such approval and in these events only,
then, within five (5) business days following termination, the Seller shall pay
to the Buyer, in cash, the sum of Two Million Dollars ($2,000,000). The only
liability of Seller to Buyer in the event of any termination of this Agreement
shall be the payment of the foregoing sum as provided in this Section 12(b).

13.      INDEMNITY.

(a) BY THE SELLER. The Seller agrees to indemnify and hold the Buyer and the
Subsidiaries harmless against and shall reimburse the Buyer and the Subsidiaries
for any and all Damages which arise from any of the following (provided,
however, that Seller shall not be required to reimburse more than one party for
any item of Damage):

         (i) the breach of any representation, warranty, agreement or
covenant of the Seller contained in this Agreement (including any
Exhibit or Schedule hereto); and

         (ii) all actual, alleged, claimed or purported liabilities and
obligations of the Seller and the Subsidiaries and all claims and demands made
in respect thereof, whether known or unknown, whether arising out of contract,
tort, misrepresentation, strict liability, violations of environmental laws or
waste management practices, or violation of any other laws or otherwise relating
to, or arising from the ownership, operation or control of the Businesses prior
to Closing except those which are reflected or reserved against on the Closing
Date Balance Sheet.

(b)      BY BUYER.  The Buyer agrees to indemnify and hold the Seller
harmless against and shall reimburse the Seller for any and all
Damages which arise from any of the following:

         (i)      the breach of any representation, warranty, agreement or
covenant of the Buyer contained in this Agreement (including any
Exhibit or Schedule hereto);

         (ii) all actual, alleged, claimed or purported liabilities and
obligations of the Subsidiaries which are reflected or reserved against on the
Closing Date Balance Sheet; and

         (iii) all actual, alleged, claimed or purported liabilities and
obligations of the Buyer and the Subsidiaries and all claims and demands made in
respect thereof, whether known or unknown, whether arising out of contract,
tort, misrepresentation, strict

                                       31

<PAGE>
liability, violations of environmental laws or waste management practices or
violation of any other laws or otherwise relating to, or arising from the
ownership, operation or control of the Businesses following Closing.

(c)      LIMITATIONS.

         (i) ON SELLER'S INDEMNIFICATION. Except as hereafter provided, in no
case shall the Seller's liability to make indemnification payments to the Buyer
("Indemnification Payments") under the foregoing provisions of this Section 13
exceed, in the aggregate, Ten Million Dollars ($10,000,000) and, except as
hereinafter provided, the liability to make indemnification payments shall
expire as to any item that is not the subject of a claim made within eighteen
(18) calendar months immediately following the Closing Date; provided, however,
that such time limitation shall not apply to covenants or agreements required to
be performed following Closing. Notwithstanding any provision contained herein,
the Buyer shall only be entitled to Indemnification Payments to the extent that
the aggregate Damages incurred by the Buyer exceed Five Hundred Thousand Dollars
($500,000) and then only to the extent of such excess; provided, however, that
the foregoing dollar threshold and limitation shall not apply to any
Indemnification Payments arising out of state sales taxes, federal income taxes
or state income or income-based taxes and, provided further, that claims with
respect to state sales taxes, federal income taxes and state income or
income-based taxes may be made within the applicable statute of limitations
respecting such tax matters.

         (ii) ON BUYER'S INDEMNIFICATION. In no case shall the Buyer's liability
to make indemnification payments to the Seller with respect to breaches of the
Buyer's representations and warranties contained in Section 6 hereof exceed, in
the aggregate, Ten Million Dollars ($10,000,000) and the foregoing
indemnification obligation with respect to breaches of the Buyer's
representations and warranties contained in Section 6 hereof shall expire as to
any item that is not the subject of a claim made within eighteen (18) calendar
months immediately following the Closing Date. Notwithstanding any provision
contained herein, the Seller shall only be entitled to indemnification payments
with respect to breaches of the Buyer's representations and warranties contained
in Section 6 hereof to the extent that the aggregate Damages incurred by the
Seller exceed Five Hundred Thousand Dollars ($500,000) and then only to the
extent of such excess.

                                       32

<PAGE>
(d) INDEMNIFICATION PROCEDURE. Promptly after an indemnified party becomes aware
of an Indemnification Claim, such indemnified party shall, if a claim in respect
thereof is to be made against any party, give written notice to the latter of
the nature of the Indemnification Claim. In case any such Indemnification Claim
involves a Third Party Claim, the indemnified party shall give the indemnifying
party notice within thirty (30) days following its receipt of notice of such
Third Party Claim. The indemnifying party shall, following notice and
consultation with the indemnified party (i) defend against any such claim or
litigation in such manner as it may deem appropriate with legal counsel of its
choice and (ii) compromise or settle such litigation or claim on such terms as
is approved by the indemnified party such approval not to be unreasonably
withheld. The indemnifying party shall be responsible for and shall pay in
accordance with the parameters specified in this Section 13, the amount of all
liabilities, damages, costs of settlement, fees, costs and expenses, including
attorney's fees, incurred in connection with the defense against, investigation
of and settlement of any such claim or litigation. If no settlement of any such
claim is made, the indemnifying party will satisfy any judgment rendered with
respect to such claim or in such litigation before the indemnified party is
required to do so, and will pay, in accordance with the parameters specified in
this Section 13, all costs and expenses, incurred by the indemnified party with
respect thereto. The indemnified party shall cooperate with the indemnifying
party with respect to any such defense.

(e) ATTORNEYS FEES. Subject to the limitations and in accordance with the
procedures of this Section 13, the indemnified party may recover attorneys fees
from the indemnifying party in connection with any Third Party Claims made
against such indemnified party. Notwithstanding the foregoing, the indemnifying
party shall not be liable for any attorneys' fees incurred by the indemnified
party in connection with a Third Party Claim once the indemnifying party has
assumed the defense of such Third Party Claim. With respect to any other claims
which an indemnified party may have against an indemnifying party pursuant to
this Section 13, such indemnified party shall not be entitled to recover
attorneys fees.

(f) INSURANCE. The Seller shall not be required to indemnify the Buyer for any
Damages to the extent the Buyer has insurance which actually pays for such
Damages; provided, however, that Buyer shall promptly make claims and seek
payment of such proceeds.


                                       33

<PAGE>
(g) EXCLUSIVE REMEDY. Notwithstanding any provision of this Agreement to the
contrary, the sole remedy of a party for any breach of any of the
representations, warranties or covenants contained in this Agreement or any
claim relating to the ownership or operation of the respective Businesses of the
Subsidiaries shall be to exercise the rights under this Section 13, which shall
be subject to the procedures and limitations set forth in this Section 13,
excluding, however, any cause of action for specific performance.

14. SPECIFIC PERFORMANCE. The parties acknowledge that they will be irreparably
damaged in the event this Agreement is not specifically enforced. In the event
of any controversy concerning any provision of this Agreement the same shall be
enforceable in a court of equity or by decree of specific performance or by
temporary or permanent injunction or any other legal or equitable remedy,
without the necessity of showing actual damages or furnishing a bond or other
security. Except as otherwise expressly provided in this Agreement, such remedy
shall, however, be cumulative and not exclusive, and shall be in addition to any
other remedy the aggrieved party may have. Notwithstanding the foregoing
provisions, if Seller shall terminate this Agreement and be entitled to receive
the Escrow Deposit, Seller shall not be entitled to specific performance,
damages, or any other right or remedy against Buyer for Buyer's breach of any
covenants, representations or warranties or for any other matter or thing
pertaining to this Agreement, it being expressly understood and agreed that the
Escrow Deposit shall be agreed liquidated damages for any and all such causes of
action against Buyer.

15. PUBLIC ANNOUNCEMENTS. The parties shall issue a joint press release or, at
the election of the parties, separate press releases mutually-acceptable to the
parties, announcing the execution and delivery of this Agreement and the closing
of the transaction contemplated hereby. Except for any such press releases, the
parties shall not issue or make any press release or make any public statement
prior to or in connection with the Closing (the "Public Announcements") with
respect to this Agreement or the transactions contemplated hereby without the
other party's prior written consent except as may be required by law in the
opinion of such party's counsel. In the event the foregoing exception is
applicable, no Public Announcement will be made without written notice and a
copy of the proposed Public Announcements being provided to the other parties to
this Agreement no less than three

                                       34

<PAGE>
(3) business days prior to the issuance of such Public
Announcements.

16.      POST-CLOSING COVENANTS.

(a) NECESSARY ACTION. From time to time after the Closing Date, the Seller
shall, if requested by the Buyer, take such actions and make, execute and
deliver to the Buyer such additional instruments of transfer, as may be
necessary or proper to (i) transfer the Shares to the Buyer; and (ii) consummate
the transactions contemplated hereby. Notwithstanding the foregoing and except
as otherwise provided in this Agreement, the Seller shall not be responsible for
any filing fees or other payments which may be required by third parties in
consummating the transactions contemplated hereby.

(b) ACCESS TO BOOKS AND RECORDS. Following Closing and for ten (10) years
thereafter, the Seller shall have the right to review any records transferred to
the Buyer pursuant hereto which relate to the Businesses, upon reasonable notice
to the Buyer during normal business hours and to copy the same at the sole
expense of the Seller.

(c) RIGHTS OF WAY. Buyer shall grant to Seller certain limited license rights on
ATNG's rights of way and easements and Buyer shall maintain AlaTenn Pipeline
Company, Inc.'s existing right-of-way and properties with respect to its
gaseous-oxygen pipeline as set forth in the pipeline agreements attached hereto
as Exhibit K.

(d) SEVERANCE POLICY. Buyer shall provide severance benefits to the full-time
employees of ATNG as of the Closing Date (other than Jerry Howard, Jeffery
Strickland and George Petty) as provided on Exhibit L hereto for any such
employee terminated during the twelve (12) month period following Closing;
provided, however, that if any employee of a Subsidiary refuses a transfer to a
job at another location of the business of the Buyer or any of its affiliates
(provided such transfer is made by Buyer in good faith and the job entails the
same responsibilities and provides the same or greater base salary), then the
Buyer shall not be obligated to honor such severance obligation with respect to
such employee. Seller shall reimburse the Buyer for fifty percent (50%) of such
severance benefits paid to any such employee promptly upon receipt of an invoice
for the same, said reimbursement not to exceed, in the aggregate, Fifty Thousand
Dollars ($50,000) for all severed employees. Notwithstanding the foregoing, in
the event any such

                                       35

<PAGE>
employee becomes an employee of Seller or any affiliate of Seller within six (6)
months following termination of such employee's employment with the applicable
Subsidiary, then the Seller shall promptly reimburse to Buyer, upon receipt of
an invoice therefor, an amount equal to the portion of the unreimbursed
severance benefits paid or to be paid to such employee by the Buyer.
Reimbursements made to Buyer pursuant to the immediately preceding sentence
shall be without regard to the Fifty Thousand Dollar ($50,000) limitation and
such reimbursements shall not be counted toward the accumulation of such dollar
limitation.

(e) OFFICE SPACE. For a period of six (6) months following Closing, Buyer shall
provide Seller with office space, office equipment, personnel and access to
equipment, all as more particularly described on Exhibit M hereto.

(f)      GUARANTEED OBLIGATIONS.  Buyer shall cause the Subsidiaries to
satisfy or fulfill all obligations of the Subsidiaries which are
guaranteed by Seller when such obligations are required to be
satisfied or fulfilled.

(g) SPECIAL ACCOUNT. The parties acknowledge that Seller has guaranteed
obligations of the Subsidiaries under certain Gas Purchase Contracts, Gas Sales
Contracts and Gas Transportation Contracts, which Guaranties are listed on
Schedule 16(g) hereto (the "Guaranties"). Prior to Closing, Buyer and Seller
shall cause the Subsidiaries to establish a separate corporate bank account with
Compass Bank (the "Special Account"). From and after the Closing the Buyer shall
cause all collections of accounts receivable of the Subsidiaries with respect to
their sales of natural gas purchased under the Gas Purchase Contracts or
transported under Gas Transportation Contracts which at such time remain under
the Guaranties to be paid into the Subsidiaries' existing accounts at Compass
Bank (the "Bank") and to be transferred on a daily basis from the Bank to the
Special Account. At Closing, Seller, Buyer and the Subsidiaries shall provide
(a) to the Subsidiaries' customers to which natural gas is sold or for whom it
is transported, irrevocable written instructions to make payments therefor to
the Subsidiaries' accounts at the Bank until otherwise instructed in writing by
Seller and Buyer, and (b) to the Bank, irrevocable written instructions to
transfer all funds in the Subsidiaries' accounts at the Bank to the Special
Account on a daily basis until otherwise instructed in writing by Seller and
Buyer. Funds in the Special Account shall be used to pay only the obligations
under the Gas Purchase Contracts and Gas Transportation

                                       36

<PAGE>
Contracts except that the Buyer shall have the right to withdraw monthly for its
own uses from such account the amount by which the parties agree the revenues
from sales of gas purchased or transported under the Gas Purchase Contracts or
Gas Transportation Contracts exceed the payment obligations under the Gas
Purchase Contracts and Gas Transportation Contracts for such month. All payments
from the Special Account shall be applied to such obligations in chronological
order based on the respective due dates thereof; PROVIDED, HOWEVER, that all
such payables shall be paid as soon as possible after receipt of invoices
therefor if funds are available in the Special Account. Nothing contained herein
shall be construed as a limitation on the Buyer's and the Subsidiaries'
obligations to pay said obligations. The Special Account shall be closed (and
any balance remaining therein transferred to such other Buyer account or
accounts as may be specified by Buyer), and Seller shall, at Buyer's request,
sign any joint notification requested by Buyer instructing the Bank or any
customer of Buyer either to make payment or transfer funds or take other action
relating to Buyer's funds other than as described above, upon the later of (i)
the full payment of the obligations under the Gas Purchase Contracts and Gas
Transportation Contracts and (ii) termination of all Guaranties. Seller shall
have the right to audit and review all accounts, books and records relating to
the Special Account during normal business hours and upon reasonable notice, to
confirm Buyer's compliance with terms hereof. At Closing, Seller and Buyer shall
cause the Subsidiaries to execute and deliver a Security Agreement pursuant to
which Subsidiaries shall grant a security interest in the Special Account to
secure the payment and performance by the Subsidiaries of their obligations
under the applicable Gas Purchase Contracts and Gas Transportation Contracts.
Such Security Agreement shall be in form and substance reasonably acceptable to
Seller and shall provide that upon default Seller shall have all rights and
remedies of a secured party under the Uniform Commercial Code in effect in the
applicable jurisdiction, and that the Subsidiaries shall cooperate in giving the
Bank appropriate notice of existence of such security interest and the
Subsidiaries shall otherwise take any and all actions (including the filing of
appropriate financing statements) reasonably required by Seller to perfect such
security interest.

(h)      TERMINATION OF GAS CONTRACTS.  Buyer agrees to use its good
faith reasonable efforts following the Closing to obtain the
release of Seller from any Guaranty with respect to any of the Gas
Purchase Contracts, Gas Sales Contracts or Gas Transportation
Contracts which have terms extending beyond the Closing.  In the

                                       37

<PAGE>
event any such Guaranty is still in effect ninety (90) days after the Closing,
Buyer shall cause the applicable Subsidiary to terminate the applicable Gas
Purchase Contract or Gas Transportation Contract (if such Gas Transportation
Contract is terminable) at the end of such ninety-day period or purchase or
transport no additional gas thereunder so long as such Guaranty remains in
effect. At Closing, Buyer and Seller shall cause each applicable Subsidiary to
grant to Seller an irrevocable power of attorney giving Seller the right and
power to terminate such Gas Purchase Contracts or Gas Transportation Contracts
or cause no gas to be purchased or transported thereunder, on behalf of such
Subsidiary, at the end of such ninety (90)-day period. At Closing and therafter,
Buyer shall assume and perform all of Seller's obligations under the Agreement
dated as of January 26, 1990 by and among Champion International Corporation,
ATEMCO and TRIGAS and Seller.

17.      TAXES.

(a) OBLIGATIONS REGARDING TAXES. Seller shall cause each Subsidiary to be
included in the respective consolidated federal income tax returns of the
applicable affiliated group of corporations which includes Seller (and the
income tax returns of any foreign, state or local taxing jurisdiction that
requires consolidated or combined income tax returns of affiliated groups of
corporations), for all periods ending on or before the Closing Date and will
timely file such returns and pay all taxes shown to be due thereon. For states
where short-period tax returns due to a change in ownership are required and the
state income tax year closes as a result of the sale of subsidiary stock with
respect to which a 338(h)(10) election is made, Seller will file the appropriate
state tax return for the applicable Subsidiary and pay the applicable taxes for
the period beginning with the beginning of the tax year through and including
the Closing Date. In states where short- period tax returns due to a change in
ownership are not allowed and the state income tax year does not close as a
result of the sale of the subsidiary stock with respect to which a 338(h)(10)
election is made, Seller shall prepare proforma federal and state returns which
report the taxable income from operations and gain from the sale from the
beginning of the Subsidiary's tax year through and including the Closing Date,
and pay to the Buyer the amount that would otherwise be due if the state
required a short-period return. Buyer shall have the opportunity to review such
pro forma returns for a period of twenty (20) days. Buyer shall be responsible
for and shall prepare and file all tax returns and pay all taxes with

                                       38

<PAGE>
respect to the Subsidiaries for all periods following the Closing Date. Each
party shall cooperate with the other and grant the other access to information
as shall be reasonably necessary to prepare and file such returns.

(b) SECTION 338(H)(10) ELECTION. Seller and Buyer agree that Buyer may elect
that the parties should make one or more timely and effective elections under
Section 338(h)(10) of the Code (the "Section 338(h)(10) Election"). Upon written
notice by Buyer to Seller that the Section 338(h)(10) Election is to be made,
Seller agrees to cause the "common parent" (as defined in Section 1504 of the
Code) of the "affiliated group" (as defined in Section 1504 of the Code) that
includes the Seller and the Subsidiaries for the taxable period that includes
the Closing Date to join in the Section 338(h)(10) Election. Buyer agrees to
join in the Section 338(h)(10) Election. If Buyer elects to make a Section
338(h)(10) Election, Buyer will cause to be filed one or more fully executed
Forms 8023 on or before the time and in the place and manner provided by the
United States Treasury regulations under Section 338 of the Code, and will
provide notice of such filing to Seller. As soon as practicable after Buyer
elects to make a Section 338(h)(10) Election, Buyer and Seller shall allocate
the modified aggregate deemed sales price and the adjusted grossed-up basis
resulting from the Section 338(h)(10) Election in the manner set forth on
Exhibit N hereto and the parties shall use such allocation for all federal,
state and local income tax reporting purposes. The Buyer shall be liable for any
and all liability for any taxes arising, directly or indirectly, from a
liquidation, merger, sale or other disposition of any of the properties and/or
assets of the Subsidiaries subsequent to the Closing Date, or from an actual or
deemed election pursuant to Section 338 of the Code with respect to the
Subsidiaries or their respective properties and/or assets, other than any
liability for taxes arising from a properly filed Section 338(h)(10) Election.
Anything to the contrary in this Agreement notwithstanding, the parties'
covenants, agreements, rights and obligations with respect to any tax covered by
this Section 17(b) shall survive the Closing and shall not terminate until
twenty (20) business days after the expiration of all statutes of limitations
(including any and all extensions thereof) applicable to such tax or the
assessment thereof, and any claim for indemnification against claims resulting
from or arising out of the breach of any such covenant or agreement shall be
made, if at all, prior to the expiration of such period.


                                       39

<PAGE>
18. ARBITRATION. The parties acknowledge and agree that this Agreement and the
performance of the transactions contemplated hereby evidence transactions which
involve a substantial nexus with interstate commerce. Accordingly, any dispute,
controversy or claim of any kind or nature which may arise between the parties
(including any dispute, controversy or claim relating to the validity of this
arbitration clause) with respect to this Agreement or the transactions
contemplated hereby, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Such arbitration proceedings shall be held in
Birmingham, Alabama, and shall be heard by an arbitrator mutually agreeable to
the Seller and the Buyer and, to the extent practicable, who is knowledgeable
and experienced in the type of matter that is the subject of the dispute. If the
parties are unable to agree on an arbitrator, then the arbitrator shall be
selected by the American Arbitration Association. The parties understand and
agree that the decision of the arbitrator shall be final and binding upon both
the Seller and the Buyer, and that the arbitrator shall have all powers provided
by law, and may award any legal or equitable relief, including, without
limitation, money damages, declaratory relief and injunctive relief; provided,
however, that the arbitrator's authority to award money damages shall be limited
to those falling within the definition of Damages. The arbitrator shall charge
all fees and expenses of the arbitration equally to the parties, except that
each party shall bear and pay all of its own attorneys' fees, accountants' fees,
expert witness fees and other fees and costs incurred by it in connection with
its preparation for and participation in the arbitration.

19. CASUALTY LOSSES. The Seller assumes all risk of loss, damage or destruction
to the physical assets of the Subsidiaries due to fire or other casualty up to
and including the Closing Date. In the event that there shall have been
suffered, between the date hereof and the Closing Date, damage to or destruction
to the physical assets of the Subsidiaries the cost of repairs or replacement of
which the Buyer reasonably determines to be in an amount greater than Two
Million Seven Hundred Fifty Thousand Dollars ($2,750,000), then the Buyer may
elect promptly after receiving all relevant facts regarding such occurrence (i)
to terminate this Agreement by giving written notice of such termination to the
Seller, or (ii) to waive such breach and consummate this Agreement, in which
case then at the Closing all

                                       40

<PAGE>
claims to insurance proceeds or other rights of the Seller against third parties
arising from such casualty or loss shall (to the extent assignable) be
separately assigned by the Seller to the Buyer at the Closing. To the extent not
so assignable, such claims may be pursued by the Buyer, for its own account and
benefit, in the name of the Seller or, alternatively, the Buyer may elect to
reduce the Purchase Price by the amount of such loss.

20.      PROHIBITED ACTIVITIES OF SELLER.  In order to protect the
goodwill and business interests of the Subsidiaries following the
Closing, Seller covenants and agrees that it and its affiliates,
now or hereafter existing, will not:

         (a) directly or indirectly, request or advise any party to any gas
sales, purchase or transportation contract, now or hereafter existing, with any
of the Subsidiaries, to withdraw, curtail or cancel any service to or from such
Subsidiary under the terms of any such contract;

         (b) aid, abet or otherwise assist any person, firm, or corporation
seeking to interfere with the Subsidiaries' relationship with the parties to, or
the terms, of any gas sales, purchase or transportation contract, now or
hereafter existing, with any of the Subsidiaries;

         (c)      without the approval of the Chief Executive Officer of
the Buyer, directly or indirectly, induce or attempt to influence
any employee of the Subsidiaries to leave or terminate his
employment; or

         (d) acting alone or in conjunction with others, directly or indirectly,
in any of the states of Alabama, Tennessee and Mississippi for a period of three
(3) years from the Closing Date, engage in any businesses in competition with
the businesses presently conducted by the Subsidiaries, whether for its own
account or for others, other than Central Gas Company's transporting and selling
of gas to the city of Florence, Alabama through its existing interconnect with
Tennessee Gas Pipeline and Tennessee River Development Company's transporting
and selling of gas to the city of Florence, Alabama through its existing
interconnect with Texas Eastern Transmission Company.

21.      MISCELLANEOUS.


                                       41

<PAGE>
(a) NOTICES. All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
when personally delivered or deposited in the United States mail, by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the party to whom such notice relates at the following addresses:

         IF TO SELLER                      ATRION CORPORATION
                                           3230 Second Street
                                           Muscle Shoals, Alabama  35662-3809

         With a Copy to:                   Berkowitz, Lefkovits, Isom & Kushner
                                           A Professional Corporation
                                           1600 SouthTrust Tower
                                           Birmingham, Alabama 35203
                                           Attention:  B.G. Minisman, Jr.

         IF TO BUYER:                      MIDCOAST ENERGY RESOURCES, INC.
                                 1100 Louisiana
                                   Suite 2950
                              Houston, Texas 77002

         With a Copy to:                             Ronald L. Chachere, Esq.
                                    Suite 970
                             Mercantile Tower MT115
                           Corpus Christi, Texas 78477

or at such alternative addresses as may be specified by the parties by notice
given in the manner provided herein.

(b) BINDING EFFECT. All agreements made and entered into in connection with this
transaction shall be binding upon and inure to the benefit of the parties
hereto, their successors and assigns. No assignment of any right, title,
interest or obligation hereunder shall be effective unless approved in writing
by all of the other parties to this Agreement; provided, however, that Buyer
shall be permitted to assign this Agreement, including its rights and
obligations hereunder, to Midcoast Holdings No. One, Inc., provided further,
however, that Buyer shall not be released from any liabilities or obligations
hereunder as a result of such assignment.

(c)      EXPENSES.  Except as otherwise provided in Section 13 hereof,
each of the parties hereto shall each bear its own expenses and
costs, including the fees of any attorney retained by it, incurred

                                       42

<PAGE>
in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby.

(d) MERGER. This Agreement, along with the Exhibits and Schedules referred to
herein merges all previous negotiations between the parties hereto and
constitutes the entire agreement and understanding between the parties with
respect to the subject matter of this Agreement. No alteration, modification or
change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto.

(e) WAIVER. No failure or delay by any party hereto in exercising any right,
power or privilege hereunder (and no course of dealing between or among any of
the parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof. No
waiver of any right, power or privilege hereunder shall be enforceable unless in
writing and executed by the party against whom such enforcement is sought. The
waiver by any party hereto of any of the conditions precedent to its obligations
under this Agreement shall not preclude it from seeking redress for breach of
this Agreement other than with respect to the condition so waived.

(f)      COUNTERPART EXECUTION.  This Agreement may be executed and
delivered by telecopy and may be executed in two (2) or more
counterparts, each of which when so executed shall be an original,
but all of which together shall constitute one agreement.

(g)      GOVERNING LAW.  This Agreement shall be construed and
enforceable in accordance with, and be governed by, the internal
laws of the State of Alabama without regard to the principles of
conflicts of laws.

(h) SURVIVAL OF WARRANTIES, REPRESENTATIONS, AND AGREEMENTS. Except as otherwise
provided herein, the representations, warranties, agreements and
indemnifications of the Seller and the Buyer contained in this Agreement shall
not be discharged or dissolved upon, but shall survive the Closing, subject to
the limitations specified in Section 13 hereof, and shall be unaffected by any
investigation made by any party at any time.


                                       43

<PAGE>
(i) INCLUDING. Wherever terms such as "include" or "including" are used in this
Agreement, they shall mean include or including without limiting the generality
of any description or word preceding such term.

(j) GENDER. Throughout this Agreement, wherever the context so permits, the
masculine gender shall be deemed to include the feminine gender and vice versa,
and both shall be deemed to include the neuter and vice-versa, and the singular
shall be deemed to include the plural and vice-versa.

(k) CAPTIONS. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to describe,
define or limit the scope or intent of the provisions of this Agreement.

(l) KNOWLEDGE DEFINED. The phrases, "knowledge," "to the knowledge" or similar
words or phrases used herein with respect to the Seller or the Subsidiaries
shall mean the actual knowledge of the Chief Executive Officer and Chief
Financial Officer of the Seller, the Controller, the Vice President of
Operations and Engineering, and Vice President of Regulatory Affairs and
Customer Service of ATNG, and the President of ATEMCO, without investigation.

(m)      SCHEDULES.  For purposes of this Agreement, any item set forth
on a Schedule of any party shall be deemed set forth on all
Schedules of such party.

(n) FURTHER ASSURANCES. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, Seller and Buyer will
take or cause to be taken such further action (including the execution and
delivery of such further instruments and documents) as the other party
reasonably may request, all without further consideration.

(o) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.


                                       44

<PAGE>
(p)      NO THIRD PARTY BENEFICIARY.  This Agreement does not confer
upon any person not a party hereto (other than an assignee of a
party hereto) any rights or remedies hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.

                                     SELLER:

                                                 ATRION CORPORATION


                                                 By:/S/ JERRY A. HOWARD
                                                    Its President


                                     BUYER:

                                                 MIDCOAST ENERGY RESOURCES, INC.


                                                 By:/S/ DAN C. TUTCHER
                                                    Its President


                                       45

<PAGE>