Transitional Services Agreement



 EXHIBIT 10.1 
  
 TRANSITIONAL SERVICES AGREEMENT 
  
 THIS TRANSITIONAL SERVICES AGREEMENT (this “Agreement”) is entered into as of October 1, 2004 (the “Execution Date”), by
and between TXU Gas Company LP (“TXU Gas”) and Atmos Energy Corporation (“Atmos Energy”). TXU Gas and Atmos Energy are referred to collectively as the “Parties” and individually as a
“Party”. 
  
 WHEREAS, the Parties desire that TXU
Gas continue to provide the services set forth in this Agreement to Atmos Energy for a transition period after the Execution Date. 
  
 NOW, THEREFORE, in consideration of the foregoing, the Parties agree as follows: 
  
 ARTICLE I 
 SERVICES 
  
 1.1 The Services. TXU Gas shall
provide or cause to be provided to Atmos Energy the Services set forth in Schedule 1. The Party providing or causing to be provided the Services hereunder shall be referred to herein as the “Service Provider” and the Party
receiving such Services shall be referred to herein as the “Service Recipient.” 
  
 1.2 Service Parameters. The Service Provider shall provide and the Service Recipient shall accept the Services, to the extent, but only to the
extent, that such Services were provided (by the Service Provider or by employees transferred to the Service Provider) immediately prior to the Execution Date, unless otherwise mutually agreed by the Parties. The Service Provider shall only be
obligated to provide the Services under the personnel availability conditions that such Services were provided by the Service Provider immediately prior to the Execution Date. Furthermore, the Services will be available only for purposes of
supporting the conduct of business substantially in the manner it was conducted immediately prior to the Execution Date, unless otherwise mutually agreed by the Parties. 
  
 1.3 Impracticability. The Service Provider shall not be required to provide any Service to the extent the performance
of such Service (a) becomes impracticable, in any material respect, as a result of a cause or causes outside the reasonable control of the Service Provider, (b) would require the Service Provider to violate any applicable laws, rules, or
regulations, or (c) would result in the breach of any agreement or other applicable contract existing on the Execution Date. 
  
 1.4 Information to be Furnished to Service Provider. The Service Recipient agrees to provide the Service Provider in a timely manner with
information necessary for, or reasonably requested by, the Service Provider to provide the Services required to be provided by the Service Provider hereunder. 
  

1.5 Additional Resources. In providing the Services, the Service Provider shall not be obligated to (a) hire any additional employees, (b)
maintain the employment of any specific employee, or (c) purchase, lease or license any additional equipment or materials. 







 ARTICLE II 
 TERM AND TERMINATION 
  
 Term. The Services shall commence on the date this Agreement is executed and continue for an initial term of one (1) year, and month to month thereafter until canceled by either Party with at least thirty (30) days’ prior
written notice. 
  
 ARTICLE III 
 COMPENSATION 
  
 3.1 Charges For Services. The charge for each Service will be calculated upon TXU Gas’ actual costs to provide such Service, provided that the
total cost of all Services provided hereunder, unless otherwise mutually agreed by the Parties, will not exceed $26,000,000 for the initial term of one (1) year as set forth in Section 2.1. 
  
 3.2 Payment Terms. The Service Provider shall bill the Service
Recipient monthly for all charges pursuant to this Agreement. Such bills shall be accompanied by reasonable documentation supporting such charges. Such invoices shall be paid within ten (10) days after receipt. Late payments shall bear interest at
the lesser of: (i) the Prime Rate as reported under “Money Rates” in the Wall Street Journal plus 4%, or (ii) the maximum rate allowed by law. The Service Provider may suspend its performance of this Agreement at any time, and for
such time, as undisputed charges due to the Service Provider remain outstanding more than thirty (30) days after the receipt of any such invoice. The term of this Agreement shall not be extended by the amount of time of any suspension under this
Section 3.2. 
  
 ARTICLE IV 
 GENERAL OBLIGATIONS; STANDARD OF CARE 
  
 4.1 Performance Standards. The Service Provider shall, to the extent applicable, use its reasonable commercial efforts to provide the Services in
accordance with its policies, procedures, and practices in effect immediately prior to the Execution Date and, in providing the Services, shall exercise the same degree of care and skill as it exercises in performing similar services for itself.

  
 4.2 DISCLAIMER OF WARRANTIES. EXCEPT AS
OTHERWISE SET FORTH HEREIN, THE SERVICE PROVIDER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
SERVICES OR OTHER DELIVERABLES PROVIDED BY IT HEREUNDER. 
  
 4.3 Indemnification by the Service Recipient. With respect to the Services provided under this Agreement, the Service Recipient shall indemnify, defend, and hold harmless the Service Provider, as applicable, its officers, employees,
agents, and consultants from and against any and all liabilities that arise out of, or result from, the provision of Services by the Service Provider in accordance with this Agreement, other than liabilities arising solely from the gross negligence
or willful misconduct of the Service Provider or its agents or employees. Additionally, each Party will maintain policies of insurance with coverages, limits and deductibles that are reasonable and customary within the industry. 
  

 2 








 4.4 Good Faith Cooperation. The Parties will use good faith efforts to cooperate with each other
in all matters relating to the provision and receipt of the Services. 
  
 4.5 Confidentiality. It is understood that from time to time in the performance of this Agreement, that the Parties may receive, or have access to, confidential or proprietary information of the other Party. As such, each Party
agrees to keep any such information confidential and not to disclose such confidential information to third parties. Notwithstanding the forgoing, each Party will have the right to make such disclosures, if any, to governmental agencies, courts of
law and to its affiliates, attorneys, auditors and accountants, as may be reasonably necessary. In the event a Party is required to provide such confidential information in a proceeding before a governmental agency or court of law, then such Party
will immediately notify the other Party, who may seek a protective order or confidentiality agreement, whichever is applicable, and the Party in possession of such confidential information will fully cooperate with the other Party in such efforts.
In the event a Party discloses such confidential information to its affiliates, attorneys, auditors or accountants, then such Party will nevertheless continue to have the obligation to protect such confidential information of the other Party, and
will remain liable for any failure to do so. 
  
 ARTICLE V

 RELATIONSHIP BETWEEN THE PARTIES 
  
 The relationship between the Parties established under this Agreement with respect to Services provided is that of independent contractors, and neither
Party shall be deemed an employee, agent, partner, or joint venturer of or with the other. The Service Provider will, subject to reimbursement pursuant to Article III, be solely responsible for the payment of any employment-related taxes, insurance
premiums, or employment benefits in respect of the performance of the Services by the Service Provider personnel under this Agreement. 
  
 ARTICLE VI 
 SUBCONTRACTORS 
  
 The Service Provider may engage one or more subcontractors to perform all or
any portion of its duties under this Agreement, provided that the Service Provider remains responsible for the performance of each such subcontractor in accordance with this Agreement, and the charges for the Services delegated to a subcontractor
shall be the lesser of (a) the amount charged by the subcontractor or (b) the amount that would have been payable to the Service Provider under Article III above if the Service Provider had provided such Services. 
  
 ARTICLE VII 
 FORCE MAJEURE 
  
 The Service Provider will be excused for any failure or delay in performing any of its obligations under this Agreement if such failure or delay is caused by Force Majeure. For the purposes of this Agreement, “Force Majeure” means
any circumstance or event beyond the 
  

 3 








 reasonable control of the Party relying upon such event or circumstance, including, without limitation: any act of God;
any accident, explosion, fire, ice, earthquake, lightning, tornado, hurricane, or other severe weather condition or calamity; any civil disturbance, labor dispute, or labor or material shortage or interruption; any sabotage or acts of terrorism; any
acts of a public enemy, uprising, insurrection, civil unrest, war, or rebellion; or any action or restraint by court order or public or governmental authority or lawfully established civilian authorities. 
  
 ARTICLE VIII 
 MISCELLANEOUS 
  
 8.1 Entire Agreement. This Agreement and the Schedule attached hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. 
  
 8.2 Governing Law. This Agreement shall be governed and construed and enforced in accordance with the laws of the State of Texas as to all matters,
without regard to principles of conflicts of laws that would require the application of the law of another state. 
  
 8.3 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. 
  
 8.4 Notices. Any
notice, demand, offer, request, or other communication required or permitted to be given by either Party pursuant to the terms of this Agreement shall sent to the other Party’s address set forth below, and will be deemed to be received: (i)
when placed in the United States Mail, postage pre-paid, if mailed; or (ii) when actually received, if delivered by any other means: 
  

			
	 TXU Gas Company LP
	 	 Atmos Energy Corporation

	 1601 Bryan Street
	 	 1800 Three Lincoln Centre

	 42nd
Floor
	 	 5430 LBJ Freeway

	 Dallas, Texas 75201
	 	 Dallas, Texas 75240


  
 8.5 Assignability;
Third-Party Beneficiaries. Neither Party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other Party’s prior written consent, which consent will not
be unreasonably withheld; provided, however, either Party may transfer its interests, rights and obligations under this Agreement without consent to (i) any parent, (ii) any affiliate, (iii) any individual, bank, trustee, company or corporation as
security for any note, notes, bonds or other obligations or securities of such assignor; or (iv) any party that acquires all or substantially all of the transferring Party’s assets. Each Party shall cause the transferee of any assets necessary
for the provision of any Services hereunder or of any documents or records to which either party may be entitled to access hereunder to be bound by the terms of this Agreement with respect thereto. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective legal representatives and permitted successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. 
  

 4 








 8.6 Severability. If any term or other provision of this Agreement is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal, or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal,
or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby
are fulfilled to the fullest extent possible. 
  
 8.7 Failure
Or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either Party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, or agreement herein, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative to,
and not exclusive of, any rights or remedies otherwise available. 
  
 8.8 Amendment. No change or amendment will be made to this Agreement except by a written instrument signed on behalf of each of the Parties hereto. 
  
 8.9 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one
and the same Agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. 
  

 5 








 IN WITNESS WHEREOF, the Parties have signed this Transitional Services Agreement effective as of the
Execution Date. 
  

			
	TXU Gas Company LP
		
	By:	 	TXU Gas Management Company LLC,
	 	 	Its General Partner
		
	 By:
	 	 /s/  MIKE McCALL


	 Title:
	 	 President


	
	Atmos Energy Corporation
		
	 By:
	 	 /s/  J. PATRICK REDDY


	 Title:
	 	 Senior Vice President and Chief Financial Officer




  

 6 








 Schedule 1: Services 
  

	•	Billing and Customer Information Services 

  
   The processing of information and data for customer accounts, calculations, preparation of bill print-ready files, and other
  activities in support of related processes. 
  

	•	Bill Printing and Mailing 

  
   The preparation of bills for mailing to customers and the mailing of bills complete with inserts, where appropriate. 
  

	•	Remittance Processing 

  
   The collection and clearing of payments by customer account. 
  

	•	Collections 

  
   The process of providing support to collect funds from past due customer accounts. 
  

	•	Customer Care Services 

  
   The handling of all customer communications. 
  

	•	New Construction Management 

  
   The process of working with contractors and builders to establish the customer’s premises in the System (as defined below) and
  schedule work orders for gas underground and gas meter installation. 
  

	•	Reporting 

  
   Information reports as currently provided or available. 
  

	•	Account Manager Services 

  
   A single point of contact within TXU Gas or its designee for handling requests from Atmos and providing information to Atmos. 
  

	•	Software Services 

  
   Normal quarterly updates of TXU Energy’s computer networks, software, and databases used to provide Customer Services (the
“System”), that have been   transferred to Atmos Energy. 
  

	•	System Changes 

  
   Any changes to the System that are reasonably necessary to comply with regulatory requirements applicable to the TXU Gas   assets
transferred to Atmos Energy.