Document:

<PAGE>

                                                                     EXHIBIT 4.9

                                   REVOLVING
                               CREDIT AGREEMENT

                                     among

                           ATMOS ENERGY CORPORATION
                                 as Borrower,

                        THE LENDERS IDENTIFIED HEREIN,

                                      AND

                            BANK OF AMERICA, N.A.,
                           as Administrative Agent,

                                 BANK ONE, NA,
                             as Syndication Agent

                                      and

                       SOCIETE GENERALE NEW YORK BRANCH,
                            as Documentation Agent

                          DATED AS OF AUGUST 3, 2000

                        BANC OF AMERICA SECURITIES LLC
                  as Sole Lead Arranger and Sole Book Manager
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

SECTION 1.  DEFINITIONS AND ACCOUNTING TERMS.................................1
     1.1    Definitions......................................................1
     1.2    Computation of Time Periods.....................................15
     1.3    Accounting Terms................................................15
     1.4    Time............................................................15

SECTION 2.  LOANS...........................................................16
     2.1    Revolving Loan Commitment.......................................16
     2.2    Method of Borrowing for Revolving Loans.........................18
     2.3    Funding of Revolving Loans......................................18
     2.4    Continuations and Conversions...................................19
     2.5    Minimum Amounts.................................................20
     2.6    Reductions of Revolving Loan Commitment.........................20
     2.7    Notes...........................................................20

SECTION 3.  PAYMENTS........................................................21
     3.1    Interest........................................................21
     3.2    Prepayments.....................................................21
     3.3    Payment in full at Maturity.....................................22
     3.4    Fees............................................................22
     3.5    Place and Manner of Payments....................................23
     3.6    Pro Rata Treatment..............................................23
     3.7    Computations of Interest and Fees...............................23
     3.8    Sharing of Payments.............................................24
     3.9    Evidence of Debt................................................25

SECTION 4.  ADDITIONAL PROVISIONS REGARDING LOANS...........................26
     4.1    Eurodollar Loan Provisions......................................26
     4.2    Capital Adequacy................................................27
     4.3    Compensation....................................................28
     4.4    Taxes...........................................................28

SECTION 5.  CONDITIONS PRECEDENT............................................30
     5.1    Closing Conditions..............................................30
     5.2    Conditions to Loans.............................................32

SECTION 6.  REPRESENTATIONS AND WARRANTIES..................................33
     6.1    Organization and Good Standing..................................33
     6.2    Due Authorization...............................................33
     6.3    No Conflicts....................................................33
     6.4    Consents........................................................34
     6.5    Enforceable Obligations.........................................34
     6.6    Financial Condition.............................................34
     6.7    No Material Change..............................................34

                                       i
<PAGE>

     6.8    No Default......................................................35
     6.9    Litigation......................................................35
     6.10   Taxes...........................................................35
     6.11   Compliance with Law.............................................35
     6.12   Material Agreements.............................................35
     6.13   ERISA...........................................................35
     6.14   Use of Proceeds.................................................37
     6.15   Government Regulation...........................................37
     6.16   Disclosure......................................................37
     6.17   Environmental Matters...........................................38
     6.18   Insurance.......................................................38
     6.19   Franchises, Licenses, Etc.......................................38
     6.20   Secured Indebtedness............................................38
     6.21   Subsidiaries....................................................38

SECTION 7.  AFFIRMATIVE COVENANTS...........................................38
     7.1    Information Covenants...........................................39
     7.2    Debt to Capitalization Ratio....................................41
     7.3    Preservation of Existence, Franchises and Assets................41
     7.4    Books and Records...............................................41
     7.5    Compliance with Law.............................................41
     7.6    Payment of Taxes and Other Indebtedness.........................41
     7.7    Insurance.......................................................42
     7.8    Use of Proceeds.................................................42
     7.9    Audits/Inspections..............................................42

SECTION 8.  NEGATIVE COVENANTS..............................................42
     8.1    Nature of Business..............................................43
     8.2    Consolidation and Merger........................................43
     8.3    Sale or Lease of Assets.........................................43
     8.4    Arm's-Length Transactions.......................................43
     8.5    Fiscal Year; Organizational Documents...........................43
     8.6    Liens...........................................................43

SECTION 9.  EVENTS OF DEFAULT...............................................45
     9.1    Events of Default...............................................45
     9.2    Acceleration; Remedies..........................................47
     9.3    Allocation of Payments After Event of Default...................48

SECTION 10  AGENCY PROVISIONS...............................................49
     10.1   Appointment.....................................................49
     10.2   Delegation of Duties............................................49
     10.3   Exculpatory Provisions..........................................49
     10.4   Reliance on Communications......................................50
     10.5   Notice of Default...............................................50
     10.6   Non-Reliance on Administrative Agent and Other Lenders..........51
     10.7   Indemnification.................................................51

                                      ii
<PAGE>

     10.8   Administrative Agent in Its Individual Capacity.................52
     10.9   Successor Agent.................................................52

SECTION 11. MISCELLANEOUS...................................................53
     11.1   Notices.........................................................53
     11.2   Right of Set-Off................................................53
     11.3   Benefit of Agreement............................................53
     11.4   No Waiver; Remedies Cumulative..................................56
     11.5   Payment of Expenses, etc........................................56
     11.6   Amendments, Waivers and Consents................................57
     11.7   Counterparts/Telecopy...........................................58
     11.8   Headings........................................................58
     11.9   Defaulting Lender...............................................58
     11.10  Survival of Indemnification and Representations and Warranties..58
     11.11  Governing Law; Venue............................................58
     11.12  Waiver of Jury Trial............................................59
     11.13  Severability....................................................59
     11.14  Further Assurances..............................................59
     11.15  Entirety........................................................60
     11.16  Binding Effect; Continuing Agreement............................60

SCHEDULES*

Schedule 1.1    Commitment Percentages
Schedule 6.20   Secured Indebtedness
Schedule 6.21   Subsidiaries
Schedule 11.1   Notices

EXHIBITS*

Exhibit 2.1(b)  Form of Competitive Bid Request
Exhibit 2.2     Form of Notice of Borrowing
Exhibit 2.4     Form of Notice of Continuation/Conversion
Exhibit 2.7(a)  Form of Revolving Loan Note
Exhibit 2.7(b)  Form of Competitive Bid Loan Note
Exhibit 7.1(c)  Form of Officer's Certificate
Exhibit 11.3(b) Form of Assignment Agreement

* Schedules and Exhibits are not filed herewith. Atmos Energy Corporation hereby
agrees to furnish supplemtally a copy of any schedule or Exhibit to the
Commission upon request.

                                      iii
<PAGE>

                                   REVOLVING
                                CREDIT AGREEMENT

     THIS REVOLVING CREDIT AGREEMENT (this "Credit Agreement"), dated as of
                                            ----------------
August 3, 2000, is entered into among ATMOS ENERGY CORPORATION, a Texas and
Virginia corporation (the "Borrower"), the Lenders (as defined herein) and BANK
OF AMERICA, N.A. as agent for the Lenders (in such capacity, the "Administrative
                                                                  --------------
Agent").
-----

                                    RECITALS

     WHEREAS, the Borrower has requested that the Lenders provide a 364-day
revolving credit facility to the Borrower for the purposes set forth herein; and

     WHEREAS, the Lenders have agreed to provide such 364-day revolving credit
facility on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                                   SECTION 1.

                        DEFINITIONS AND ACCOUNTING TERMS

     1.1  Definitions.
          -----------

     As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires.  Defined terms herein shall
include in the singular number the plural and in the plural the singular.

          "Acquisition" means the acquisition to be consummated pursuant to the
           -----------
     terms of the Purchase and Sale Agreement.

          "Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
           ------------------------
     Applicable Percentage for Eurodollar Loans.

          "Administrative Agent" means Bank of America, N.A. and any successors
           --------------------
     and assigns in such capacity.

          "Affiliate" means, with respect to any Person, any other Person
           ---------
     directly or indirectly controlling, controlled by or under direct or
     indirect common control with such Person.  A Person shall be deemed to
     control another Person if such Person possesses, directly or indirectly,
     the power (a) to vote 10% or more of the securities having ordinary voting
     power for the election of directors of such other Person or (b) to direct
     or cause direction of the management and policies of such other Person,
     whether through the ownership of voting
<PAGE>

     securities, by contract or otherwise.

          "Agency Services Address" means 901 Main Street, Dallas, Texas 75201
           -----------------------
     or such other address as the Administrative Agent may designate in writing.

          "Applicable Percentage" means with respect to Eurodollar Loans and
           ---------------------
     Unused Fees (subject to the terms set forth below), the appropriate
     applicable percentage corresponding to the long term, senior, unsecured,
     non-credit enhanced debt rating of the Borrower in effect from time to time
     as described below:

<TABLE>
<CAPTION>

          Long Term, Senior, Unsecured, Non-Credit                        Applicable Percentage        Applicable Percentage
               Enhanced Debt Rating of Borrower                           for Eurodollar Loans           for Unused Fees
               --------------------------------                           --------------------           ---------------
<S>                                                                      <C>                            <C>
     I.   greater than or equal to  A- from S&P                                     .50%                       .10%
                or
          greater than or equal to A3 from Moody's

     II.  greater than or equal to BBB+ but less than A- from S&P                  .625%                      .125%
                or
          greater than or equal to Baa1 but less than A3 from Moody's

     III. greater than or equal to BBB but less than BBB+ from S&P                  .75%                       .15%
                or
          greater than or equal to Baa2 but less than Baa1 from Moody's

     IV.  greater than or equal to BBB- but less than BBB from S&P                 1.00%                       .20%
                or
          greater than or equal to Baa3 but less than Baa2 from Moody's

     V.   less than BBB- from S&P                                                 1.375%                       .30%
                or
          less than Baa3 from Moody's
                or
          unrated by S&P and Moody's
</TABLE>

          Notwithstanding the above, (a) the Applicable Percentage on the
     Effective Date shall be based on Pricing Level II set forth above and shall
     remain at Pricing Level II until S&P or Moody's has confirmed or changed
     its rating based upon the consummation or proposed consummation of the
     Acquisition or has otherwise changed its rating with respect to the
     Borrower and (b) if at any time there is a split in ratings between S&P and
     Moody's of one level, the applicable percentage shall be determined by the
     higher of the two ratings and if at any time there is a split between S&P
     and Moody's of two or more levels, the applicable level shall be one level
     below (i.e., one level higher pricing than) the higher of the S&P or
     Moody's rating.

          The Borrower shall notify the Administrative Agent in writing at the
     Agency Services Address immediately upon any change in the long term,
     senior, unsecured non-credit enhanced debt rating of the Borrower.

          "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
           ---------------
     States Code, as amended, modified, succeeded or replaced from time to time.

                                       2
<PAGE>

          "Base Rate" means, for any day, the rate per annum (rounded upwards,
           ---------
     if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
     greater of (a) the Federal Funds Rate in effect on such day plus  1/2 of 1%
                                                                 ----
     (.50%) or (b) the Prime Rate in effect on such day.  If for any reason the
     Administrative Agent shall have determined (which determination shall be
     conclusive absent manifest error) that it is unable after due inquiry to
     ascertain the Federal Funds Rate for any reason, including the inability or
     failure of the Administrative Agent to obtain sufficient quotations in
     accordance with the terms hereof, the Base Rate shall be determined without
     regard to clause (a) of the first sentence of this definition until the
     circumstances giving rise to such inability no longer exist.  Any change in
     the Base Rate due to a change in the Prime Rate or the Federal Funds Rate
     shall be effective on the effective date of such change in the Prime Rate
     or the Federal Funds Rate, respectively.

          "Base Rate Loan" means a Loan which bears interest based on the Base
           --------------
     Rate.

          "Borrower" means Atmos Energy Corporation, a Texas and Virginia
           --------
     corporation.

          "Borrower Obligations" means, without duplication, all of the
           --------------------
     obligations of the Borrower to the Lenders and the Administrative Agent,
     whenever arising, under this Credit Agreement, the Notes or any of the
     other Credit Documents.

          "Business Day" means any day other than a Saturday, a Sunday, a legal
           ------------
     holiday  or a day on which banking institutions are authorized or required
     by law or other governmental action to close in Dallas, Texas; provided
                                                                    --------
     that in the case of Eurodollar Loans, such day is also a day on which
     dealings between banks are carried on in U.S. dollar deposits in the London
     interbank market.

          "Capital Stock" means (a) in the case of a corporation, all classes of
           -------------
     capital stock of such corporation, (b) in the case of a partnership,
     partnership interests (whether general or limited), (c) in the case of a
     limited liability company, membership interests and (d) any other interest
     or participation that confers on a Person the right to receive a share of
     the profits and losses of, or distributions of assets of, the issuing
     Person.

          "Change of Control" means either of the following events:
           -----------------

               (a) any "person" or "group" (within the meaning of Section 13(d)
          or 14(d) of the Exchange Act) has become, directly or indirectly, the
          "beneficial owner" (as defined in Rules 13d-3 (other than subsection
          (d) thereof) and 13d-5 under the Exchange Act), by way of merger,
          consolidation or otherwise of 40% or more of the voting power of the
          Borrower on a fully-diluted basis, after giving effect to the
          conversion and exercise of all outstanding warrants, options and other
          securities of the Borrower convertible into or exercisable for voting
          stock of the Borrower (whether or not such securities are then
          currently convertible or exercisable); or

                                       3
<PAGE>

               (b) during any period of two consecutive calendar years,
          individuals who at the beginning of such period constituted the board
          of directors of the Borrower together with any new members of such
          board of directors whose elections by such board or board of directors
          or whose nomination for election by the stockholders of the Borrower
          was approved by a vote of a majority of the members of such board of
          directors then still in office who either were directors at the
          beginning of such period or whose election or nomination for election
          was previously so approved cease for any reason to constitute a
          majority of the directors of the Borrower then in office.

          "Closing Date" means the date hereof.
           ------------

          "Code" means the Internal Revenue Code of 1986, as amended from time
           ----
     to time, and the rules and regulations promulgated thereunder.

          "Commitment Percentage" means, for each Lender, the percentage
           ---------------------
     identified as its Commitment Percentage opposite such Lender's name on
     Schedule 1.1, as such percentage may be modified by assignment in
     ------------
     accordance with the terms of this Credit Agreement.

          "Commitments" means, collectively, each Lender's share of the
           -----------
     Revolving Loan Commitment based upon such Lender's Commitment Percentage,
     as reflected on Schedule 1.1.
                     ------------

          "Competitive Bid" means an offer by a Lender to make a Competitive Bid
           ---------------
     Loan pursuant to the terms of Section 2.1(b).

          "Competitive Bid Fee" means a fee of $1,000 payable by the Borrower to
           -------------------
     the Administrative Agent in connection with a Competitive Bid Request
     pursuant to Section 2.1(b).

          "Competitive Bid Loan" means a loan made by a Lender in its discretion
           --------------------
     pursuant to the provisions of Section 2.1(b).

          "Competitive Bid Loan Notes" means the promissory notes of the
           --------------------------
     Borrower in favor of each Lender evidencing the Competitive Bid Loans and
     substantially in the form of Exhibit 2.7(b), as such promissory notes may
                                  --------------
     be amended, modified, supplemented or replaced from time to time.

          "Competitive Bid Rate" means, as to any Competitive Bid made by a
           --------------------
     Lender in accordance with the provisions of Section 2.1(b), the rate of
     interest offered by the Lender making the Competitive Bid.

          "Competitive Bid Request" means a request by the Borrower for
           -----------------------
     Competitive Bids in the form of Exhibit 2.1(b).
                                     --------------

                                       4
<PAGE>

          "Consolidated Capitalization" means, without duplication, the sum of
           ---------------------------
     (a) all of the shareholders' equity or net worth of the Borrower and its
     Subsidiaries on a consolidated basis, as determined in accordance with GAAP
     plus (b) the aggregate principal amount of Preferred Securities plus (c)
     the aggregate Minority Interests in Subsidiaries plus (d) Consolidated
     Funded Debt.

          "Consolidated Funded Debt" means, without duplication, the sum of (a)
           ------------------------
     all indebtedness of the Borrower and its Subsidiaries for borrowed money,
     (b) all purchase money indebtedness of the Borrower and its Subsidiaries,
     (c) the principal portion of all obligations of the Borrower and its
     Subsidiaries under capital leases, (d) all commercial letters of credit and
     the maximum amount of all performance and standby letters of credit issued
     or bankers' acceptance facilities created for the account of the Borrower
     or one of its Subsidiaries, including, without duplication, all
     unreimbursed draws thereunder, (e) all Guaranty Obligations of the Borrower
     and its Subsidiaries with respect to funded indebtedness of another Person;
     provided that neither the indebtedness of Woodward Marketing, LLC
     ("Woodward") incurred in connection with the purchase of gas by Woodward
     ----------
     for resale to the Borrower nor the guaranty by the Borrower or one of its
     Subsidiaries of such indebtedness shall be included in this definition if
     such indebtedness has been outstanding for less than two months from the
     date of its incurrence by Woodward, (f) all indebtedness of another entity
     secured by a Lien on any property of the Borrower or any of its
     Subsidiaries whether or not such indebtedness has been assumed by the
     Borrower or any of its Subsidiaries, (g) all indebtedness of any
     partnership or unincorporated joint venture to the extent the Borrower or
     one of its Subsidiaries is legally obligated with respect thereto, net of
     any assets of such partnership or joint venture, (h) all obligations of the
     Borrower and its Subsidiaries to advance or provide funds or other support
     for the payment or purchase of funded indebtedness (including, without
     limitation, maintenance agreements, comfort letters or similar agreements
     or arrangements) (other than as may be given in respect of Woodward) and
     (i) the principal balance outstanding under any synthetic lease, tax
     retention operating lease, off-balance sheet loan or similar off-balance
     sheet financing product of the Borrower or one of its Material Subsidiaries
     where such transaction is considered borrowed money indebtedness for tax
     purposes but is classified as an operating lease in accordance with GAAP.

          "Consolidated Net Property" means the Fixed Assets less, without
           -------------------------
     duplication, the amount of accumulated depreciation and amortization
     attributable thereto.

          "Credit Documents" means this Credit Agreement, the Notes, any Notice
           ----------------
     of Borrowing and all other related agreements and documents issued or
     delivered hereunder or thereunder or pursuant hereto or thereto.

          "Debt to Capitalization Ratio" means the ratio of (a) Consolidated
           ----------------------------
     Funded Debt to (b) Consolidated Capitalization.

          "Default" means any event, act or condition which with notice or lapse
           -------
     of time, or both, would constitute an Event of Default.

                                       5
<PAGE>

          "Defaulting Lender" means, at any time, any Lender that, at such time
           -----------------
     (a) has failed to make a Loan required pursuant to the term of this Credit
     Agreement, (b) has failed to pay to the Administrative Agent or any Lender
     an amount owed by such Lender pursuant to the terms of this Credit
     Agreement or (c) has been deemed insolvent or has become subject to a
     bankruptcy or insolvency proceeding or to a receiver, trustee or similar
     official.

          "Dollars" and "$" means dollars in lawful currency of the United
           -------       -
     States of America.

          "Effective Date" means the date on which all of the conditions set
           --------------
     forth in Section 5.1 shall have been fulfilled (or waived in the sole
     discretion of the Lenders).

          "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
           -----------------
     and (c) any other Person approved by the Administrative Agent and the
     Borrower (such approval not to be unreasonably withheld or delayed);
     provided that (i) the Borrower's consent is not required during the
     -------- ----
     existence and continuation of an Event of Default, (ii) approval by the
     Borrower shall be deemed given if no objection is received by the
     Administrative Agent from the Borrower within five Business Days after
     notice of such proposed assignment has been received by the Borrower; and
     (iii) neither the Borrower nor an Affiliate of the Borrower shall qualify
     as an Eligible Assignee.

          "Environmental Laws" means any current or future legal requirement of
           ------------------
     any Governmental Authority pertaining to (a) the protection of health,
     safety, and the indoor or outdoor environment, (b) the conservation,
     management, or use of natural resources and wildlife, (c) the protection or
     use of surface water and groundwater or (d) the management, manufacture,
     possession, presence, use, generation, transportation, treatment, storage,
     disposal, release, threatened release, abatement, removal, remediation or
     handling of, or exposure to, any hazardous or toxic substance or material
     or (e) pollution (including any release to land surface water and
     groundwater) and includes, without limitation, the Comprehensive
     Environmental Response, Compensation, and Liability Act of 1980, as amended
     by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et
     seq., Solid Waste Disposal Act, as amended by the Resource Conservation and
     Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42
     USC 6901 et seq., Federal Water Pollution Control Act, as amended by the
     Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as
     amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC
     2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et
     seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et
     seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning
     and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
     Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water
     Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing
     or successor law, and any amendment, rule, regulation, order, or directive
     issued thereunder.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
     amended, and any successor statute thereto, as interpreted by the rules and
     regulations

                                       6
<PAGE>

     thereunder, all as the same may be in effect from time to time.
     References to sections of ERISA shall be construed also to refer to any
     successor sections.

          "ERISA Affiliate" means an entity, whether or not incorporated, which
           ---------------
     is under common control with the Borrower or any of its Subsidiaries within
     the meaning of Section 4001(a)(14) of ERISA, or is a member of a group
     which includes the Borrower or any of its Subsidiaries and which is treated
     as a single employer under Sections 414(b), (c), (m), or (o) of the Code.

          "Eurodollar Loan" means a Loan bearing interest at the Adjusted
           ---------------
     Eurodollar Rate.

          "Eurodollar Rate" means with respect to any Eurodollar Loan, for the
           ---------------
     Interest Period applicable thereto, a rate per annum determined pursuant to
     the following formula:

          "Eurodollar Rate" =         London Interbank Offered Rate
                             ----------------------------------------------
                                     1 - Eurodollar Reserve Percentage

          "Eurodollar Reserve Percentage" means, for any day, that percentage
           -----------------------------
     (expressed as a decimal) which is in effect from time to time under
     Regulation D of the Board of Governors of the Federal Reserve System (or
     any successor), as such regulation may be amended from time to time or any
     successor regulation, as the maximum reserve requirement (including,
     without limitation, any basic, supplemental, emergency, special, or
     marginal reserves) applicable with respect to Eurocurrency liabilities, as
     that term is defined in Regulation D (or against any other category of
     liabilities that includes deposits by reference to which the interest rate
     of Eurodollar Loans is determined), whether or not a Lender has any
     Eurocurrency liabilities subject to such reserve requirement at that time.
     Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and
     as such shall be deemed subject to reserve requirements without benefits of
     credits for proration, exceptions or offsets that may be available from
     time to time to a Lender.  The Eurodollar Rate shall be adjusted
     automatically on and as of the effective date of any change in the
     Eurodollar Reserve Percentage.

          "Event of Default" has the meaning specified in Section 9.1.
           ----------------

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

          "Fee Letter" means that certain letter agreement, dated as of April
           ----------
     13, 2000, between the Administrative Agent and the Borrower, as amended,
     modified, supplemented or replaced from time to time.

          "Federal Funds Rate" means, for any day, the rate per annum (rounded
           ------------------
     upward to the nearest 1/100th of 1%) equal to the weighted average of the
     rates on overnight Federal funds transactions with members of the Federal
     Reserve System arranged by Federal funds brokers on such day, as published
     by the Federal Reserve Bank of New York on the

                                       7
<PAGE>

     Business Day next succeeding such day; provided that (a) if such day is not
                                            --------
     a Business Day, the Federal Funds Rate for such day shall be such rate on
     such transactions on the next preceding Business Day and (b) if no such
     rate is so published on such next succeeding Business Day, the Federal
     Funds Rate for such day shall be the average rate quoted to the
     Administrative Agent on such day on such transactions as determined by the
     Administrative Agent.

          "Financial Officer" means any one of the chief financial officer, the
          -----------------
     controller or the treasurer of the Borrower.

          "Fixed Assets" means the assets of the Borrower and its Subsidiaries
           ------------
     constituting "net property, plant and equipment" on the consolidated
     balance sheet of the Borrower and its Subsidiaries.

          "GAAP" means generally accepted accounting principles in the United
           ----
     States applied on a consistent basis and subject to Section 1.3.

          "Governmental Authority" means any Federal, state, local or foreign
           ----------------------
     court or governmental agency, authority, instrumentality or regulatory
     body.

          "Guaranty Obligations" means, with respect to any Person, without
           --------------------
     duplication, any obligations (other than endorsements in the ordinary
     course of business of negotiable instruments for deposit or collection)
     guaranteeing any indebtedness for borrowed money of any other Person in any
     manner, whether direct or indirect, and including without limitation any
     obligation, whether or not contingent, (a) to purchase any such
     indebtedness or other obligation or any property constituting security
     therefor, (b) to lease or purchase property, securities or services
     primarily for the purpose of assuring the owner of such indebtedness or (c)
     to otherwise assure or hold harmless the owner of such indebtedness or
     obligation against loss in respect thereof.  The amount of any Guaranty
     Obligation hereunder shall (subject to any limitations set forth therein)
     be deemed to be an amount equal to the outstanding principal amount of the
     indebtedness in respect of which such Guaranty Obligation is made.

          "Interest Payment Date" means (a) as to Base Rate Loans, the last day
           ---------------------
     of each fiscal quarter of the Borrower and the Maturity Date, (b) as to
     Eurodollar Loans, the last day of each applicable Interest Period and the
     Maturity Date and, in addition, where the applicable Interest Period for a
     Eurodollar Loan is greater than three months, then also on the last day of
     each three-month period during such Interest Period and (c) as to
     Competitive Bid Loans, the last day of each applicable Interest Period and
     the Maturity Date.

          "Interest Period" means (a) as to Eurodollar Loans, a period of one,
           ---------------
     two, three or six months' duration, as the Borrower may elect, commencing,
     in each case, on the date of the borrowing (including continuations and
     conversions of Eurodollar Loans) and (b) with respect to Competitive Bid
     Loans, a period beginning on the date the Competitive Bid Loan is made and
     ending on a date specified in the applicable Competitive Bid Request
     pursuant

                                       8
<PAGE>

     to which the offer to make such Competitive Bid Loan was extended, which
     shall not be less than 30 days nor more than 90 days in duration; provided,
                                                                       --------
     however, (a) if any Interest Period would end on a day which is not a
     -------
     Business Day, such Interest Period shall be extended to the next succeeding
     Business Day (except that where the next succeeding Business Day falls in
     the next succeeding calendar month, then such Interest Period shall end on
     the next preceding Business Day), (b) no Interest Period shall extend
     beyond the Maturity Date and (c) with respect to Eurodollar Loans, where an
     Interest Period begins on a day for which there is no numerically
     corresponding day in the calendar month in which the Interest Period is to
     end, such Interest Period shall end on the last Business Day of such
     calendar month.

          "Lender" means any of the Persons identified as a "Lender" on the
           ------
     signature pages hereto, and any Eligible Assignee which may become a Lender
     by way of assignment in accordance with the terms hereof, together with
     their successors and permitted assigns.

          "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
           ----
     arrangement, security interest, encumbrance, lien (statutory or otherwise),
     preference, priority or charge of any kind (including any agreement to give
     any of the foregoing).

          "Loans" means the Revolving Loans and the Competitive Bid Loans.
           -----

          "London Interbank Offered Rate" means, with respect to any Eurodollar
           -----------------------------
     Loan for the Interest Period applicable thereto, the rate of interest per
     annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
     on Telerate Page 3750 (or any successor page) as the London interbank
     offered rate for deposits in Dollars at approximately 11:00 A.M. (London
     time) two Business Days prior to the first day of such Interest Period for
     a term comparable to such Interest Period; provided, however, if more than
                                                --------  -------
     one rate is specified on Telerate Page 3750, the applicable rate shall be
     the arithmetic mean of all such rates.  If, for any reason, such rate is
     not available, the term "London Interbank Offered Rate" shall mean, with
                              -----------------------------
     respect to any Eurodollar Loan for the Interest Period applicable thereto,
     the rate of interest per annum (rounded upwards, if necessary, to the
     nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
     interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
     (London time) two Business Days prior to the first day of such Interest
     Period for a term comparable to such Interest Period; provided, however, if
     more than one rate is specified on Reuters Screen LIBO Page, the applicable
     rate shall be the arithmetic mean of all such rates.

          "Material Adverse Effect" means a material adverse effect on (a) the
           -----------------------
     operations, business, assets, liabilities (actual or contingent), financial
     condition or prospects of the Borrower and its Subsidiaries, taken as a
     whole (taking into account the value of any indemnifications in favor of
     the Borrower pursuant to the Purchase and Sale Agreement), (b) the ability
     of the Borrower to perform its obligations under this Credit Agreement or
     (c) the validity or enforceability of this Credit Agreement, any of the
     other Credit Documents, or the rights and remedies of the Lenders hereunder
     or thereunder.

          "Material Subsidiary" means, at any date, a Subsidiary of the Borrower
           -------------------
     whose

                                       9
<PAGE>

     aggregate assets properly included under the category "property, plant and
     equipment" on the balance sheet of such Subsidiary, less the amount of
     depreciation and amortization attributable thereto, constitutes at least
     10% of Consolidated Net Property as of such date; provided that if at any
     time the Borrower has Subsidiaries that are not Material Subsidiaries whose
     total aggregate assets under the category "property, plant and equipment"
     on the balance sheet of such Subsidiaries, less the amount of depreciation
     and amortization attributable thereto, constitutes more than 20% of
     Consolidated Net Property as of such date the Borrower shall designate one
     or more of such Subsidiaries as Material Subsidiaries for the purposes of
     this Agreement in order that all Subsidiaries of the Borrower, other than
     Material Subsidiaries, own not more than 20% of Consolidated Net Property.

          "Maturity Date" means August 2, 2001.
           -------------

          "Minority Interests" means interests owned by Persons (other than the
           ------------------
     Borrower or a Subsidiary of the Borrower) in a Subsidiary of the Borrower
     in which less than 100% of all classes of the voting securities are owned
     by the Borrower or its Subsidiaries.

          "Missouri Property Acquisition" means the acquisition, effective June
           -----------------------------
     1, 2000, by the Borrower of certain gas utility properties in Missouri from
     a subsidiary of Southwestern Energy Corporation.

          "Moody's" means Moody's Investors Service, Inc., or any successor or
           -------
     assignee of the business of such company in the business of rating
     securities.

          "Multiemployer Plan" means a Plan covered by Title IV of ERISA which
           ------------------
     is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

          "Multiple Employer Plan" means a Plan covered by Title IV of ERISA,
           ----------------------
     other than a Multiemployer Plan, which the Borrower or any ERISA Affiliate
     and at least one employer other than the Borrower or any ERISA Affiliate
     are contributing sponsors.

          "1957 Indenture" means, collectively, that certain Indenture of
           --------------
     Mortgage, dated as of March 1, 1957, granted by Greeley Gas Company
     (predecessor in interest to the Borrower) to The Central Bank and Trust
     Company, as original Trustee, and all Supplemental Indentures thereto.

          "1959 Indenture" means, collectively, that certain Indenture of
           --------------
     Mortgage, dated as of July 15, 1959, granted by United Cities Gas Company
     (predecessor in interest to the Borrower) to City National Bank and Trust
     Company of Chicago and R. Emmett Hanley, as the original Trustees, and all
     Supplemental Indentures thereto, including, without limitation, that
     certain First Supplemental Indenture, dated as of November 1, 1960; that
     certain Second Supplemental Indenture, dated as of June 1, 1962; that
     certain Third Supplemental Indenture, dated as of February 1, 1963; that
     certain Fourth Supplemental Indenture, dated as of June 15, 1963; that
     certain Fifth Supplemental Indenture, dated as of November 15, 1964; that
     certain  Sixth Supplemental Indenture, dated as of March 15,

                                      10
<PAGE>

     1968; that certain Seventh Supplemental Indenture, dated as of August 1,
     1970; that certain Eighth Supplemental Indenture, dated as of September 1,
     1972; that certain Ninth Supplemental Indenture, dated as of January 1,
     1974; that certain Tenth Supplemental Indenture, dated as of July 1, 1976;
     that certain Eleventh Supplemental Indenture, dated as of December 1, 1976;
     that certain Twelfth Supplemental Indenture, dated as of April 1, 1981;
     that certain Thirteenth Supplemental Indenture, dated as of May 1, 1982;
     that certain Fourteenth Supplemental Indenture, dated as of March 1, 1987;
     that certain Fifteenth Supplemental Indenture, dated as of October 1, 1987;
     that certain Sixteenth Supplemental Indenture, dated as of December 1,
     1989; that certain Seventeenth Supplemental Indenture, dated as of April 1,
     1990; that certain Eighteenth Supplemental Indenture, dated as of June 1,
     1991; that certain Nineteenth Supplemental Indenture, dated as of May 1,
     1992; that certain Twentieth Supplemental Indenture, dated as of December
     1, 1992; that certain Twenty-First Supplemental Indenture, dated as of
     February 5, 1997; and that certain Twenty-Second Supplemental Indenture,
     dated as of July 29, 1997.

          "1987 Note Purchase Agreements" means, collectively, those certain
           -----------------------------
     Note Purchase Agreements, dated as of December 21, 1987, by and between
     Energas Company (predecessor in interest to the Borrower) and (a) John
     Hancock Mutual Life Insurance Company, (b) John Hancock Charitable Trust I
     and (c) Mellon Bank, N.A., Trustee under the Master Trust of AT&T
     Corporation, and all Amendments thereto, including, without limitation,
     that certain Amendment to Note Purchase Agreements, amending each of the
     above-referenced Note Purchase Agreements, each dated as of (i) October 11,
     1989, (ii) November 12, 1991, (iii) December 22, 1993, (iv) December 20,
     1994 and July 29, 1997.

          "1989 Note Purchase Agreement" means, collectively, that certain Note
           ----------------------------
     Purchase Agreement, dated as of October 11, 1989, by and between the
     Borrower and John Hancock Mutual Life Insurance Company, and all Amendments
     thereto, including, without limitation, those Amendments dated as of
     October 11, 1989, November 12, 1991, December 22, 1993, December 20, 1994,
     and July 29, 1997.

          "1991 Note Purchase Agreement" means, collectively, that certain Note
           ----------------------------
     Purchase Agreement, dated as of August 29, 1991, by and between the
     Borrower and The Variable Annuity Life Insurance Company, and all
     Amendments thereto, including, without limitation, those Amendments dated
     as of November 26, 1991, December 22, 1993, and July 29, 1997.

          "1992 Note Purchase Agreement" means, collectively, that certain Note
           ----------------------------
     Purchase Agreement, dated as of August 31, 1992, by and between the
     Borrower and The Variable Annuity Life Insurance Company, and all
     Amendments thereto, including, without limitation, those Amendments dated
     as of December 22, 1993, and July 29, 1997.

          "1994 Note Purchase Agreement" means, collectively, that certain Note
           ----------------------------
     Purchase Agreement dated November 14, 1994, by and among the Borrower and
     New York Life

                                      11
<PAGE>

     Insurance Company, New York Life Insurance and Annuity Corporation, The
     Variable Annuity Life Insurance Company, American General Life Insurance
     Company, and Merit Life Insurance Company, and all Amendments thereto;
     including, without limitation, that Amendment dated as of July 29, 1997.

          "1998 Indenture" means, collectively, that certain Indenture, dated as
           --------------
     of July 15, 1998, granted by the Borrower to US Bank Trust National
     Association, as Trustee, and all Supplemental Indentures thereto.

          "Notes" means the Revolving Loan Notes and the Competitive Bid Loan
           -----
      Notes.

          "Notice of Borrowing" means a request by the Borrower for a Revolving
           -------------------
     Loan in the form of Exhibit 2.2.
                         -----------

          "Notice of Continuation/Conversion" means a request by the Borrower
           ---------------------------------
     for the continuation or conversion of a Revolving Loan in the form of
     Exhibit 2.4.
     -----------

          "PBGC" means the Pension Benefit Guaranty Corporation established
           ----
     pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

          "Person" means any individual, partnership, joint venture, firm,
           ------
     corporation, association, trust, limited liability company or other
     enterprise (whether or not incorporated), or any government or political
     subdivision or any agency, department or instrumentality thereof.

          "Plan" means any employee benefit plan (as defined in Section 3(3) of
           ----
     ERISA) which is covered by ERISA and with respect to which the Borrower or
     any ERISA Affiliate is (or, if such plan were terminated at such time,
     would under Section 4069 of ERISA be deemed to be) an "employer" within the
     meaning of Section 3(5) of ERISA.

          "Preferred Securities" means, at any date, any equity interests in the
           --------------------
     Borrower, in a Special Purpose Financing Subsidiary of the Borrower or in
     any other Subsidiary of the Borrower (such as those known as "TECONS",
     "MIPS" or "RHINOS"): (a) that are not (i) required to be redeemed or
     redeemable at the option of the holder thereof prior to the fifth
     anniversary of the Maturity Date or (ii) convertible into or exchangeable
     for (unless solely at the option of the Borrower or such Subsidiary of the
     Borrower) equity interests referred to in clause (i) above or indebtedness
     having a scheduled maturity, or requiring any repayments or prepayments of
     principal or any sinking fund or similar payments in respect of principal
     or providing for any such repayment, prepayment, sinking fund or other
     payment at the option of the holder thereof prior to the fifth anniversary
     of the Maturity Date and (b) as to which, at such date, the Borrower or
     such Subsidiary of the Borrower has the right to defer the payment of all
     dividends and other distributions in respect thereof for the period of at
     least 19 consecutive quarters beginning at such date.

          "Prime Rate" means the per annum rate of interest established from
           ----------
     time to time by

                                      12
<PAGE>

     the Administrative Agent at its principal office in Charlotte, North
     Carolina (or such other principal office as communicated by the
     Administrative Agent to the Borrower and the Lenders) as its Prime Rate.
     Any change in the interest rate resulting from a change in the Prime Rate
     shall become effective as of 12:01 a.m. of the Business Day on which each
     change in the Prime Rate is announced by the Administrative Agent. The
     Prime Rate is a reference rate used by the Administrative Agent in
     determining interest rates on certain loans and is not intended to be the
     lowest rate of interest charged on any extension of credit to any debtor.

          "Purchase and Sale Agreement" means that certain Purchase and Sale
           ---------------------------
     Agreement, dated as of April 13, 2000, among Citizens Utilities Company,
     LGS Natural Gas Company and the Borrower.

          "Register" has the meaning set forth in Section 11.3(c).
           --------

          "Regulation A, D, O, T, U, or X" means Regulation A, D, O, T, U or X,
           ------------------------------
     respectively, of the Board of Governors of the Federal Reserve System as
     from time to time in effect, any amendment thereto and any successor to all
     or a portion thereof.

          "Reportable Event" means a "reportable event" as defined in Section
           ----------------
     4043 of ERISA with respect to which the notice requirements to the PBGC
     have not been waived.

          "Required Lenders" means Lenders whose aggregate Credit Exposure (as
           ----------------
     hereinafter defined) constitutes more than 50% of the aggregate Credit
     Exposure of all Lenders at such time; provided, however, that if any Lender
                                           --------  -------
     shall be a Defaulting Lender at such time then there shall be excluded from
     the determination of Required Lenders the aggregate principal amount of
     Credit Exposure of such Lender at such time.  For purposes of the preceding
     sentence, the term "Credit Exposure" as applied to each Lender shall mean
     (a) at any time prior to the termination of the Commitments, the Commitment
     Percentage of such Lender multiplied times the Revolving Loan Commitment
     and (b) at any time after the termination of the Commitments, the sum of
     the principal balance of the outstanding Revolving Loans of such Lender.

          "Revolving Loan" means a loan made by a Lender to the Borrower
           --------------
     pursuant to Section 2.1(a).

          "Revolving Loan Commitment" means THREE HUNDRED MILLION DOLLARS
           -------------------------
     ($300,000,000) as such amount may be otherwise reduced in accordance with
     Section 2.6.

          "Revolving Loan Notes" means the promissory notes of the Borrower in
           --------------------
     favor of each Lender evidencing the Loans and substantially in the form of
     Exhibit 2.7(a), as such promissory notes may be amended, modified,
     --------------
     supplemented or replaced from time to time.

                                      13
<PAGE>

          "S&P" means Standard & Poor's Ratings Services, a division of McGraw
           ---
     Hill, Inc., or any successor or assignee of the business of such division
     in the business of rating securities.

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------
     rules and regulations promulgated thereunder.

          "Single Employer Plan" means any Plan which is covered by Title IV of
           --------------------
     ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.

          "Special Purpose Financing Subsidiary" means a Subsidiary of the
           ------------------------------------
     Borrower that has no direct or indirect interest in the business of the
     Borrower and its other Subsidiaries and was formed solely for the purpose
     of issuing Trust Preferred Securities.

          "Subsidiary" means, as to any Person, (a) any corporation more than
           ----------
     50% of whose stock of any class or classes having by the terms thereof
     ordinary voting power to elect a majority of the directors of such
     corporation (irrespective of whether or not, at the time, any class or
     classes of such corporation shall have or might have voting power by reason
     of the happening of any contingency) is at the time owned by such Person
     directly or indirectly through Subsidiaries and (b) any partnership,
     association, joint venture, limited liability company or other entity in
     which such Person directly or indirectly through Subsidiaries has more than
     50% equity interest at any time.

          "Termination Event" means (a) with respect to any Single Employer
           -----------------
     Plan, the occurrence of a Reportable Event or the substantial cessation of
     operations (within the meaning of Section 4062(e) of ERISA), (b) the
     withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer
     Plan during a plan year in which it was a substantial employer (as such
     term is defined in Section 4001(a)(2) of ERISA), or the termination of a
     Multiple Employer Plan, (c) the distribution of a notice of intent to
     terminate or the actual termination of a Plan pursuant to Section
     4041(a)(2) or 4041A of ERISA, (d) the institution of proceedings to
     terminate or the actual termination of a Plan by the PBGC under Section
     4042 of ERISA, (e) any event or condition which might reasonably constitute
     grounds under Section 4042 of ERISA for the termination of, or the
     appointment of a trustee to administer, any Plan, or (f) the complete or
     partial withdrawal of the Borrower or any ERISA Affiliate from a
     Multiemployer Plan.

          "Total Assets" means all assets of the Borrower as shown on its most
           ------------
     recent quarterly consolidated balance sheet, as determined in accordance
     with GAAP.

          "2000 Indenture" means, collectively, that certain proposed Indenture
           --------------
     to be granted by the Borrower to SunTrust Bank, Atlanta, as Trustee, in
     connection with the Borrower's proposed debt offering currently planned for
     calendar years 2000 and 2001, and all Supplemental Indentures thereto.

                                      14
<PAGE>

          "Unused Revolving Loan Commitment" means, for any period from the
           --------------------------------
     Effective Date to the Maturity Date, the amount by which (a) the then
     applicable Revolving Loan Commitment exceeds (b) the daily average sum for
     such period of the aggregate principal amount of all Revolving Loans
     outstanding.

          "Unused Fees" has the meaning set forth in Section 3.4(a).
           -----------

          "Utilization Fees" has the meaning set forth in Section 3.4(b).
           ----------------

          "Utilized Revolving Commitment" means, for any day that the
           -----------------------------
     Utilization Fees are required to be paid pursuant to Section 3.4(b), the
     amount equal to the principal amount of Loans outstanding on such day.

     1.2  Computation of Time Periods.
          ---------------------------

     For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."  References in this Credit Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.

     1.3  Accounting Terms.
          ----------------

     Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis.  All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements described in Section 5.1(d)); provided,
                                                                       --------
however, if (a) the Borrower shall object to determining such compliance on such
-------
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Administrative
Agent or the Required Lenders shall so object in writing within 30 days after
delivery of such financial statements, then such calculations shall be made on a
basis consistent with the most recent financial statements delivered by the
Borrower to the Lenders as to which no such objection shall have been made.

     1.4  Time.
          ----

     All references to time herein shall be references to Central Standard Time
or Central Daylight time, as the case may be, unless specified otherwise.

                                      15
<PAGE>

                                   SECTION 2.

                                     LOANS

     2.1  Revolving Loan Commitment.
          -------------------------

          (a) Revolving Loans.  Subject to the terms and conditions set forth
              ---------------
     herein, each Lender severally agrees to make revolving loans to the
     Borrower in Dollars, at any time and from time to time, during the period
     from the Effective Date to the Maturity Date (each a "Revolving Loan" and
     collectively the "Revolving Loans"); provided, however, that (i) the
                                          --------  -------
     aggregate amount of Revolving Loans outstanding plus the aggregate amount
     of Competitive Bid Loans outstanding shall not exceed the Revolving Loan
     Commitment and (ii) with respect to each individual Lender, the Lender's
     Commitment Percentage multiplied by the outstanding Revolving Loans shall
     not exceed such Lender's Commitment.  Subject to the terms of this Credit
     Agreement, the Borrower may borrow, repay and reborrow Revolving Loans.

          (b) Competitive Bid Loans Subfacility.
              ---------------------------------

               (i)   Competitive Bid Loans.  Subject to the terms and conditions
                     ---------------------
          set forth herein, the Borrower may, from time to time, during the
          period from the Effective Date to the Maturity Date, request, in
          Dollars, and each Lender may, in its sole discretion, agree to make
          Competitive Bid Loans to the Borrower; provided, however, that (A) the
                                                 --------  -------
          sum of the aggregate amount of Revolving Loans outstanding plus the
          aggregate amount of Competitive Bid Loans outstanding shall not exceed
          the Revolving Loan Commitment and (B) if a Lender does make a
          Competitive Bid Loan it shall not reduce such Lender's obligation to
          make its pro rata share of any Revolving Loan.

               (ii)  Competitive Bid Requests.  The Borrower may solicit
                     ------------------------
          Competitive Bids by delivery of a Competitive Bid Request to the
          Administrative Agent by 10:00 a.m. on a Business Day not less than one
          nor more than five Business Days prior to the date of the requested
          Competitive Bid Loan.  A Competitive Bid Request must be substantially
          in the form of Exhibit 2.1(b) and shall specify (A) the date of the
                         --------------
          requested Competitive Bid Loan (which shall be a Business Day), (B)
          the amount of the requested Competitive Bid Loan and (C) the
          applicable Interest Period or Interest Periods requested and must be
          accompanied by the Competitive Bid Fee.  The Administrative Agent
          shall notify the Lenders of its receipt of a Competitive Bid Request
          and the contents thereof and invite the Lenders to submit Competitive
          Bids in response thereto.  The Borrower may not request a Competitive
          Bid for more than three different Interest Periods per Competitive Bid
          Request and Competitive Bid Requests may be made no more frequently
          than four times every calendar month.

               (iii) Competitive Bid Procedure.  Each Lender may, in its sole
                     -------------------------

                                      16
<PAGE>

          discretion, make one or more Competitive Bids to the Borrower in
          response to a Competitive Bid Request.  Each Competitive Bid must be
          received by the Administrative Agent not later than 10:00 a.m. on the
          proposed date of the requested Competitive Bid Loan; provided,
                                                               --------
          however, that should the Administrative Agent, in its capacity as a
          -------
          Lender, desire to submit a Competitive Bid it shall notify the
          Borrower of its Competitive Bid and the terms thereof not later than
          15 minutes prior to the time the other Lenders are required to submit
          their Competitive Bid.  A Lender may offer to make all or part of the
          requested Competitive Bid Loan and may submit multiple Competitive
          Bids in response to a Competitive Bid Request.  Any Competitive Bid
          must specify (A) the particular Competitive Bid Request as to which
          the Competitive Bid is submitted, (B) the minimum (which shall be not
          less than $5,000,000 and integral multiples of $1,000,000 in excess
          thereof) and maximum principal amounts of the requested Competitive
          Bid Loan or Loans that the Lender is willing to make and (C) the
          applicable interest rate or rates and Interest Period or Interest
          Periods therefor.  A Competitive Bid submitted by a Lender in
          accordance with the provisions hereof shall be irrevocable.  The
          Administrative Agent shall promptly notify the Borrower of all
          Competitive Bids made and the terms thereof.

               (iv) Acceptance of Competitive Bids.  The Borrower may, in its
                    ------------------------------
          sole discretion, subject only to the provisions of this subsection
          (iv), accept or refuse any Competitive Bid offered to it.  To accept a
          Competitive Bid, the Borrower shall give oral notification of its
          acceptance of any or all such Competitive Bids (which shall be
          promptly confirmed in writing) to the Administrative Agent by 11:00
          a.m. on the proposed date of the Competitive Bid Loan; provided,
                                                                 --------
          however, (A) the failure by the Borrower to give timely notice of its
          -------
          acceptance of a Competitive Bid shall be deemed to be a refusal
          thereof, (B) to the extent Competitive Bids are for comparable
          Interest Periods, the Borrower may accept Competitive Bids only in
          ascending order of rates, (C) the aggregate amount of Competitive Bids
          accepted by the Borrower shall not exceed the principal amount
          specified in the Competitive Bid Request, (D) if the Borrower shall
          accept a bid or bids made at a particular Competitive Bid Rate, but
          the amount of such bid or bids shall cause the total amount of bids to
          be accepted by the Borrower to be in excess of the amount specified in
          the Competitive Bid Request, then the Borrower shall accept a portion
          of such bid or bids in an amount equal to the amount specified in the
          Competitive Bid Request less the amount of all other Competitive Bids
          accepted with respect to such Competitive Bid Request, which
          acceptance in the case of multiple bids at such Competitive Bid Rate,
          shall be made pro rata in accordance with the amount of each such bid
          at such Competitive Bid Rate and (E) no bid shall be accepted for a
          Competitive Bid Loan unless such Competitive Bid Loan is in a minimum
          principal amount of $5,000,000 and integral multiples of $1,000,000 in
          excess thereof, except that where a portion of a Competitive Bid is
          accepted in accordance with the provisions of clause (D) of this
          subsection (iv), then in a minimum principal amount of $500,000 and
          integral multiples of $100,000 (but not in any event less than the
          minimum amount specified in the

                                      17
<PAGE>

          Competitive Bid), and in calculating the pro rata allocation of
          acceptances of portions of multiple bids at a particular Competitive
          Bid Rate pursuant to clause (D) of this subsection (iv), the amounts
          shall be rounded to integral multiples of $100,000 in a manner which
          shall be in the discretion of the Borrower. A notice of acceptance of
          a Competitive Bid given by the Borrower in accordance with the
          provisions hereof shall be irrevocable. The Administrative Agent
          shall, not later than noon on the proposed date of such Competitive
          Bid Loan, notify each bidding Lender whether or not its Competitive
          Bid has been accepted (and, if so, in what amount and at what
          Competitive Bid Rate), and each successful bidder will thereupon
          become bound, subject to the other applicable conditions hereof, to
          make the Competitive Bid Loan in respect of which its bid has been
          accepted. The Administrative Agent shall send a copy of each of the
          Competitive Bids to the Borrower and each of the Lenders for its
          records as soon as practicable.

               (v)  Funding of Competitive Bid Loans.  Each Lender which is to
                    --------------------------------
          make a Competitive Bid Loan shall make its Competitive Bid Loan
          available to the Administrative Agent by 2:00 p.m. on the date
          specified in the Competitive Bid Request by deposit of immediately
          available funds at the Agency Services Address.  The Administrative
          Agent will, upon receipt, make the proceeds of such Competitive Bid
          Loans available to the Borrower.

               (vi) Maturity of Competitive Bid Loans.  Each Competitive Bid
                    ---------------------------------
          Loan shall mature and be due and payable in full on the last day of
          the Interest Period applicable thereto.  Unless the Borrower shall
          give notice to the Administrative Agent otherwise (or repays such
          Competitive Bid Loan), or a Default or Event of Default exists and is
          continuing, the Borrower shall be deemed to have requested Revolving
          Loans from all of the Lenders (in the amount of the maturing
          Competitive Bid Loan and accruing interest at the Base Rate), the
          proceeds of which will be used to repay such Competitive Bid Loan.

     2.2  Method of Borrowing for Revolving Loans.
          ---------------------------------------

     By no later than 11:00 a.m. (a) on the date of the requested borrowing of
Revolving Loans that will be Base Rate Loans or (b) three Business Days prior to
the date of the requested borrowing of Revolving Loans that will be Eurodollar
Loans, the Borrower shall telephone the Administrative Agent as well as submit a
written Notice of Borrowing in the form of Exhibit 2.2 to the Administrative
                                           -----------
Agent setting forth (i) the amount requested, (ii) whether such Loans shall
accrue interest at the Base Rate or the Adjusted Eurodollar Rate, (iii) with
respect to Loans that will be Eurodollar Loans, the Interest Period applicable
thereto and (iv) certification that the Borrower has complied in all respects
with Section 5.2.

     2.3  Funding of Revolving Loans.
          --------------------------

     Upon receipt of a Notice of Borrowing, the Administrative Agent shall
promptly inform the

                                      18
<PAGE>

Lenders as to the terms thereof. Each such Lender shall make its Commitment
Percentage of the requested Revolving Loans available to the Administrative
Agent by 1:00 p.m. on the date specified in the Notice of Borrowing by deposit,
in Dollars, of immediately available funds at the Agency Services Address. The
amount of the requested Revolving Loans will then be made available to the
Borrower by the Administrative Agent by crediting the account of the Borrower on
the books of such office of the Administrative Agent, to the extent the amount
of such Revolving Loans are made available to the Administrative Agent.

     No Lender shall be responsible for the failure or delay by any other Lender
in its obligation to make Revolving Loans hereunder; provided, however, that the
                                                     --------  -------
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder.  Unless the Administrative Agent
shall have been notified by any Lender prior to the date of any such Revolving
Loan that such Lender does not intend to make available to the Administrative
Agent its portion of the Revolving Loans to be made on such date, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on the date of such Revolving Loans, and the
Administrative Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the Borrower a
corresponding amount.  If such corresponding amount is not in fact made
available to the Administrative Agent, the Administrative Agent shall be able to
recover such corresponding amount from such Lender.  If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent will promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent.  The Administrative Agent shall also be entitled to recover from the
Lender or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent at a per annum
rate equal to (a) from the Borrower at the applicable rate for such Revolving
Loan pursuant to the Notice of Borrowing and (b) from a Lender at the Federal
Funds Rate.

     2.4  Continuations and Conversions.
          -----------------------------

     The Borrower shall have the option, on any Business Day, to continue
existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate
Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans;
provided, however, that (a) each such continuation or conversion must be
requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit 2.4, in compliance with the
                                        -----------
terms set forth below, (b) except as provided in Section 4.1, Eurodollar Loans
may only be continued or converted into Base Rate Loans on the last day of the
Interest Period applicable thereto, (c) Eurodollar Loans may not be continued
nor may Base Rate Loans be converted into Eurodollar Loans during the existence
and continuation of a Default or Event of Default and (d) any request to extend
a Eurodollar Loan that fails to comply with the terms hereof or any failure to
request an extension of a Eurodollar Loan at the end of an Interest Period shall
constitute a conversion to a Base Rate Loan on the last day of the applicable
Interest Period.  Each continuation or conversion must be requested by the
Borrower no later than 11:00 a.m. (i) on the date for a requested conversion of
a Eurodollar Loan to a Base Rate Loan or (ii) three

                                      19
<PAGE>

Business Days prior to the date for a requested continuation of a Eurodollar
Loan or conversion of a Base Rate Loan to a Eurodollar Loan, in each case
pursuant to a written Notice of Continuation/Conversion submitted to the
Administrative Agent which shall set forth (A) whether the Borrower wishes to
continue or convert such Loans and (B) if the request is to continue a
Eurodollar Loan or convert a Base Rate Loan to a Eurodollar Loan, the Interest
Period applicable thereto.

     2.5  Minimum Amounts.
          ---------------

     Each request for a Loan or a conversion or continuation hereunder shall be
subject to the following requirements:  (a) each Eurodollar Loan shall be in a
minimum of $5,000,000 (and in integral multiples of $1,000,000 in excess
thereof), (b) each Base Rate Loan shall be in a minimum amount of the lesser of
$5,000,000 (and in integral multiples of $1,000,000 in excess thereof) or the
remaining amount of the Revolving Loan Commitment available to be borrowed and
(c) no more than five Eurodollar Loans shall be outstanding hereunder at any one
time.  For the purposes of this Section, all Eurodollar Loans with the same
Interest Periods that begin and end on the same date shall be considered as one
Eurodollar Loan, but Eurodollar Loans with different Interest Periods, even if
they begin on the same date, shall be considered separate Eurodollar Loans.

     2.6  Reductions of Revolving Loan Commitment.
          ---------------------------------------

     Upon at least three Business Days' prior written notice, the Borrower shall
have the right to permanently terminate or reduce the aggregate unused amount of
the Revolving Loan Commitment at any time or from time to time; provided that
                                                                --------
(a) each partial reduction shall be in an aggregate amount at least equal to
$5,000,000 and in integral multiples of $1,000,000 above such amount and (b) no
reduction shall be made which would reduce the Revolving Loan Commitment to an
amount less than the sum of the then outstanding Revolving Loans plus the then
outstanding Competitive Bid Loans.  Any reduction in (or termination of) the
Revolving Loan Commitment shall be permanent and may not be reinstated.

     2.7  Notes.
          -----

          (a) Revolving Loan Notes.  The Revolving Loans made by the Lenders
              --------------------
     shall be evidenced by a promissory note of the Borrower payable to each
     Lender in substantially the form of Exhibit 2.7(a) (the "Revolving Loan
                                         --------------       --------------
     Notes").
     -----

          (b) Competitive Bid Loan Notes.  The Competitive Bid Loans made by the
              --------------------------
     Lenders shall be evidenced by a promissory note of the Borrower payable to
     each Lender in substantially the form of Exhibit 2.7(b) (the "Competitive
                                              --------------       -----------
     Bid Loan Notes").
     --------------

     The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Loan made by each Lender to the Borrower, and each payment
made on account of the principal thereof, shall be recorded by such Lender on
its books; provided that the failure of such Lender to make any such recordation
           --------
or endorsement shall not affect the obligations of the Borrower to

                                      20
<PAGE>

make a payment when due of any amount owing hereunder or under any Note in
respect of the Loans to be evidenced by such Note, and each such recordation or
endorsement shall be conclusive and binding absent manifest error.

                                   SECTION 3.

                                    PAYMENTS

     3.1  Interest.
          --------

          (a)  Interest Rate.
               -------------

               (i)    All Base Rate Loans shall accrue interest at the Base
          Rate.

               (ii)   All Eurodollar Loans shall accrue interest at the Adjusted
          Eurodollar Rate applicable to each Eurodollar Loan.

               (iii)  All Competitive Bid Loans shall accrue interest at the
          applicable Competitive Bid Rate with respect to each Competitive Bid
          Loan.

          (b)  Default Rate of Interest.  Upon the occurrence, and during the
               ------------------------
     continuation, of an Event of Default, the principal of and, to the extent
     permitted by law, interest on the Loans and any other amounts owing
     hereunder or under the other Credit Documents shall bear interest, payable
     on demand, at a per annum rate equal to two percent (2%) plus the rate
     which would otherwise be applicable (or if no rate is applicable, then the
     rate for Revolving Loans that are Base Rate Loans plus two percent (2%) per
     annum).

          (c)  Interest Payments.  Interest on Loans shall be due and payable in
               -----------------
     arrears on each Interest Payment Date.

     3.2  Prepayments.
          -----------

          (a)  Voluntary Prepayments.  The Borrower shall have the right to
               ---------------------
     prepay Loans in whole or in part from time to time without premium or
     penalty; provided, however, that (i) Eurodollar Loans may only be prepaid
              --------  -------
     on three Business Days' prior written notice to the Administrative Agent
     and any prepayment of Eurodollar Loans will be subject to Section 4.3; (ii)
     each such partial prepayment of Loans shall be in the minimum principal
     amount of $5,000,000; and (iii) Competitive Bid Loans may not be prepaid
     unless a breakage fee equal to the actual amount of damages suffered by the
     Lender whose Competitive Bid Loan is prepaid is paid to such Lender.
     Amounts prepaid hereunder shall be applied as the Borrower may elect;
     provided that if the Borrower fails to specify the application of a
     --------
     voluntary prepayment then such prepayment shall be applied first to Base
     Rate Loans, then to Eurodollar Loans in direct order of Interest Period
     maturities, and then to Competitive Bid Loans pro rata among all Lenders
     holding

                                      21
<PAGE>

     same.

          (b)  Mandatory Prepayments.  If at any time the amount of Revolving
               ---------------------
     Loans outstanding plus the amount of Competitive Bid Loans outstanding
     exceeds the Revolving Loan Commitment, the Borrower shall immediately make
     a principal payment to the Administrative Agent in the manner and in an
     amount such that the amount of Revolving Loans outstanding plus the amount
     of Competitive Bid Loans outstanding is less than or equal to the Revolving
     Loan Commitment.  Any payments made under this Section 3.2(b) shall be
     subject to Section 4.3 and shall be applied first to Base Rate Loans, then
     to Eurodollar Loans in direct order of Interest Period maturities and then
     to Competitive Bid Loans pro rata among all Lenders holding same.

     3.3  Payment in full at Maturity.
          ---------------------------

     On the Maturity Date, the entire outstanding principal balance of all
Loans, together with accrued but unpaid interest and all other sums owing under
this Credit Agreement and the other Credit Documents, shall be due and payable
in full, unless accelerated sooner pursuant to Section 9.2.

     3.4  Fees.
          ----

          (a)  Unused Fees.
               -----------

               (i)  In consideration of the Revolving Loan Commitment being made
          available by the Lenders hereunder, the Borrower agrees to pay to the
          Administrative Agent, for the pro rata benefit of each Lender, a per
          annum fee equal to the Applicable Percentage for Unused Fees on the
          Unused Revolving Loan Commitment (the "Unused Fees").
                                                 -----------

               (ii) The accrued Unused Fees shall be due and payable in arrears
          five Business Days after the end of each fiscal quarter of the
          Borrower (as well as on the Maturity Date) for the immediately
          preceding fiscal quarter (or portion thereof), beginning with the
          first of such dates to occur after the Effective Date.

          (b)  Utilization Fees.  For each day that the principal amount of
               ----------------
     outstanding Loans hereunder shall exceed an amount equal to thirty three
     percent (33%) of the Revolving Loan Commitment, the Borrower shall pay to
     the Administrative Agent, for the pro rata benefit of the Lenders, a per
     annum fee equal to one-eighth of one percent (.125%) on the Utilized
     Revolving Commitment for such day (the "Utilization Fees").  The
                                             ----------------
     Utilization Fees, if any, shall be due and payable in arrears five Business
     Days after the end of each fiscal quarter of the Borrower (as well as on
     the Maturity Date) for the immediately preceding fiscal quarter (or portion
     thereof), beginning with the first of such dates to occur after the
     Effective Date.

          (c)  Administrative Fees.  The Borrower agrees to pay to the
               -------------------
     Administrative

                                      22
<PAGE>

     Agent, for its own account, an annual fee as agreed to between the Borrower
     and the Administrative Agent in the Fee Letter.

     3.5  Place and Manner of Payments.
          ----------------------------

     All payments of principal, interest, fees, expenses and other amounts to be
made by the Borrower under this Credit Agreement shall be made without setoff,
deduction or counterclaim and received not later than 2:00 p.m. on the date when
due, in Dollars and in immediately available funds, by the Administrative Agent
at the Agency Services Address.  In the event any such payment shall be due on a
day that is not a Business Day, the applicable payment date shall be the next
succeeding Business Day, except, with respect to Eurodollar Loans, if the next
succeeding Business Day shall fall in the next succeeding calendar month, then
such payment shall be due on the next preceding Business Day.  The Borrower
shall, at the time it makes any payment under this Credit Agreement, specify to
the Administrative Agent, the Loans, fees or other amounts payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
it fails to specify, or if such application would be inconsistent with the terms
hereof, the Administrative Agent shall distribute such payment to the Lenders in
such manner as it reasonably determines in its sole discretion.)

     3.6  Pro Rata Treatment.
          ------------------

     Except to the extent otherwise provided herein, all Revolving Loans, each
payment or prepayment of principal of any Revolving Loan, each payment of
interest on the Revolving Loans, each payment of Unused Fees, each payment of
Utilization Fees, each reduction of the Revolving Loan Commitment, and each
conversion or continuation of any Revolving Loans, shall be allocated pro rata
among the Lenders in accordance with the respective Commitment Percentages;
provided that, if any Lender shall have failed to pay its applicable pro rata
--------
share of any Revolving Loan, then any amount to which such Lender would
otherwise be entitled pursuant to this Section 3.6 shall instead be payable to
the Administrative Agent until the share of such Revolving Loan not funded by
such Lender has been repaid and any interest owed by such Lender as a result of
such failure to fund has been paid; and provided further, that in the event any
                                        -------- -------
amount paid to any Lender pursuant to this Section 3.6 is rescinded or must
otherwise be returned by the Administrative Agent, each Lender shall, upon the
request of the Administrative Agent, repay to the Administrative Agent the
amount so paid to such Lender, with interest for the period commencing on the
date such payment is returned by the Administrative Agent until the date the
Administrative Agent receives such repayment at a rate per annum equal to,
during the period to but excluding the date two Business Days after such
request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent
                                                               ----
(2%) per annum.

     3.7  Computations of Interest and Fees.
          ---------------------------------

          (a) Except for Base Rate Loans, on which interest shall be computed on
     the basis of a 365 or 366 day year as the case may be, all computations of
     interest and fees hereunder shall be made on the basis of the actual number
     of days elapsed over a year of 360 days.  Interest shall accrue from the
     date a Loan is made until the date such Loan is

                                      23
<PAGE>

     repaid or continued or converted pursuant to Section 2.4.

          (b)  It is the intent of the Lenders and the Borrower to conform to
     and contract in strict compliance with applicable usury law from time to
     time in effect. All agreements between the Lenders and the Borrower are
     hereby limited by the provisions of this paragraph which shall override and
     control all such agreements, whether now existing or hereafter arising and
     whether written or oral. In no way, nor in any event or contingency
     (including but not limited to prepayment or acceleration of the maturity of
     any obligation), shall the interest taken, reserved, contracted for,
     charged, or received under this Credit Agreement, under the Notes or
     otherwise, exceed the maximum nonusurious amount permissible under
     applicable law. If, from any possible construction of any of the Credit
     Documents or any other document, interest would otherwise be payable in
     excess of the maximum nonusurious amount, any such construction shall be
     subject to the provisions of this paragraph and interest owing pursuant to
     such documents shall be automatically reduced to the maximum nonusurious
     amount permitted under applicable law, without the necessity of execution
     of any amendment or new document. If any Lender shall ever receive anything
     of value which is characterized as interest on the Loans under applicable
     law and which would, apart from this provision, be in excess of the maximum
     lawful amount, an amount equal to the amount which would have been
     excessive interest shall, without penalty, be applied to the reduction of
     the principal amount owing on the Loans and not to the payment of interest,
     or refunded to the Borrower or the other payor thereof if and to the extent
     such amount which would have been excessive exceeds such unpaid principal
     amount of the Loans. The right to demand payment of the Loans or any other
     indebtedness evidenced by any of the Credit Documents does not include the
     right to receive any interest which has not otherwise accrued on the date
     of such demand, and the Lenders do not intend to charge or receive any
     unearned interest in the event of such demand. All interest paid or agreed
     to be paid to the Lenders with respect to the Loans shall, to the extent
     permitted by applicable law, be amortized, prorated, allocated, and spread
     throughout the full stated term (including any renewal or extension) of the
     Loans so that the amount of interest on account of such indebtedness does
     not exceed the maximum nonusurious amount permitted by applicable law.

     3.8  Sharing of Payments.
          -------------------

     Each Lender agrees that, in the event that any Lender shall obtain payment
in respect of any Loan or any other obligation owing to such Lender under this
Credit Agreement through the exercise of a right of set-off, banker's lien,
counterclaim or otherwise (including, but not limited to, pursuant to the
Bankruptcy Code) in excess of its pro rata share as provided for in this Credit
Agreement, such Lender shall promptly purchase from the other Lenders a
participation in such Loans and other obligations, in such amounts and with such
other adjustments from time to time, as shall be equitable in order that all
Lenders share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement.  Each Lender further agrees that if a
payment to a Lender (which is obtained by such Lender through the exercise of a
right of set-off, banker's lien, counterclaim or otherwise) shall be rescinded
or must otherwise be restored, each Lender which shall have shared the benefit
of such payment shall, by repurchase of a participation

                                      24
<PAGE>

theretofore sold, return its share of that benefit to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including set-off, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of such Loan or other obligation in the amount of such participation.
Except as otherwise expressly provided in this Credit Agreement, if any Lender
shall fail to remit to the Administrative Agent or any other Lender an amount
payable by such Lender to the Administrative Agent or such other Lender pursuant
to this Credit Agreement on the date when such amount is due, such payments
shall accrue interest thereon, for each day from the date such amount is due
until the day such amount is paid to the Administrative Agent or such other
Lender, at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.8 applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders under this Section
3.8 to share in the benefits of any recovery on such secured claim.

     3.9  Evidence of Debt.
          ----------------

          (a) Each Lender shall maintain an account or accounts evidencing each
     Loan made by such Lender to the Borrower from time to time, including the
     amounts of principal and interest payable and paid to such Lender from time
     to time under this Credit Agreement.  Each Lender will make reasonable
     efforts to maintain the accuracy of its account or accounts and to promptly
     update its account or accounts from time to time, as necessary.

          (b) The Administrative Agent shall maintain the Register pursuant to
     Section 11.3(c), and a subaccount for each Lender, in which Register and
     subaccounts (taken together) shall be recorded (i) the amount, type and
     Interest Period of each such Loan hereunder, (ii) the amount of any
     principal or interest due and payable or to become due and payable to each
     Lender hereunder and (iii) the amount of any sum received by the
     Administrative Agent hereunder from or for the account of the Borrower and
     each Lender's share thereof.  The Administrative Agent will make reasonable
     efforts to maintain the accuracy of the subaccounts referred to in the
     preceding sentence and to promptly update such subaccounts from time to
     time, as necessary.

          (c) The entries made in the accounts, Register and subaccounts
     maintained pursuant to subsection (b) of this Section 3.9 (and, if
     consistent with the entries of the Administrative Agent, subsection (a))
     shall be prima facie evidence of the existence and amounts of the
     obligations of the Borrower therein recorded; provided, however, that the
                                                   --------  -------
     failure of any Lender or the Administrative Agent to maintain any such
     account, such Register or such subaccount, as applicable, or any error
     therein, shall not in any manner affect the obligation of the Borrower to
     repay the Loans made by such Lender in accordance with the terms hereof.

                                      25
<PAGE>

                                   SECTION 4.

                     ADDITIONAL PROVISIONS REGARDING LOANS

     4.1  Eurodollar Loan Provisions.
          --------------------------

          (a) Unavailability.  In the event that the Administrative Agent shall
              --------------
     have determined in good faith (i) that U.S. dollar deposits in the
     principal amounts requested with respect to a Eurodollar Loan are not
     generally available in the London interbank Eurodollar market or (ii) that
     reasonable means do not exist for ascertaining the Eurodollar Rate, the
     Administrative Agent shall, as soon as practicable thereafter, give notice
     of such determination to the Borrower and the Lenders.  In the event of any
     such determination under clauses (i) or (ii) above, until the
     Administrative Agent shall have advised the Borrower and the Lenders that
     the circumstances giving rise to such notice no longer exist, (A) any
     request by the Borrower for Eurodollar Loans shall be deemed to be a
     request for Base Rate Loans, (B) any request by the Borrower for conversion
     into or continuation of Eurodollar Loans shall be deemed to be a request
     for conversion into or continuation of Base Rate Loans and (C) any Loans
     that were to be converted or continued as Eurodollar Loans on the first day
     of an Interest Period shall be converted to or continued as Base Rate
     Loans.

          (b)  Change in Legality.
               ------------------

               (i) Notwithstanding any other provision herein, if any change,
          after the date hereof, in any law, governmental rule, regulation,
          guideline or order (including the introduction of any new law,
          governmental rule, regulation, guideline or order) or in the
          interpretation or administration thereof by any Governmental Authority
          charged with the interpretation or administration thereof shall make
          it unlawful for any Lender to make or maintain any Eurodollar Loan or
          to give effect to its obligations as contemplated hereby with respect
          to any Eurodollar Loan, then, by written notice to the Borrower and to
          the Administrative Agent, such Lender may:

                    (A) declare that Eurodollar Loans, and conversions to or
               continuations of Eurodollar Loans, will not thereafter be made by
               such Lender hereunder, whereupon any request by the Borrower for,
               or for conversion into or continuation of, Eurodollar Loans
               shall, as to such Lender only, be deemed a request for, or for
               conversion into or continuation of, Base Rate Loans, unless such
               declaration shall be subsequently withdrawn; and

                    (B) require that all outstanding Eurodollar Loans made by it
               be converted to Base Rate Loans in which event all such
               Eurodollar Loans shall be automatically converted to Base Rate
               Loans.

          In the event any Lender shall exercise its rights under clause (A) or
     (B) above, all payments and prepayments of principal which would otherwise
     have been applied to repay

                                      26
<PAGE>

     the Eurodollar Loans that would have been made by such Lender or the
     converted Eurodollar Loans of such Lender shall instead be applied to repay
     the Base Rate Loans made by such Lender in lieu of, or resulting from the
     conversion of, such Eurodollar Loans.

          (c) Requirements of Law.  If at any time a Lender shall incur
              -------------------
     increased costs or reductions in the amounts received or receivable
     hereunder with respect to the making, the commitment to make or the
     maintaining of any Eurodollar Loan because of (i) any change after the date
     hereof, in any law, governmental rule, regulation, guideline or order
     (including the introduction of any new law, governmental rule, regulation,
     guideline or order) or in the interpretation or administration thereof by
     any Governmental Authority charged with the interpretation or
     administration thereof, including, without limitation, the imposition,
     modification or deemed applicability of any reserves, deposits or similar
     requirements (such as, for example, but not limited to, a change in
     official reserve requirements, but, in all events, excluding reserves
     required under Regulation D to the extent included in the computation of
     the Adjusted Eurodollar Rate) or (ii) other circumstances affecting the
     London interbank Eurodollar market; then (A) the Lender shall promptly
     notify the Administrative Agent and the Borrower and shall designate a
     different lending office of such Lender if such designation will avoid or
     reduce the amount of such increased costs, or reductions in amounts
     receivable and such designation will not, in such Lender's sole discretion,
     be otherwise disadvantageous to such Lender and (B) the Borrower shall
     promptly pay to such Lender such additional amounts (in the form of an
     increased rate of, or a different method of calculating, interest or
     otherwise as such Lender may determine in its sole discretion) as may be
     required to compensate such Lender for such increased costs or reductions
     in amounts receivable hereunder.

     Each determination and calculation made by a  Lender under this Section 4.1
shall, absent manifest error, be binding and conclusive on the parties hereto.
Any conversions of Eurodollar Loans made pursuant to this Section 4.1 shall
subject the Borrower to the payments required by Section 4.3.  This Section
shall survive termination of this Credit Agreement and the other Credit
Documents and the payment of the Loans and all other amounts payable hereunder.

     4.2  Capital Adequacy.
          ----------------

     If any Lender has determined in good faith that the adoption or
effectiveness, after the date hereof, of any applicable law, rule or regulation
regarding capital adequacy, or any change therein (after the date hereof), or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent corporation)
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's (or
parent corporation's) capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender (or its parent
corporation) could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's (or parent corporation's)
policies with respect to capital adequacy), then, upon notice from such Lender,
the Borrower shall promptly pay to such Lender such additional amount or amounts
as

                                      27
<PAGE>

will compensate such Lender for such reduction.  Each determination by any
such Lender of amounts owing under this Section 4.2 shall, absent manifest
error, be conclusive and binding on the parties hereto. This Section shall
survive termination of this Credit Agreement and the other Credit Documents and
the payment of the Loans and all other amounts payable hereunder.

     4.3  Compensation.
          ------------

     The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in the making of a borrowing of a
Competitive Bid Loan or in the making of a borrowing of, conversion into or
continuation of a Eurodollar Loan after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan or a
Competitive Bid Loan after the Borrower has given a notice thereof in accordance
with the provisions of this Credit Agreement, (c) the making of a prepayment of
a Eurodollar Loan or a Competitive Bid Loan on a day which is not the last day
of an Interest Period with respect thereto and (d) the payment, continuation or
conversion of a Eurodollar Loan or a Competitive Bid Loan on a day which is not
the last day of the Interest Period applicable thereto or the failure to repay a
Eurodollar Loan when required by the terms of this Credit Agreement.  Each
determination by any such Lender of amounts owing under this Section 4.3 shall,
absent manifest error, be conclusive and binding on the parties hereto.  This
Section shall survive the termination of this Credit Agreement and the other
Credit Documents and the payment of the Loans and all other amounts payable
hereunder.

     4.4  Taxes.
          -----

          (a) Except as provided below in this Section 4.4, all payments made by
     the Borrower under this Credit Agreement and any Notes shall be made free
     and clear of, and without deduction or withholding for or on account of,
     any present or future income, stamp or other taxes, levies, imposts,
     duties, charges, fees, deductions or withholdings, now or hereafter
     imposed, levied, collected, withheld or assessed by any court, or
     governmental body, agency or other official, excluding taxes measured by or
     imposed upon the net income of any Lender or its applicable lending office,
     or any branch or affiliate thereof, and all franchise taxes, branch taxes,
     taxes on doing business or taxes on the capital or net worth of any Lender
     or its applicable lending office, or any branch or affiliate thereof, in
     each case imposed in lieu of net income taxes: (i) by the jurisdiction
     under the laws of which such Lender, applicable lending office, branch or
     affiliate is organized or is located, or in which its principal executive
     office is located, or any nation within which such jurisdiction is located
     or any political subdivision thereof; or (ii) by reason of any connection
     between the jurisdiction imposing such tax and such Lender, applicable
     lending office, branch or affiliate other than a connection arising solely
     from such Lender having executed, delivered or performed its obligations,
     or received payment under or enforced, this Credit Agreement or any Notes.
     If any such non-excluded taxes, levies, imposts, duties, charges, fees,
     deductions or withholdings ("Non-Excluded Taxes") are required to be
                                  -------------------
     withheld from any amounts payable to an Administrative

                                      28
<PAGE>

     Agent or any Lender hereunder or under any Notes, (A) the amounts so
     payable to the Administrative Agent or such Lender shall be increased to
     the extent necessary to yield to the Administrative Agent or such Lender
     (after payment of all Non-Excluded Taxes) interest or any such other
     amounts payable hereunder at the rates or in the amounts specified in this
     Credit Agreement and any Notes, provided, however, that the Borrower shall
                                     -----------------
     be entitled to deduct and withhold any Non- Excluded Taxes and shall not be
     required to increase any such amounts payable to any Lender that is not
     organized under the laws of the United States of America or a state thereof
     if such Lender fails to comply with the requirements of paragraph (b) of
     this Section 4.4 whenever any Non-Excluded Taxes are payable by the
     Borrower, and (B) as promptly as possible after requested, the Borrower
     shall send to the Administrative Agent for its own account or for the
     account of such Lender, as the case may be, a certified copy of an original
     official receipt received by the Borrower showing payment thereof. If the
     Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
     taxing authority or fails to remit to the Administrative Agent the required
     receipts or other required documentary evidence, the Borrower shall
     indemnify the Administrative Agent and any Lender for any incremental Non-
     Excluded Taxes, interest or penalties that may become payable by the
     Administrative Agent or any Lender as a result of any such failure. The
     agreements in this Section 4.4 shall survive the termination of this Credit
     Agreement and the payment of the Loans and all other amounts payable
     hereunder.

          (b)  Each Lender that is not incorporated under the laws of the United
     States of America or a state thereof shall:

                    (i)  (A)  on or before the date of any payment by the
               Borrower under this Credit Agreement or the Notes to such Lender,
               deliver to the Borrower and the Administrative Agent (x) two duly
               completed copies of United States Internal Revenue Service Form
               1001 or 4224, or successor applicable form, as the case may be,
               certifying that it is entitled to receive payments under this
               Credit Agreement and any Notes without deduction or withholding
               of any United States federal income taxes and (y) an Internal
               Revenue Service Form W-8 or W-9, or successor applicable form, as
               the case may be, certifying that it is entitled to an exemption
               from United States backup withholding tax;

                         (B) deliver to the Borrower and the Administrative
               Agent two further copies of any such form or certification on or
               before the date that any such form or certification expires or
               becomes obsolete and after the occurrence of any event requiring
               a change in the most recent form previously delivered by it to
               the Borrower; and

                         (C) obtain such extensions of time for filing and
               complete such forms or certifications as may reasonably be
               requested by the Borrower or the Administrative Agent; or

                                      29
<PAGE>

               (ii) in the case of any such Lender that is not a "bank" within
          the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (A)
          represent to the Borrower (for the benefit of the Borrower and the
          Administrative Agent) that it is not a bank within the meaning of
          Section 881 (c)(3)(A) of the Internal Revenue Code, (B) agree to
          furnish to the Borrower, on or before the date of any payment by the
          Borrower, with a copy to the Administrative Agent, two accurate and
          complete original signed copies of Internal Revenue Service Form W-8,
          or successor applicable form certifying to such Lender's legal
          entitlement at the date of such certificate to an exemption from U.S.
          withholding tax under the provisions of Section 881(c) of the Internal
          Revenue Code with respect to payments to be made under this Credit
          Agreement and any Notes (and to deliver to the Borrower and the
          Administrative Agent two further copies of such form on or before the
          date it expires or becomes obsolete and after the occurrence of any
          event requiring a change in the most recently provided form and, if
          necessary, obtain any extensions of time reasonably requested by the
          Borrower or the Administrative Agent for filing and completing such
          forms), and (C) agree, to the extent legally entitled to do so, upon
          reasonable request by the Borrower, to provide to the Borrower (for
          the benefit of the Borrower and the Administrative Agent) such other
          forms as may be reasonably required in order to establish the legal
          entitlement of such Lender to an exemption from withholding with
          respect to payments under this Credit Agreement and any Notes.

               Notwithstanding the above, if any change in treaty, law or
          regulation has occurred after the date such Person becomes a Lender
          hereunder which renders all such forms inapplicable or which would
          prevent such Lender from duly completing and delivering any such form
          with respect to it and such Lender so advises the Borrower and the
          Administrative Agent, then such Lender shall be exempt from such
          requirements. Each Person that shall become a Lender or a participant
          of a Lender pursuant to Section 11.3 shall, upon the effectiveness of
          the related transfer, be required to provide all of the forms,
          certifications and statements required pursuant to this subsection
          (b); provided that in the case of a participant of a Lender, the
               --------
          obligations of such participant of a Lender pursuant to this
          subsection (b) shall be determined as if the participant of a Lender
          were a Lender except that such participant of a Lender shall furnish
          all such required forms, certifications and statements to the Lender
          from which the related participation shall have been purchased.

                                   SECTION 5.

                              CONDITIONS PRECEDENT

     5.1  Closing Conditions.
          ------------------

     The obligation of the Lenders to enter into this Credit Agreement is
subject to satisfaction

                                      30
<PAGE>

(or waiver) of the following conditions:

          (a) Executed Credit Documents.  Receipt by the Administrative Agent of
              -------------------------
     duly executed copies of (i) this Credit Agreement, (ii) the Notes and (iii)
     all other Credit Documents, each in form and substance acceptable to the
     Lenders.

          (b) Corporate Documents.  Receipt by the Administrative Agent of the
              -------------------
     following:

               (i)   Charter Documents. Copies of the articles of incorporation
                     -----------------
          or other charter documents of the Borrower certified to be true and
          complete as of a recent date by the appropriate Governmental
          Authorities of the states or other jurisdictions of its incorporation
          and certified by a secretary or assistant secretary of the Borrower to
          be true and correct as of the Closing Date.

               (ii)  Bylaws. A copy of the bylaws of the Borrower certified by
                     ------
          a secretary or assistant secretary of the Borrower to be true and
          correct as of the Closing Date.

               (iii) Resolutions.  Copies of resolutions of the Board of
                     -----------
          Directors of the Borrower approving and adopting the Credit Documents
          to which it is a party, the transactions contemplated therein and
          authorizing execution and delivery thereof,  certified by a secretary
          or assistant secretary of the Borrower to be true and correct and in
          full force and effect as of the Closing Date.

               (iv)  Good Standing.  Copies of certificates of good standing,
                     -------------
          existence or its equivalent with respect to the Borrower certified as
          of a recent date by the appropriate Governmental Authorities of the
          states or other jurisdictions of incorporation and each other
          jurisdiction in which the failure to so qualify and be in good
          standing would have a Material Adverse Effect.

               (v)   Incumbency.  An incumbency certificate of the Borrower
                     ----------
          certified by a secretary or assistant secretary of the Borrower to be
          true and correct as of the Closing Date.

          (c) Opinion of Counsel.  Receipt by the Administrative Agent of an
              ------------------
     opinion, or opinions, from legal counsel to the Borrower addressed to the
     Administrative Agent on behalf of the Lenders and dated as of the Effective
     Date, in each case satisfactory in form and substance to the Administrative
     Agent.

          (d) Financial Statements.  Receipt by the Lenders of the consolidated
              --------------------
     audited financial statements of the Borrower and its Subsidiaries dated as
     of September 30, 1998 and September 30, 1999, and the unaudited financial
     statements for the quarters ending December 31, 1999 and March 31, 2000,
     including balance sheets and income and cash flow statements, in each case
     audited (except for the quarterly financial statement) by

                                      31
<PAGE>

     independent public accountants of recognized standing and prepared in
     accordance with GAAP.

          (e) Fees and Expenses.  Payment by the Borrower of all fees and
              -----------------
     expenses owed by it to the Lenders and the Administrative Agent, including,
     without limitation, payment to the Administrative Agent of the fees set
     forth in the Fee Letter.

          (f) Material Adverse Effect.  No event or condition shall have
              -----------------------
     occurred since March 31, 2000 that has had or would be reasonably expected
     to have a Material Adverse Effect.

          (g) Officer's Certificates.  The Administrative Agent shall have
              ----------------------
     received a certificate or certificates executed by a Financial Officer of
     the Borrower as of the Effective Date stating that (i) no action, suit,
     investigation or legal, equitable, arbitration or administrative proceeding
     is pending or, to such officer's knowledge, threatened in any court or
     before any arbitrator or Governmental Authority that would have or be
     reasonably expected to have a Material Adverse Effect, (ii) the financial
     statements and information delivered to the Administrative Agent on or
     before the Effective Date were prepared in good faith and in accordance
     with GAAP and (iii) immediately after giving effect to this Credit
     Agreement, the other Credit Documents and all the transactions contemplated
     herein and therein to occur on such date, (A) no Default or Event of
     Default exists, (B) all representations and warranties contained herein and
     in the other Credit Documents are true and correct in all material respects
     on and as of the date made and (C) the Borrower is in compliance with the
     financial covenant set forth in Section 7.2.

          (h) Payment of Existing Debt.  Receipt by the Administrative Agent of
              ------------------------
     evidence that that certain Credit Agreement, dated as of August 6, 1999,
     among the Borrower, the Administrative Agent and the lenders party thereto
     has been terminated and all amounts owing thereunder have been paid in
     full.

          (i) Other.  Receipt by the Lenders of such other documents,
              -----
     instruments, agreements or information as reasonably requested by any
     Lender.

     5.2  Conditions to Loans.
          -------------------

     In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make new Loans unless:

          (a) Request.  The Borrower shall have timely delivered a duly executed
              -------
     and completed Notice of Borrowing or Competitive Bid Request, as
     applicable, in conformance with all the terms and conditions of this Credit
     Agreement.

          (b) Representations and Warranties.  The representations and
              ------------------------------
     warranties made by the Borrower are true and correct in all material
     respects at and as if made as of the date of the funding of the requested
     Loans.

                                      32
<PAGE>

          (c) No Default. No Default or Event of Default shall exist or be
              ----------
     continuing either prior to or after giving effect thereto.

          (d) Availability.  Immediately after giving effect to the making of a
              ------------
     Loan (and the application of the proceeds thereof) the sum of the amount of
     Revolving Loans outstanding plus the amount of Competitive Bid Loans
     outstanding shall not exceed the Revolving Loan Commitment.

The delivery of each Notice of Borrowing and each Competitive Bid Request shall
constitute a representation and warranty by the Borrower of the correctness of
the matters specified in subsections (b) through (d) above.

                                  SECTION 6.

                        REPRESENTATIONS AND WARRANTIES

     The Borrower hereby represents and warrants to each Lender that:

     6.1  Organization and Good Standing.
          ------------------------------

     The Borrower (a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdictions of its incorporation, (b) is
duly qualified and in good standing as a foreign corporation authorized to do
business in every jurisdiction where the failure to so qualify would have or
would reasonably be expected to have a Material Adverse Effect and (c) has the
requisite corporate power and authority to own its properties and to carry on
its business as now conducted and as proposed to be conducted.

     6.2  Due Authorization.
          -----------------

     The Borrower (a) has the requisite corporate power and authority to
execute, deliver and perform this Credit Agreement and the other Credit
Documents and to incur the obligations herein and therein provided for and (b)
has been authorized by all necessary corporate action, to execute, deliver and
perform this Credit Agreement and the other Credit Documents.

     6.3  No Conflicts.
          ------------

     Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by the Borrower will in any
material respect (a) violate or conflict with any provision of its articles of
incorporation or bylaws, (b) violate, contravene or conflict with any law
(including without limitation, the Public Utility Holding Company Act of 1935,
as amended), regulation (including without limitation, Regulation U, Regulation
X or any regulation promulgated by the Federal Energy Regulatory Commission),
order, writ, judgment, injunction, decree or permit

                                      33
<PAGE>

applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it or its properties may be bound, or (d) result
in or require the creation of any Lien upon or with respect to its properties.

     6.4  Consents.
          --------

     No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or Governmental Authority or third party is
required in connection with the execution, delivery or performance of this
Credit Agreement or any of the other Credit Documents.

     6.5  Enforceable Obligations.
          -----------------------

     This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
the Borrower enforceable against the Borrower in accordance with their
respective terms, except as may be limited by bankruptcy or insolvency laws or
similar laws affecting creditors' rights generally or by general equitable
principles.

     6.6  Financial Condition.
          -------------------

          (a) The financial statements delivered to the Lenders pursuant to
     Section 5.1(d) and pursuant to Section 7.1(a) and (b):  (i) have been
     prepared in accordance with GAAP (subject to the provisions of Section 1.3)
     and (ii) present fairly in all material respects the financial condition,
     results of operations, and cash flows of the Borrower and its Subsidiaries
     as of such date and for such periods.

          (b) Other than the Missouri Property Acquisition, since March 31,
     2000, there has been no sale, transfer or other disposition by the Borrower
     of any material part of the business or property of the Borrower, and no
     purchase or other acquisition by the Borrower of any business or property
     (including any Capital Stock of any other Person) material in relation to
     the financial condition of the Borrower (other than the Acquisition), in
     each case, which, is not (i) reflected in the most recent financial
     statements delivered to the Lenders pursuant to Section 7.1 or in the notes
     thereto or (ii) otherwise permitted by the terms of this Credit Agreement
     and communicated to the Administrative Agent.

     6.7  No Material Change.
          ------------------

     Since March 31, 2000, there has been no development or event relating to or
affecting the Borrower or any of its Subsidiaries that has had or would be
reasonably expected to have a Material Adverse Effect, it being understood that
the consummation of the Acquisition, in and of itself, shall not constitute a
Material Adverse Effect.

                                      34
<PAGE>

     6.8  No Default.
          ----------

     No Default or Event of Default presently exists and is continuing.

     6.9  Litigation.
          ----------

     There are no actions, suits, investigations or legal, equitable,
arbitration or administrative proceedings pending or, to the knowledge of the
Borrower, threatened against the Borrower, any of its Subsidiaries or any of its
properties which could have or be reasonably expected to have a Material Adverse
Affect.

     6.10 Taxes.
          -----

     The Borrower and its Subsidiaries have filed, or caused to be filed, all
tax returns (federal, state, local and foreign) required to be filed and paid
all amounts of taxes shown thereon to be due (including interest and penalties)
and has paid all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes  which are not yet delinquent or  that
are being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in accordance with GAAP.

     6.11 Compliance with Law.
          -------------------

     The Borrower and each of its Subsidiaries is in compliance with all laws,
rules, regulations, orders and decrees applicable to it or to its properties,
except where the failure to be in compliance would not have or would not
reasonably be expected to have a Material Adverse Effect.

     6.12 Material Agreements.
          -------------------

     Neither the Borrower nor any of its Subsidiaries is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default has had or would be reasonably
expected to have a Material Adverse Effect.

     6.13 ERISA.
          -----

     Except as would not result or be reasonably expected to result in a
Material Adverse Effect:

          (a) During the five-year period prior to the date on which this
     representation is made or deemed made: (i) no Termination Event has
     occurred, and, to the best knowledge of the Borrower, no event or condition
     has occurred or exists as a result of which any Termination Event is
     reasonably expected to occur, with respect to any Plan; (ii) no
     "accumulated funding deficiency," as such term is defined in Section 302 of
     ERISA and Section 412 of the Code, whether or not waived, has occurred with
     respect to any Plan;

                                      35
<PAGE>

     (iii) each Plan has been maintained, operated, and funded in material
     compliance with its own terms and in material compliance with the
     provisions of ERISA, the Code, and any other applicable federal or state
     laws; and (iv) no Lien in favor or the PBGC or a Plan has arisen or is
     reasonably expected to arise on account of any Plan.

          (b) No liability has been or is reasonably expected by the Borrower to
     be incurred under Sections 4062, 4063 or 4064 of ERISA with respect to any
     Single Employer Plan by the Borrower or any of its Subsidiaries which has
     or would reasonably be expected to have a Material Adverse Effect.

          (c) The actuarial present value of all "benefit liabilities" under
     each Single Employer Plan (determined within the meaning of Section
     401(a)(2) of the Code, utilizing the actuarial assumptions used to fund
     such Plans), whether or not vested, did not, as of the last annual
     valuation date prior to the date on which this representation is made or
     deemed made, exceed the current value of the assets of such Plan allocable
     to such accrued liabilities, except as disclosed in the Borrower's
     financial statements.

          (d) Neither the Borrower nor any ERISA Affiliate has incurred, or, to
     the best knowledge of the Borrower, is reasonably expected to incur, any
     withdrawal liability under ERISA to any Multiemployer Plan or Multiple
     Employer Plan.  Neither the Borrower nor any ERISA Affiliate has received
     any notification that any Multiemployer Plan is in reorganization (within
     the meaning of Section 4241 of ERISA), is insolvent (within the meaning of
     Section 4245 of ERISA), or has been terminated (within the meaning of Title
     IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the
     Borrower, reasonably expected to be in reorganization, insolvent, or
     terminated.

          (e) No prohibited transaction (within the meaning of Section 406 of
     ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
     has occurred with respect to a Plan which has subjected or is reasonably
     likely to subject the Borrower or any ERISA Affiliate to any liability
     under Sections 406, 407, 409, 502(i), or 502(l) of ERISA or Section 4975 of
     the Code, or under any agreement or other instrument pursuant to which the
     Borrower or any ERISA Affiliate has agreed or is required to indemnify any
     person against any such liability.

          (f) The present value (determined using actuarial and other
     assumptions which are reasonable with respect to the benefits provided and
     the employees participating) of the liability of the Borrower and each
     ERISA Affiliate for post-retirement welfare benefits to be provided to
     their current and former employees under Plans which are welfare benefit
     plans (as defined in Section 3(1) of ERISA), net of all assets under all
     such Plans allocable to such benefits, are reflected on the financial
     statements referenced in Section 7.1 in accordance with FASB 106.

          (g) Each Plan which is a welfare plan (as defined in Section 3(1) of
     ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
     apply has been

                                      36
<PAGE>

     administered in compliance in all material respects with such sections.

     6.14  Use of Proceeds.
           ---------------

     The proceeds of the Loans hereunder will be used solely for the purposes
specified in Section 7.8.  None of such proceeds will be used for the
acquisition of another Person unless the board of directors (or other comparable
governing body) or stockholders, as appropriate, of such Person has approved
such acquisition.

     6.15  Government Regulation.
           ---------------------

           (a) No proceeds of the Loans will be used, directly or indirectly,
     for the purpose of purchasing or carrying any "margin stock" within the
     meaning of Regulation U, or for the purpose of purchasing or carrying or
     trading in any securities. If requested by any Lender or the Administrative
     Agent, the Borrower will furnish to the Administrative Agent and each
     Lender a statement to the foregoing effect in conformity with the
     requirements of FR Form U-1 referred to in Regulation U. No indebtedness
     being reduced or retired out of the proceeds of the Loans was or will be
     incurred for the purpose of purchasing or carrying any margin stock within
     the meaning of Regulation U or any "margin security" within the meaning of
     Regulation T. "Margin stock" within the meaning of Regulation U does not
     constitute more than 25% of the value of the consolidated assets of the
     Borrower and its Subsidiaries. None of the transactions contemplated by the
     Credit Documents (including, without limitation, the direct or indirect use
     of the proceeds of the Loans) will violate or result in a violation of the
     Securities Act or the Exchange Act.

           (b) Neither the Borrower nor any of its Subsidiaries is (i) an
     "investment company" registered or required to be registered under the
     Investment Company Act of 1940, as amended, and is not controlled by an
     "investment company", or (ii) a "holding company", or a "subsidiary
     company" of a "holding company", or an "affiliate" of a "holding company"
     or of a "subsidiary" of a "holding company", within the meaning of the
     Public Utility Holding Company Act of 1935, as amended.

           (c) No director, executive officer or principal shareholder of the
     Borrower or any of its Subsidiaries is a director, executive officer or
     principal shareholder of any Lender.  For the purposes hereof the terms
     "director", "executive officer" and "principal shareholder" (when used with
     reference to any Lender) have the respective meanings assigned thereto in
     Regulation O.

     6.16  Disclosure.
           ----------

     Neither this Credit Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of the Borrower in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or

                                      37
<PAGE>

herein, taken as a whole, not misleading.

     6.17  Environmental Matters.
           ---------------------

     Except as would not result or be reasonably expected to result in a
Material Adverse Effect:  (a) each of the properties of the Borrower and its
Subsidiaries (the "Properties") and all operations at the Properties are in
compliance in all material respects with all applicable Environmental Laws, (b)
there is no violation of any Environmental Law with respect to the Properties or
the businesses operated by the Borrower or its Subsidiaries (the "Businesses"),
and (c) there are no conditions relating to the Businesses or Properties that
would reasonably be expected to give rise to a material liability under any
applicable Environmental Laws.

     6.18  Insurance.
           ---------

     The Borrower and its Subsidiaries maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar business and owning
similar properties in the same general areas in which the Borrower and its
Subsidiaries operate.

     6.19  Franchises, Licenses, Etc.
           -------------------------

     The Borrower and its Subsidiaries possess all material franchises,
certificates, licenses, permits and other authorizations necessary for the
operation of their respective businesses.

     6.20  Secured Indebtedness.
           --------------------

     All of the secured indebtedness of the Borrower is set forth on Schedule
                                                                     --------
6.20 or permitted by Section 8.6.
----

     6.21  Subsidiaries.
           ------------

     All Subsidiaries of the Borrower and the designation as to which such
Subsidiaries are Material Subsidiaries are set forth on Schedule 6.21.  Schedule
                                                        -------------   --------
6.21 may be updated from time to time by the Borrower.
----

                                  SECTION 7.

                             AFFIRMATIVE COVENANTS

     The Borrower hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments shall
have terminated:

                                      38
<PAGE>

     7.1  Information Covenants.
          ---------------------

     The Borrower will furnish, or cause to be furnished, to the Administrative
Agent:

          (a) Annual Financial Statements.  As soon as available, and in any
              ---------------------------
     event within 120 days after the close of each fiscal year of the Borrower,
     a consolidated balance sheet and income statement of the Borrower and its
     Subsidiaries, as of the end of such fiscal year, together with retained
     earnings and a consolidated statement of cash flows for such fiscal year
     setting forth in comparative form figures for the preceding fiscal year,
     all such financial information described above to be in reasonable form and
     detail and audited by independent certified public accountants of
     recognized national standing reasonably acceptable to the Administrative
     Agent and whose opinion shall be furnished to the Administrative Agent,
     shall be to the effect that such financial statements have been prepared in
     accordance with GAAP (except for changes with which such accountants
     concur) and shall not be limited as to the scope of the audit or qualified
     in any respect.

          (b) Quarterly Financial Statements.  As soon as available, and in any
              ------------------------------
     event within 65 days after the close of each fiscal quarter of the Borrower
     (other than the fourth fiscal quarter, in which case 120 days after the end
     thereof) a consolidated balance sheet and income statement of the Borrower
     and its Subsidiaries, as of the end of such fiscal quarter, together with a
     related consolidated statement of cash flows for such fiscal quarter in
     each case setting forth in comparative form figures for the corresponding
     period of the preceding fiscal year, all such financial information
     described above to be in reasonable form and detail and reasonably
     acceptable to the Administrative Agent, and accompanied by a certificate of
     a Financial Officer of the Borrower to the effect that such quarterly
     financial statements fairly present in all material respects the financial
     condition of the Borrower and have been prepared in accordance with GAAP,
     subject to changes resulting from audit and normal year-end audit
     adjustments.

          (c) Officer's Certificate.  At the time of delivery of the financial
              ---------------------
     statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
     of a Financial Officer of the Borrower, substantially in the form of
     Exhibit 7.1(c), (i) demonstrating compliance with Section 7.2 by
     --------------
     calculation thereof as of the end of each such fiscal period and (ii)
     stating that no Default or Event of Default exists, or if any Default or
     Event of Default does exist, specifying the nature and extent thereof and
     what action the Borrower proposes to take with respect thereto.

          (d) Reports.  Promptly upon transmission or receipt thereof, copies of
              -------
     any filings and registrations with, and reports to or from, any
     Governmental Authority, including, without limitation, the Securities and
     Exchange Commission or any successor agency and any utility regulatory
     body.

          (e) Notices.  Upon the Borrower obtaining knowledge thereof, the
              -------
     Borrower will give written notice to the Administrative Agent immediately
     of (i) the occurrence of a Default or Event of Default, specifying the
     nature and existence thereof and what action the

                                      39
<PAGE>

     Borrower proposes to take with respect thereto and (ii) the occurrence of
     any of the following with respect to the Borrower or any Subsidiary: (A)
     the pendency or commencement of any litigation, arbitration or governmental
     proceeding against the Borrower or such Subsidiary which, if adversely
     determined, would have or would be reasonably expected to have a Material
     Adverse Effect or (B) the institution of any proceedings against the
     Borrower or such Subsidiary with respect to, or the receipt of notice by
     such Person of potential liability or responsibility for violation or
     alleged violation of any federal, state or local law, rule or regulation
     (including, without limitation, any Environmental Law), the violation of
     which would have or would be reasonably expected to have a Material Adverse
     Effect.

          (f) ERISA.  Upon the Borrower or any ERISA Affiliate obtaining
              -----
     knowledge thereof, the Borrower will give written notice to the
     Administrative Agent and each of the Lenders promptly (and in any event
     within five Business Days) of: (i) any event or condition, including, but
     not limited to, any Reportable Event, that constitutes, or would be
     reasonably expected to lead to, a Termination Event; (ii) any communication
     from the PBGC stating its intention to terminate any Plan or to have a
     trustee appointed to administer any Plan together with a statement of the
     amount of liability, if any, incurred or expected to be incurred by the
     Borrower or any Subsidiary in connection therewith; (iii) with respect to
     any Multiemployer Plan, the receipt of notice as prescribed in ERISA or
     otherwise of any withdrawal liability assessed against the Borrower or any
     ERISA Affiliate, or of a determination that any Multiemployer Plan is in
     reorganization or insolvent (both within the meaning of Title IV of ERISA);
     (iv) the failure to make full payment on or before the due date (including
     extensions) thereof of all amounts which the Borrower or any of its
     Subsidiaries or ERISA Affiliates is required to contribute to each Plan
     pursuant to its terms and as required to meet the minimum funding standard
     set forth in ERISA and the Code with respect thereto; or (v) any change in
     the funding status of any Plan that would have or would be reasonably
     expected to have a Material Adverse Effect; together, with a description of
     any such event or condition or a copy of any such notice and a statement by
     a officer of the Borrower briefly setting forth the details regarding such
     event, condition, or notice, and the action, if any, which has been or is
     being taken or is proposed to be taken by the Borrower with respect
     thereto.  Promptly upon request, the Borrower shall furnish the
     Administrative Agent and each of the Lenders with such additional
     information concerning any Plan as may be reasonably requested, including,
     but not limited to, copies of each annual report/return (Form 5500 series),
     as well as all schedules and attachments thereto required to be filed with
     the Department of Labor and/or the Internal Revenue Service pursuant to
     ERISA and the Code, respectively, for each "plan year" (within the meaning
     of Section 3(39) of ERISA).

          (g) Other Information.  With reasonable promptness upon any such
              -----------------
     request, such other information regarding the business, properties or
     financial condition of the Borrower as the Administrative Agent or the
     Required Lenders may reasonably request.

                                      40
<PAGE>

     7.2  Debt to Capitalization Ratio.
          ----------------------------

     At all times during the periods set forth below, the Debt to Capitalization
Ratio shall be less than or equal to the following:

          (a) from the Effective Date to the date on which the Acquisition is
     consummated, .70 to 1.0;

          (b) if the Acquisition is consummated on or before May ___, 2001, from
     the first Business Day following the date the Acquisition is consummated to
     May ___, 2001, .75 to 1.0; and

          (c) from May ___, 2001 and thereafter, .70 to 1.0.

     7.3  Preservation of Existence, Franchises and Assets.
          ------------------------------------------------

     The Borrower will, and will cause its Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence, rights,
franchises and authority, except where failure to do so would not or would not
reasonably be expected to have a Material Adverse Effect.  The Borrower will,
and will cause its Subsidiaries to, generally maintain its properties, real and
personal, in good condition, and the Borrower and its Subsidiaries shall not
waste or otherwise permit such properties to deteriorate, reasonable wear and
tear excepted, except where failure to do so would not or would not reasonably
be expected to have a Material Adverse Effect.

     7.4  Books and Records.
          -----------------

     The Borrower will, and will cause its Subsidiaries to, keep complete and
accurate books and records of its transactions in accordance with good
accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).

     7.5  Compliance with Law.
          -------------------

     The Borrower will, and will cause its Subsidiaries to, comply with, and
obtain all permits and licenses required by, all laws (including, without
limitation, all Environmental Laws and ERISA laws), rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property, if the failure to comply would have or would
be reasonably expected to have a Material Adverse Effect.

     7.6  Payment of Taxes and Other Indebtedness.
          ---------------------------------------

     The Borrower will, and will cause its Subsidiaries to, pay, settle or
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its

                                      41
<PAGE>

properties, and (c) all of its other indebtedness as it shall become due (to the
extent such repayment is not otherwise prohibited by this Credit Agreement);
provided, however, that the Borrower shall not be required to pay any such tax,
--------  -------
assessment, charge, levy, claim or indebtedness which is being contested in good
faith by appropriate action and as to which adequate reserves therefor, if
required, have been established in accordance with GAAP, unless the failure to
make any such payment (i) would give rise to an immediate right to foreclose or
collect on a Lien securing such amounts or (ii) would have or would reasonably
be expected to have a Material Adverse Effect.

     7.7  Insurance.
          ---------

     The Borrower will, and will cause its Subsidiaries to, at all times
maintain in full force and effect insurance (including worker's compensation
insurance, liability insurance, casualty insurance and business interruption
insurance) with responsible and reputable insurance companies in such amounts,
covering such risks and liabilities and with such deductibles or self-insurance
retentions as are in accordance with normal industry practice.

     7.8  Use of Proceeds.
          ---------------

     The proceeds of the Loans may be used solely (a) to provide credit support
for the Borrower's commercial paper program and (b) for working capital, capital
expenditures and other lawful corporate purposes of the Borrower.

     7.9  Audits/Inspections.
          ------------------

     Upon reasonable prior notice and during normal business hours, the Borrower
will permit representatives appointed by the Administrative Agent, including,
without limitation, independent accountants, agents, attorneys, and appraisers
to visit and inspect the Borrower's and its Subsidiaries' property, including
their books and records, their accounts receivable and inventory, the Borrower's
and its Subsidiaries' facilities and their other business assets, and to make
photocopies or photographs thereof and to write down and record any information
such representative obtains and shall permit the Administrative Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees and
representatives of the Borrower and its Subsidiaries.

                                  SECTION 8.

                              NEGATIVE COVENANTS

     The Borrower hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments shall
have terminated:

                                      42
<PAGE>

     8.1  Nature of Business.
          ------------------

     The Borrower will not materially alter the character of its business from
that conducted as of the Closing Date.

     8.2  Consolidation and Merger.
          ------------------------

     The Borrower will not (a) enter into any transaction of merger, or (b)
consolidate, liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that, so long as no Default or Event of Default shall
              --------
exist or be caused thereby, a Person may be merged or consolidated with or into
the Borrower so long as the Borrower shall be the continuing or surviving
corporation.

     8.3  Sale or Lease of Assets.
          -----------------------

     Within any twelve month period, the Borrower will not, nor will it permit
any Subsidiary to, convey, sell, lease, transfer or otherwise dispose of assets,
business or operations with a net book value in excess of 25% of Total Assets as
calculated as of the end of the most recent fiscal quarter.

     8.4  Arm's-Length Transactions.
          -------------------------

     The Borrower will not, nor will it permits its Subsidiaries to, enter into
any transaction or series of transactions, whether or not in the ordinary course
of business, with any officer, director or Affiliate other than on terms and
conditions substantially as favorable as would be obtainable in a comparable
arm's-length transaction with a Person other than an officer, director or
Affiliate.

     8.5  Fiscal Year; Organizational Documents.
          -------------------------------------

     The Borrower will not (a) change its fiscal year or (b) in any manner that
would reasonably be expected to materially adversely affect the rights of the
Lenders, change its organizational documents or its bylaws; it being understood
that the Borrower's shareholders may approve an amendment to the Borrower's
Articles of Incorporation to permit the issuance of Preferred Securities.

     8.6  Liens.
          -----

     The Borrower will not, nor will it permit any of its Material Subsidiaries
to, contract, create, incur, assume or permit to exist any Lien with respect to
any of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for the following:  (a)
Liens securing Borrower Obligations, (b) Liens for taxes not yet due or Liens
for taxes being contested in good faith by appropriate action and for which
adequate reserves, if required, determined in accordance with GAAP have been
established (and as to which the property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof), (c) Liens in respect
of property imposed by law arising in the ordinary course of business such as

                                      43
<PAGE>

materialmen's, mechanics', warehousemen's, carrier's, landlords' and other
nonconsensual statutory Liens which are not yet due and payable, which have been
in existence less than 90 days or which are being contested in good faith by
appropriate action and for which adequate reserves, if required, determined in
accordance with GAAP have been established (and as to which the property subject
to any such Lien is not yet subject to foreclosure, sale or loss on account
thereof), (d) pledges or deposits made in the ordinary course of business to
secure payment of worker's compensation insurance, unemployment insurance,
pensions or social security programs, (e) Liens arising from good faith deposits
in connection with or to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business (other than obligations in respect
of the payment of borrowed money), (f) Liens arising from good faith deposits in
connection with or to secure performance of statutory obligations and surety and
appeal bonds, (g) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of the
encumbered property for its intended purposes, (h) judgment Liens that would not
constitute an Event of Default, (i) Liens arising by virtue of any statutory or
common law provision relating to banker's liens, rights of setoff or similar
rights as to deposit accounts or other funds maintained with a creditor
depository institution, (j) any Lien on any assets securing indebtedness
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such assets; provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof, (k) any Lien
on any asset of any Person existing at the time such Person is merged or
consolidated with or into the Borrower or one of its Subsidiaries and not
created in contemplation of such event, (l) any Lien existing on any asset prior
to the acquisition thereof by the Borrower or one of its Subsidiaries and not
created in contemplation of such acquisition, (m) any Lien (whether such Lien
applies to current assets or after-acquired property, or both) on any assets of
the Borrower or such Material Subsidiary created pursuant to the 1957 Indenture
or the 1959 Indenture; provided that any Lien on any assets of the Borrower or
such Material Subsidiary that are specifically excluded as collateral under such
Indentures shall not be deemed to be a Permitted Lien hereunder, (n) any Lien
(whether such Lien applies to current assets or after-acquired property, or
both) on any Fixed Assets of the Borrower or such Material Subsidiaries created
or arising at any time pursuant to or under (i) Section 4.08 of each of the 1987
Note Purchase Agreements and the 1989 Note Purchase Agreement, (ii) Section 4.8
of each of the 1991 Note Purchase Agreement, the 1992 Note Purchase Agreement
and the 1994 Note Purchase Agreement or (iii) any similar provision utilizing
the same or a similar cash flow-to-debt test, contained in any other loan
agreement that the Borrower may enter into after the Effective Date, which
agreement grants a loan or extends credit to the Borrower with a maturity date
in excess of one year, (n) any Lien on the assets of the Borrower pursuant to
Section 803 of the 1998 Indenture or Section 803 of the 2000 Indenture, if
placed on the property of the Borrower on a pro rata basis only with other Liens
that may be placed on the properties of the Borrower in the future, (o) Liens on
Fixed Assets not otherwise permitted by this Credit Agreement securing
indebtedness in the aggregate (at the time such Liens are created) not in excess
of five percent (5%) of Consolidated Net Property, and (p) any extension,
renewal or replacement (or successive extensions, renewals or replacements), as
a whole or in part, of any Liens referred to in the foregoing clauses (a)
through (o), for amounts not exceeding the principal amount of the indebtedness
secured by the Lien so extended, renewed or replaced; provided that such
                                                      --------
extension, renewal or replacement Lien is limited to all or a part of the same
property or assets that were

                                      44
<PAGE>

covered by the Lien extended, renewed or replaced (plus improvements on such
property or assets).

                                  SECTION 9.

                               EVENTS OF DEFAULT

     9.1  Events of Default.
          -----------------

     An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
                           ----------------

          (a) Payment.  The Borrower shall default in the payment (i) when due
              -------
     of any principal of any of the Loans or (ii) within one Business Day of
     when due of any interest on the Loans or of any fees or other amounts owing
     hereunder, under any of the other Credit Documents or in connection
     herewith.

          (b) Representations.  Any representation, warranty or statement made
              ---------------
     or deemed to be made by the Borrower herein, in any of the other Credit
     Documents, or in any statement or certificate delivered or required to be
     delivered pursuant hereto or thereto shall prove untrue in any material
     respect on the date as of which it was deemed to have been made.

          (c)  Covenants.  The Borrower shall:
               ---------

               (i)   default in the due performance or observance of any term,
          covenant or agreement contained in Sections 7.2, 7.3, 7.4, 7.5, 7.9 or
          8.1 through 8.6 inclusive; or

               (ii)  default in the due performance or observance by it of any
          term, covenant or agreement contained in Section 7.1 and such default
          shall continue unremedied for a period of five Business Days after the
          earlier of the Borrower becoming aware of such default or notice
          thereof given by the Administrative Agent; or

               (iii) default in the due performance or observance by it of any
          term, covenant or agreement (other than those referred to in
          subsections (a), (b), (c)(i), or (c)(ii) of this Section 9.1)
          contained in this Credit Agreement or any other Credit Document and
          such default shall continue unremedied for a period of at least 30
          days after the earlier of the Borrower becoming aware of such default
          or notice thereof given by the Administrative Agent.

          (d) Credit Documents.  The Borrower shall default in the due
              ----------------
     performance or observance of any term, covenant or agreement in any of the
     other Credit Documents and such default shall continue unremedied for a
     period of at least 30 days after the earlier of the

                                      45
<PAGE>

     Borrower becoming aware of such default or notice thereof given by the
     Administrative Agent or (ii) any Credit Document shall fail to be in full
     force and effect or the Borrower shall so assert or any Credit Document
     shall fail to give the Administrative Agent and/or the Lenders the rights,
     powers and privileges purported to be created thereby.

          (e) Bankruptcy, etc.  The occurrence of any of the following with
              ---------------
     respect to the Borrower or any of its Material Subsidiaries: (i) a court or
     governmental agency having jurisdiction in the premises shall enter a
     decree or order for relief in respect of the Borrower or any of its
     Material Subsidiaries in an involuntary case under any applicable
     bankruptcy, insolvency or other similar law now or hereafter in effect, or
     appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator
     or similar official of the Borrower or any of its Material Subsidiaries or
     for any substantial part of its property or order the winding up or
     liquidation of its affairs; or (ii) an involuntary case under any
     applicable bankruptcy, insolvency or other similar law now or hereafter in
     effect is commenced against the Borrower or any of its Material
     Subsidiaries and such petition remains unstayed and in effect for a period
     of 60 consecutive days; or (iii) the Borrower or any of its Material
     Subsidiaries shall commence a voluntary case under any applicable
     bankruptcy, insolvency or other similar law now or hereafter in effect, or
     consent to the entry of an order for relief in an involuntary case under
     any such law, or consent to the appointment or taking possession by a
     receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
     official of such Person or any substantial part of its property or make any
     general assignment for the benefit of creditors; or (iv) the Borrower or
     any of its Material Subsidiaries shall admit in writing its inability to
     pay its debts generally as they become due or any action shall be taken by
     such Person in furtherance of any of the aforesaid purposes.

          (f) Defaults under Other Agreements.  With respect to (x) any secured
              -------------------------------
     indebtedness of the Borrower or (y) any other indebtedness in excess of
     $20,000,000 (other than indebtedness outstanding under this Credit
     Agreement) of the Borrower (A) the Borrower shall (1) default in any
     payment (beyond the applicable grace period with respect thereto, if any)
     with respect to any such indebtedness, or (2) default (after giving effect
     to any applicable grace period) in the observance or performance of any
     covenant or agreement relating to such indebtedness or contained in any
     instrument or agreement evidencing, securing or relating thereto, or any
     other event or condition shall occur or condition exist, the effect of
     which default or other event or condition is to cause, or permit, the
     holder of the holders of such indebtedness (or trustee or agent on behalf
     of such holders) to cause (determined without regard to whether any notice
     or lapse of time is required) any such indebtedness to become due prior to
     its stated maturity; or (B) any such indebtedness shall be declared due and
     payable, or required to be prepaid other than by a regularly scheduled
     required prepayment prior to the stated maturity thereof; or (C) any such
     indebtedness shall mature and remain unpaid.

          (g) Judgments. One or more judgments, orders, or decrees shall be
              ---------
     entered against the Borrower involving a liability of $20,000,000 or more,
     in the aggregate, (to the extent not paid or covered by insurance provided
     by a carrier who has acknowledged coverage) and such judgments, orders or
     decrees shall continue unsatisfied, undischarged

                                      46
<PAGE>

     and unstayed for a period ending on the first to occur of (i) the last day
     on which such judgment, order or decree becomes final and unappealable and,
     where applicable, with the status of a judicial lien or (ii) 60 days;
     provided that if such judgment, order or decree provides for periodic
     payments over time then the Borrower shall have a grace period of 30 days
     with respect to each such periodic payment.

          (h) ERISA.  The occurrence of any of the following events or
              -----
     conditions if any of the same would be reasonably expected to result in a
     liability of an amount greater than or equal to $20,000,000:  (A) any
     "accumulated funding deficiency," as such term is defined in Section 302 of
     ERISA and Section 412 of the Code, whether or not waived, shall exist with
     respect to any Plan, or any lien shall arise on the assets of the Borrower
     or any ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination
     Event shall occur with respect to a Single Employer Plan, which is, in the
     reasonable opinion of the Administrative Agent, likely to result in the
     termination of such Plan for purposes of Title IV of ERISA; (C) a
     Termination Event shall occur with respect to a Multiemployer Plan or
     Multiple Employer Plan, which is, in the reasonable opinion of the
     Administrative Agent, likely to result in (i) the termination of such Plan
     for purposes of Title IV of ERISA, or (ii) the Borrower or any ERISA
     Affiliate incurring any liability in connection with a withdrawal from,
     reorganization of (within the meaning of Section 4241 of ERISA), or
     insolvency (within the meaning of Section 4245 of ERISA) of such Plan; or
     (D) any prohibited transaction (within the meaning of Section 406 of ERISA
     or Section 4975 of the Code) or breach of fiduciary responsibility shall
     occur which would be reasonably expected to subject the Borrower or any
     ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
     of ERISA or Section 4975 of the Code, or under any agreement or other
     instrument pursuant to which the Borrower or any ERISA Affiliate has agreed
     or is required to indemnify any person against any such liability.

          (i) Change of Control.  The occurrence of any Change of Control.
              -----------------

     9.2  Acceleration; Remedies.
          ----------------------

     Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may, with the consent of the Required Lenders, and shall,
upon the request and direction of the Required Lenders, by written notice to the
Borrower take any of the following actions without prejudice to the rights of
the Administrative Agent or any Lender to enforce its claims against the
Borrower, except as otherwise specifically provided for herein:

          (i)  Termination of Commitments.  Declare the Commitments terminated
               --------------------------
     whereupon the Commitments shall be immediately terminated.

          (ii) Acceleration of Loans.  Declare the unpaid amount of all Borrower
               ---------------------
     Obligations to be due whereupon the same shall be immediately due and
     payable without presentment, demand, protest or other notice of any kind,
     all of which are hereby waived by the Borrower.

                                      47
<PAGE>

          (iii)  Enforcement of Rights.  Enforce any and all rights and
                 ---------------------
     interests created and existing under the Credit Documents, including,
     without limitation, all rights of set-off.

Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(e) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders and the Administrative
Agent hereunder shall immediately become due and payable without the giving of
any notice or other action by the Administrative Agent or the Lenders.

Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.

     9.3  Allocation of Payments After Event of Default.
          ---------------------------------------------

     Notwithstanding any other provisions of this Credit Agreement, after the
occurrence of an Event of Default, all amounts collected or received by the
Administrative Agent or any Lender on account of amounts outstanding under any
of the Credit Documents shall be paid over or delivered as follows:

          FIRST, to the payment of all reasonable out-of-pocket costs and
     expenses (including without limitation reasonable attorneys' fees) of the
     Administrative Agent or any of the Lenders in connection with enforcing the
     rights of the Lenders under the Credit Documents, pro rata as set forth
     below;

          SECOND, to payment of any fees owed to the Administrative Agent, or
     any Lender, pro rata as set forth below;

          THIRD, to the payment of all accrued interest payable to the Lenders
     hereunder, pro rata as set forth below;

          FOURTH, to the payment of the outstanding principal amount of the
     Loans, pro rata as set forth below;

          FIFTH, to all other obligations which shall have become due and
     payable under the Credit Documents and not repaid pursuant to clauses
     "FIRST" through "FOURTH" above; and

          SIXTH, to the payment of the surplus, if any, to whoever may be
     lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (b) each of the

                                      48
<PAGE>

Lenders shall receive an amount equal to its pro rata share (based on the
proportion that the then outstanding Loans held by such Lender bears to the
aggregate then outstanding Loans) of amounts available to be applied.

                                  SECTION 10

                               AGENCY PROVISIONS

     10.1  Appointment.
           -----------

     Each Lender hereby designates and appoints Bank of America, N.A. as agent
of such Lender to act as specified herein and the other Credit Documents, and
each such Lender hereby authorizes the Administrative Agent, as the agent for
such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto.  Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Credit Agreement  or any of the other Credit Documents, or
shall otherwise exist against the Administrative Agent.  The provisions of this
Section are solely for the benefit of the Administrative Agent and the Lenders
and the Borrower shall not have any rights as a third party beneficiary of the
provisions hereof.  In performing its functions and duties under this Credit
Agreement and the other Credit Documents, the Administrative Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation or relationship of agency or trust with or for the
Borrower.  Any agent named herein (other than the Administrative Agent) shall
have no duties or obligations whatsoever under this Credit Agreement or the
other Credit Documents.

     10.2  Delegation of Duties.
           --------------------

     The Administrative Agent may execute any of its duties hereunder or under
the other Credit Documents by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties.  The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.

     10.3  Exculpatory Provisions.
           ----------------------

     Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be liable to any Lender
for any action lawfully taken or omitted to be taken by it or such Person under
or in connection herewith or in connection with any of the other Credit
Documents (except for its or such Person's own gross negligence or willful
misconduct), or  responsible in any manner to any of the Lenders for any
recitals, statements, representations or

                                      49
<PAGE>

warranties made by the Borrower contained herein or in any of the other Credit
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit Documents, or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be responsible to any Lender for
the effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower in any written or oral statement or in any
financial or other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the
Administrative Agent to the Lenders or by or on behalf of the Borrower to the
Administrative Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default or to inspect the properties, books or records of the
Borrower. The Administrative Agent is not a trustee for the Lenders and owes no
fiduciary duty to the Lenders.

     10.4  Reliance on Communications.
           --------------------------

     The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without  limitation, counsel to the Borrower, independent
accountants and other experts selected by the Administrative Agent with
reasonable care).  The Administrative Agent may deem and treat the Lenders as
the owner of its interests hereunder for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent in accordance with Section 11.3(b).  The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Credit Agreement or under any of the other Credit Documents unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder or under any of the other Credit Documents in accordance with a
request of the Required Lenders (or to the extent specifically provided in
Section 11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).

     10.5  Notice of Default.
           -----------------

     The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to the Credit Document, describing such Default or Event of Default and stating
that such notice is a "notice of default." In the event that the

                                      50
<PAGE>

Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders.

     10.6  Non-Reliance on Administrative Agent and Other Lenders.
           ------------------------------------------------------

     Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Administrative Agent or any affiliate thereof hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrower
and made its own decision to make its Extensions of Credit hereunder and enter
into this Credit Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Credit Agreement, and to make such
investigation as it deems necessary to inform itself as to the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

     10.7  Indemnification.
           ---------------

     Each Lender agrees to indemnify the Administrative Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to its Commitment
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following the payment in full of the Borrower Obligations) be imposed
on, incurred by or asserted against the Administrative Agent in its capacity as
such in any way relating to or arising out of this Credit Agreement or the other
Credit Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
           --------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of the Administrative Agent.  If any indemnity
furnished to the Administrative Agent for any purpose shall, in the opinion of
the Administrative Agent, be

                                      51
<PAGE>

insufficient or become impaired, the Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section 10.7 shall survive the payment of the Borrower Obligations and all other
amounts payable hereunder and under the other Credit Documents and the
termination of the Commitments.

     10.8  Administrative Agent in Its Individual Capacity.
           -----------------------------------------------

     The Administrative Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though the Administrative Agent were not Administrative Agent hereunder.  With
respect to the Loans made and all Borrower Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Credit
Agreement as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.

     10.9  Successor Agent.
           ---------------

     The Administrative Agent may, at any time, resign upon 20 days written
notice to the Lenders.  Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Administrative Agent, which successor
shall be reasonably acceptable to the Borrower; provided that the Borrower shall
have no right to approve such successor during the existence and continuation of
a Default or Event of Default.  If no successor Administrative Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the notice of resignation, then the retiring
Administrative Agent shall select a successor Administrative Agent; provided
such successor is an Eligible Assignee (or if no Eligible Assignee shall have
been so appointed by the retiring Administrative Agent and shall have accepted
such appointment, then the Lenders shall perform all obligations of the retiring
Administrative Agent hereunder until such time, if any, as a successor
Administrative Agent shall have been appointed and shall have accepted such
appointment as provided for above).  Upon the acceptance of any appointment as
an Administrative Agent hereunder by a successor, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations as an
Administrative Agent, as appropriate, under this Credit Agreement and the other
Credit Documents and the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Administrative Agent under this Credit Agreement.

                                      52
<PAGE>

                                  SECTION 11.

                                 MISCELLANEOUS

     11.1  Notices.
           -------

     Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device), (c)
the Business Day following the day on which the same has been delivered to a
reputable national overnight air courier service, or (d) the third Business Day
following the day on which the same is sent by certified or registered mail,
postage prepaid, in each case to the respective parties at the address or
telecopy numbers set forth on Schedule 11.1, or at such other address as such
                              -------------
party may specify by written notice to the other parties hereto.

     11.2  Right of Set-Off.
           ----------------

     In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
and during the continuation of an Event of Default and the commencement of
remedies described in Section 9.2, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of the Borrower against obligations and
liabilities of the Borrower to the Lenders hereunder, under the Notes or the
other Credit Documents, irrespective of whether the Administrative Agent or the
Lenders shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of such Lender subsequent thereto.  The Borrower hereby agrees that any Person
purchasing a participation in the Loans and Commitments hereunder pursuant to
Section 11.3(c) may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.

     11.3  Benefit of Agreement.
           --------------------

           (a) Generally.  This Credit Agreement shall be binding upon and inure
               ---------
     to the benefit of and be enforceable by the respective successors and
     assigns of the parties hereto; provided that the Borrower may not assign
                                    --------
     and transfer any of its interests without the prior written consent of the
     Lenders; and provided further that the rights of each Lender to transfer,
                  -------- -------
     assign or grant participations in its rights and/or obligations hereunder
     shall be limited as set forth below in this Section 11.3.

           (b) Assignments.  Each Lender may assign to one or more Eligible
               -----------
     Assignees all or a portion of its rights and obligations under this Credit
     Agreement (including, without limitation, all or a portion of its Loans,
     its Notes, and its Commitment); provided,
                                     --------

                                      53
<PAGE>

     however, that:
     -------

               (i)   each such assignment shall be to an Eligible Assignee;

               (ii)  except in the case of an assignment to another Lender or an
          assignment of all of a Lender's rights and obligations under this
          Credit Agreement, any such partial assignment shall be in an amount at
          least equal to $5,000,000 (or, if less, the remaining amount of the
          Commitment being assigned by such Lender) and an integral multiple of
          $1,000,000 in excess thereof;

               (iii) each such assignment by a Lender shall be of a constant,
          and not varying, percentage of all of its rights and obligations under
          this Credit Agreement and the Notes; and

               (iv)  the parties to such assignment shall execute and deliver to
          the Administrative Agent for its acceptance an Assignment Agreement in
          substantially the form of Exhibit 11.3(b), together with a processing
                                    ---------------
          fee from the assignor of $3,500.

     Upon execution, delivery, and acceptance of such Assignment Agreement, the
     assignee thereunder shall be a party hereto and, to the extent of such
     assignment, have the obligations, rights, and benefits of a Lender
     hereunder and the assigning Lender shall, to the extent of such assignment,
     relinquish its rights and be released from its obligations under this
     Credit Agreement. Upon the consummation of any assignment pursuant to this
     Section 11.3(b), the assignor, the Administrative Agent and the Borrower
     shall make appropriate arrangements so that, if required, new Notes are
     issued to the assignor and the assignee. If the assignee is not
     incorporated under the laws of the United States of America or a state
     thereof; it shall deliver to the Borrower and the Administrative Agent
     certification as to exemption from deduction or withholding of taxes in
     accordance with Section 4.4.

          By executing and delivering an assignment agreement in accordance with
     this Section 11.3(b), the assigning Lender thereunder and the assignee
     thereunder shall be deemed to confirm to and agree with each other and the
     other parties hereto as follows: (A) such assigning Lender warrants that it
     is the legal and beneficial owner of the interest being assigned thereby
     free and clear of any adverse claim created by such assigning Lender and
     the assignee warrants that it is an Eligible Assignee; (B) except as set
     forth in clause (A) above, such assigning Lender makes no representation or
     warranty and assumes no responsibility with respect to any statements,
     warranties or representations made in or in connection with this Credit
     Agreement, any of the other Credit Documents or any other instrument or
     document furnished pursuant hereto or thereto, or the execution, legality,
     validity, enforceability, genuineness, sufficiency or value of this Credit
     Agreement, any of the other Credit Documents or any other instrument or
     document furnished pursuant hereto or thereto or the financial condition of
     the Borrower or the performance or observance by the Borrower of any of its
     obligations under this

                                      54
<PAGE>

     Credit Agreement, any of the other Credit Documents or any other instrument
     or document furnished pursuant hereto or thereto; (C) such assignee
     represents and warrants that it is legally authorized to enter into such
     assignment agreement; (D) such assignee confirms that it has received a
     copy of this Credit Agreement, the other Credit Documents and such other
     documents and information as it has deemed appropriate to make its own
     credit analysis and decision to enter into such assignment agreement; (E)
     such assignee will independently and without reliance upon the
     Administrative Agent, such assigning Lender or any other Lender, and based
     on such documents and information as it shall deem appropriate at the time,
     continue to make its own credit decisions in taking or not taking action
     under this Credit Agreement and the other Credit Documents; (F) such
     assignee appoints and authorizes the Administrative Agent to take such
     action on its behalf and to exercise such powers under this Credit
     Agreement or any other Credit Document as are delegated to the
     Administrative Agent by the terms hereof or thereof, together with such
     powers as are reasonably incidental thereto; and (G) such assignee agrees
     that it will perform in accordance with their terms all the obligations
     which by the terms of this Credit Agreement and the other Credit Documents
     are required to be performed by it as a Lender.

          (c) Register.  The Administrative Agent shall maintain a copy of each
              --------
     Assignment Agreement delivered to and accepted by it and a register for the
     recordation of the names and addresses of the Lenders and the Commitment
     of, and principal amount of the Loans owing to, each Lender from time to
     time (the "Register"). The entries in the Register shall be conclusive and
     binding for all purposes, absent manifest error, and the Borrower, the
     Administrative Agent and the Lenders may treat each Person whose name is
     recorded in the Register as a Lender hereunder for all purposes of this
     Credit Agreement. The Register shall be available for inspection by the
     Borrower or any Lender at any reasonable time and from time to time upon
     reasonable prior notice.

          (d) Acceptance.  Upon its receipt of an Assignment Agreement executed
              ----------
     by the parties thereto, together with any Note subject to such assignment
     and payment of the processing fee, the Administrative Agent shall, if such
     Assignment Agreement has been completed and is in substantially the form of
     Exhibit 11.3(b), (i) accept such Assignment Agreement, (ii) record the
     --------------
     information contained therein in the Register and (iii) give prompt notice
     thereof to the parties thereto.

          (e) Participations.  Each Lender may sell participations to one or
              --------------
     more Persons in all or a portion of its rights, obligations or rights and
     obligations under this Credit Agreement (including all or a portion of its
     Commitment, its Notes and its Loans); provided, however, that (i) such
                                           --------  -------
     Lender's obligations under this Credit Agreement shall remain unchanged,
     (ii) such Lender shall remain solely responsible to the other parties
     hereto for the performance of such obligations, (iii) the participant shall
     be entitled to the benefit of the yield protection provisions contained in
     Sections 4.1 through 4.4, inclusive, and the right of set-off contained in
     Section 11.2, and (iv) the Borrower shall continue to deal solely and
     directly with such Lender in connection with such Lender's rights and
     obligations under this Credit Agreement, and such Lender shall retain the
     sole right to

                                      55
<PAGE>

     enforce the obligations of the Borrower relating to its Loans and its Notes
     and to approve any amendment, modification, or waiver of any provision of
     this Credit Agreement (other than amendments, modifications, or waivers
     decreasing the amount of principal of or the rate at which interest is
     payable on such Loans or Notes, extending any scheduled principal payment
     date or date fixed for the payment of interest on such Loans or Notes, or
     extending its Commitment).

          (f) Nonrestricted Assignments.  Notwithstanding any other provision
              -------------------------
     set forth in this Credit Agreement, any Lender may at any time assign and
     pledge all or any portion of its Loans and its Notes to any Federal Reserve
     Bank as collateral security pursuant to Regulation A and any Operating
     Circular issued by such Federal Reserve Bank. No such assignment shall
     release the assigning Lender from its obligations hereunder.

          (g) Information.  Any Lender may furnish any information concerning
              -----------
     the Borrower in the possession of such Lender from time to time to
     assignees and participants (including prospective assignees and
     participants).

     11.4  No Waiver; Remedies Cumulative.
           ------------------------------

     No failure or delay on the part of the Administrative Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower and the Administrative
Agent or any Lender shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder.  The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Administrative Agent or any Lender would otherwise have.  No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Lenders to
any other or further action in any circumstances without notice or demand.

     11.5  Payment of Expenses, etc.
           ------------------------

     The Borrower agrees to:  (i) pay all reasonable out-of-pocket costs and
expenses of the Administrative Agent and Banc of America Securities LLC ("BAS")
                                                                          ---
in connection with (A) the negotiation, preparation, execution and delivery and
administration of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, PLLC, special counsel to
the Administrative Agent) and (B) any amendment, waiver or consent relating
hereto and thereto including, but not limited to, any such amendments, waivers
or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Borrower under this Credit
Agreement, (ii) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Lenders in connection with (A) enforcement of the
Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any

                                      56
<PAGE>

such enforcement, the reasonable fees and disbursements of counsel for the
Administrative Agent and each of the Lenders (including the allocated cost of
internal counsel)) and (B) any bankruptcy or insolvency proceeding of the
Borrower and (iii) indemnify the Administrative Agent, BAS and each Lender, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, any investigation, litigation or other
proceeding (whether or not the Administrative Agent, BAS or any Lender is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Loans (including other extensions of
credit) hereunder or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel (including the allocated cost of internal counsel)
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified).

     11.6 Amendments, Waivers and Consents.
          --------------------------------

     Neither this Credit Agreement, nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the Borrower; provided that no
                                                             --------
such amendment, change, waiver, discharge or termination shall without the
consent of each Lender affected thereby:

          (a) extend the Maturity Date, or postpone or extend the time for any
     payment or prepayment of principal;

          (b) reduce the rate or extend the time of payment of interest (other
     than as a result of waiving the applicability of any post-default increase
     in interest rates) thereon or fees or other amounts payable hereunder;

          (c) reduce or waive the principal amount of any Loan;

          (d) increase or extend the Commitment of a Lender (it being understood
     and agreed that a waiver of any Default or Event of Default or a waiver of
     any mandatory reduction in the Commitments shall not constitute a change in
     the terms of any Commitment of any Lender);

          (e) release the Borrower from its obligations under the Credit
     Documents;

          (f) amend, modify or waive any provision of this Section 11.6 or
     Section 3.6, 3.8, 9.1(a), 11.2, 11.3 or 11.5.

          (g) reduce any percentage specified in, or otherwise modify, the
     definition of Required Lenders; or

                                      57
<PAGE>

          (h) consent to the assignment or transfer by the Borrower of any of
     its rights and obligations under (or in respect of) the Credit Documents.

No provision of Section 10 may be amended or modified without the consent of the
Administrative Agent.

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans, and each
Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and (y) the
Required Lenders may consent to allow the Borrower to use cash collateral in the
context of a bankruptcy or insolvency proceeding.

     11.7  Counterparts/Telecopy.
           ---------------------

     This Credit Agreement may be executed in any number of counterparts, each
of which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.  Delivery of executed counterparts
by telecopy shall be as effective as an original and shall constitute a
representation that an original will be delivered.

     11.8  Headings.
           --------

     The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

     11.9  Defaulting Lender.
           -----------------

     Each Lender understands and agrees that if such Lender is a Defaulting
Lender then it shall not be entitled to vote on any matter requiring the consent
of the Required Lenders or to object to any matter requiring the consent of all
the Lenders; provided, however, that all other benefits and obligations under
             --------  -------
the Loan Documents shall apply to such Defaulting Lender.

     11.10 Survival of Indemnification and Representations and Warranties.
           --------------------------------------------------------------

     All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, and the repayment of the Loans and other obligations
and the termination of the Commitments hereunder.

     11.11 Governing Law; Venue.
           --------------------

           (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
     RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
     GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
     THE STATE OF

                                      58
<PAGE>

     NEW YORK.

           (b) Any legal action or proceeding with respect to this Credit
     Agreement or any other Credit Document may be brought in the courts of the
     State of New York or of the United States for the Southern District of New
     York, and, by execution and delivery of this Credit Agreement, the Borrower
     hereby irrevocably accepts for itself and in respect of its property,
     generally and unconditionally, the jurisdiction of such courts. The
     Borrower further irrevocably consents to the service of process out of any
     of the aforementioned courts in any such action or proceeding by the
     mailing of copies thereof by registered or certified mail, postage prepaid,
     to it at the address for notices pursuant to Section 11.1, such service to
     become effective 10 days after such mailing. Nothing herein shall affect
     the right of a Lender to serve process in any other manner permitted by law
     or to commence legal proceedings or to otherwise proceed against the
     Borrower in any other jurisdiction. The Borrower agrees that a final
     judgment in any action or proceeding shall be conclusive and may be
     enforced in other jurisdictions by suit on the judgment or in any other
     manner provided by law; provided that nothing in this Section 11.11(b) is
     intended to impair the Borrower's right under applicable law to appeal or
     seek a stay of any judgment.

           (c) The Borrower hereby irrevocably waives any objection which it may
     now or hereafter have to the laying of venue of any of the aforesaid
     actions or proceedings arising out of or in connection with this Credit
     Agreement or any other Credit Document in the courts referred to in
     subsection (a) hereof and hereby further irrevocably waives and agrees not
     to plead or claim in any such court that any such action or proceeding
     brought in any such court has been brought in an inconvenient forum.

     11.12 Waiver of Jury Trial.
           --------------------

     EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     11.13 Severability.
           ------------

     If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

     11.14 Further Assurances.
           ------------------

     The Borrower agrees, upon the request of the Administrative Agent, to
promptly take such actions, as reasonably requested, as are necessary to carry
out the intent of this Credit Agreement

                                      59
<PAGE>

and the other Credit Documents.

     11.15  Entirety.
            --------

     This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.

     11.16  Binding Effect; Continuing Agreement.
            ------------------------------------

            (a) This Credit Agreement shall become effective at such time when
     all of the conditions set forth in Section 5.1 have been satisfied or
     waived by the Lenders and it shall have been executed by the Borrower, the
     Administrative Agent and the Lenders, and thereafter this Credit Agreement
     shall be binding upon and inure to the benefit of the Borrower, the
     Administrative Agent and each Lender and their respective successors and
     assigns.

            (b) This Credit Agreement shall be a continuing agreement and shall
     remain in full force and effect until all Loans, interest, fees and other
     Borrower Obligations have been paid in full and all Commitments have been
     terminated.  Upon termination, the Borrower shall have no further
     obligations (other than the indemnification provisions that survive) under
     the Credit Documents; provided that should any payment, in whole or in
     part, of the Borrower Obligations be rescinded or otherwise required to be
     restored or returned by the Administrative Agent or any Lender, whether as
     a result of any proceedings in bankruptcy or reorganization or otherwise,
     then the Credit Documents shall automatically be reinstated and all amounts
     required to be restored or returned and all costs and expenses incurred by
     the Administrative Agent or any Lender in connection therewith shall be
     deemed included as part of the Borrower Obligations.

                  [Remainder of Page Intentionally Left Blank]

                                      60
<PAGE>

     Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.

BORROWER:                     ATMOS ENERGY CORPORATION,
--------
                              A Texas and Virginia corporation

                              By:      /s/ JOHN P. REDDY
                                  ----------------------------------------------
                              Name:    John P. Reddy
                                    --------------------------------------------
                              Title:   SVP, CFO and Treasurer
                                     -------------------------------------------

LENDERS:                      BANK OF AMERICA, N.A.
-------
                              individually in its capacity as a
                              Lender and in its capacity as Administrative Agent

                              By:      /s/ MICHELLE A. SCHOENFELD
                                  ----------------------------------------------
                              Name:    Michelle A. Schoenfeld
                                    --------------------------------------------
                              Title:   Vice President
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              AMSOUTH BANK

                              By:      /s/ RUSSELL S. ROGERS
                                  ----------------------------------------------
                              Name:    Russell S. Rogers
                                    --------------------------------------------
                              Title:   Vice President
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              FLEET NATIONAL BANK

                              By:      /s/ ROBERT D. LANIGAN
                                  ----------------------------------------------
                              Name:    Robert D. Lanigan
                                    --------------------------------------------
                              Title:   Managing Director
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              THE FUJI BANK, LIMITED

                              By:      /s/ JACQUES AZAGURY
                                  ----------------------------------------------
                              Name:    Jacques Azagury
                                    --------------------------------------------
                              Title:   Senior Vice President & Manager
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              KBC BANK N.V.

                              By:      /s/ JEAN-PIERRE DIELS
                                  ----------------------------------------------
                              Name:    Jean-Pierre Diels
                                    --------------------------------------------
                              Title:   First Vice President
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              FIRST UNION NATIONAL BANK

                              By:      /s/ MICHAEL J. KOLOSOWSKY
                                  ----------------------------------------------
                              Name:    Michael J. Kolosowsky
                                    --------------------------------------------
                              Title:   Vice President
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              BANK ONE, NA

                              By:      /s/ JANE A. BEK
                                  ----------------------------------------------
                              Name:    Jane A. Bek
                                    --------------------------------------------
                              Title:   Vice President
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              THE BANK OF TOKYO-MITSUBISHI, LTD.

                              By:      /s/ ICHIRO OTANI
                                  ----------------------------------------------
                              Name:    Ichiro Otani
                                    --------------------------------------------
                              Title:   Deputy General Manager
                                     -------------------------------------------
<PAGE>

                  Signature Page to Atmos Energy Corporation
                          Revolving Credit Agreement

                              SOCIETE GENERALE NEW YORK BRANCH

                              By:      /s/ DAVID BIRD
                                  ----------------------------------------------
                              Name:    David Bird
                                    --------------------------------------------
                              Title:   Vice President
                                     -------------------------------------------<PAGE>

                                                                    EXHIBIT 10.1

                           ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 7, 2000, by and among ATMOS ENERGY CORPORATION, a Texas and
Virginia corporation ("Atmos"), ATMOS ENERGY MARKETING, LLC, a Delaware limited
liability company ("Energy"), WOODWARD MARKETING, INC., a Texas corporation
("WMI"), J.D. Woodward, III, an individual, and Linda Lee Woodward, an
individual (collectively, "Woodward"), and James Kifer, an individual, and Rita
B. Kifer, an individual (collectively, "Kifer").

     WHEREAS, WMI owns 55% and Energy owns 45%, respectively, of the membership
interests of Woodward Marketing, L.L.C., a Delaware limited liability company
(the "LLC");

     WHEREAS, the boards of directors of Atmos and WMI, the stockholders of WMI
and the managers of Energy have determined that it is in the best interests of
their respective companies, stockholders and owner, to effect the sale of
substantially all of the assets of WMI to Energy and to consummate the
transactions contemplated hereby upon the terms and subject to the conditions
set forth herein;

     WHEREAS, in connection with the sale of substantially all of its assets,
WMI has adopted a plan of complete liquidation and dissolution;

     WHEREAS, for federal income tax purposes, it is intended that the sale of
assets contemplated hereby, together with such liquidation, will constitute a
"reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as
amended.

     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
Atmos, Energy, WMI, Woodward and Kifer hereby agree as follows:

     A.   On the basis of the representations, warranties, covenants and
agreements set forth herein, and subject to the terms and conditions set forth
herein, at the Closing, WMI shall sell, convey, assign, transfer, and deliver to
Energy, and Energy shall purchase and acquire from WMI, all of WMI's assets,
franchises, interests, properties, and rights and privileges of every kind and
description, real, personal or mixed, tangible or intangible, including all
right, title and interest of WMI therein and thereto as all of the foregoing
exist immediately prior to the Closing (collectively, exclusive of the Excluded
Assets, the "Acquired Assets"), constituting the following:

     (i)  All of the LLC Membership Interests owned by WMI and all rights and
benefits of WMI under the LLC Documents attributable to the period after the
Closing; and

     (ii) 345,500 shares of Common Stock, no par value, of Atmos ("Common
Stock").

Notwithstanding the foregoing, WMI shall retain all of its other assets,
including all cash and cash equivalents, all accounts receivable, all notes
receivable from Woodward and Kifer, all life insurance policies, all rights to
distributions from the LLC contemplated by Section 7.2, all books and records of
WMI not related to the LLC, all rights under this Agreement and the
<PAGE>

Ancillary Agreements and all rights and benefits under the LLC Documents that,
under the terms of the LLC Documents, expressly survive the time when WMI is no
longer an owner of LLC Membership Interests or are attributable to the period
prior to the Closing (collectively, the "Excluded Assets").

     B.   As full payment for the Acquired Assets, WMI will receive the
following consideration (the "Purchase Consideration"): (i) 960,000 shares of
Common Stock, based upon a value of $24,000,000 at $25.00 per share (the "Base
Shares"), (ii) 345,500 shares of Common Stock (the "Included Shares") and (iii)
463,193 shares of Common Stock, based on the Trading Value of the Common Stock
as of the date hereof (the "Cumulative Shares").

     C.   The portion of the Purchase Consideration constituting the Base Shares
shall be subject to adjustment in the circumstances, and to the extent, provided
in this Section C, and subject to Section E below. If between the first
anniversary of the Closing Date and the Date of Determination, the Closing Price
for the Common Stock for each trading day in any period of thirty (30)
consecutive days shall have been at least $25.00, no additional consideration
shall be payable. If as of the Date of Determination there shall not have been
any such period in which the Closing Price shall have been at least $25.00,
additional consideration (the "True-up Consideration") shall be payable in
respect of the Base Shares issued at the Closing Date. For each Base Share, the
True-up Consideration shall be the amount by which the Trading Value as of the
Date of Determination is less than $25.00. Any True-up Consideration required to
be paid by this Section C shall be paid in shares of Common Stock, valued at the
Trading Value as of the Date of Determination, no later than three (3) business
days after the Date of Determination.

     D.   If any True-up Consideration is required to be delivered pursuant to
Section C above, WMI shall also receive an amount (the "Dividend Adjustment")
equal to the aggregate amount of dividends and other distributions that would
have been received from the Closing Date to the Date of Determination (the
"Missed Dividends") on or in respect of the number of shares of Common Stock to
be delivered as True-up Consideration. To the extent the Missed Dividends are
comprised of cash, the Dividend Adjustment shall be paid in shares of Common
Stock, valued at the Trading Value as of the Date of Determination, not later
than three (3) business days after the Date of Determination. To the extent the
Missed Dividends are comprised of Common Stock, the Dividend Adjustment shall be
paid in an equal number of shares of Common Stock.

     E.   Notwithstanding Section C above, the aggregate number of shares of
Common Stock delivered under Section C above shall not exceed 232,547 shares.

     F.   For purposes of the foregoing:

     (i)  The term "Date of Determination" shall mean the earlier of (A) the
fifth anniversary of the Closing Date or (B) the date of a Change in Control.

     (ii) The term "Trading Value" shall mean, for any date, the average Closing
Price for the Common Stock for the ten (10) then most recent trading days ending
on the second trading day prior to such date.

                                       2
<PAGE>

     (iii) The term "Closing Price" shall mean, for any trading day, the closing
price for the Common Stock as reported for New York Stock Exchange Composite
Transactions or, if the Common Stock is not listed on the New York Stock
Exchange, as reported for the principal exchange or system on which such shares
are listed or traded.

     (iv)  The number, kind and value of shares or other consideration so
issuable, and determinations of prices associated therewith, shall be subject to
such customary anti-dilution adjustments as shall be determined in good faith by
Atmos to reflect any stock splits, reverse stock splits, stock dividends,
reclassifications, recapitalizations, mergers, consolidations or other changes
in capital structure occurring or for which a record date occurs after the date
hereof.

     (v)   No certificates representing fractional shares of Common Stock will
be issued as a result of the transactions contemplated hereby. If WMI would
otherwise have been entitled to receive a fraction of a share of Common Stock,
WMI shall receive, in lieu thereof, additional Common Stock in order to round up
to the next whole share the Common Stock it is otherwise entitled to receive.

     G.    At the Closing, Energy shall assume the executory obligations of WMI
under (i) the LLC Documents relating to the period beginning immediately after
the Closing Date and (ii) the Bank of America Facility (the "Assumed
Obligations"). Notwithstanding any other provisions hereof or any doctrine of
law, except for Assumed Obligations, WMI shall retain and Energy shall not
assume or agree to pay, perform, or discharge, any liabilities or obligations of
WMI, whether known or unknown, accrued or contingent or otherwise, including (i)
any liabilities or obligations that WMI owes to any Affiliate, (ii) any
liabilities or obligations that relate to the Excluded Assets, (iii) any
obligations or liabilities to employees, whether for compensation, under any
Employee Benefit Arrangement or by applicable law, rule or regulation, (iv) any
liabilities or obligations with respect to any Environmental Requirements or
Hazardous Materials, (v) any liabilities for any pending or threatened claims,
actions, suits, investigations or proceedings, or (vi) any Taxes (collectively,
the "Retained Liabilities").

     H.    The parties acknowledge that, as the owners of WMI, Woodward and
Kifer will receive consideration for their obligations hereunder as a result of
the consideration to be delivered to WMI hereunder.

                                  ARTICLE I.
                        REPRESENTATIONS AND WARRANTIES
                          OF WMI, WOODWARD AND KIFER

     WMI, Woodward and Kifer, jointly and severally, hereby represent and
warrant to Atmos and Energy that the statements set forth in this Article I are
true, correct and complete, except as set forth in the WMI Disclosure Schedule
attached hereto as Exhibit A.
                   ---------

     SECTION 1.1. Organization and Qualification.

     (a)   WMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. The LLC is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Each of WMI and the LLC has all requisite corporate or
limited liability company power and authority and possesses

                                       3
<PAGE>

all franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Governmental Authorizations") necessary to
own, lease and operate its properties and assets and to carry on its business as
it is presently conducted, except where the failure to have any of such
Governmental Authorizations would not reasonably be expected to have a Material
Adverse Effect on WMI or the LLC. Each of WMI and the LLC is duly qualified as a
foreign corporation and limited liability company, respectively, to do business
and is in good standing in the State of Texas and each jurisdiction in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect on WMI or the LLC.

     (b) WMI has not been a subsidiary or division of another corporation or
entity at any time during the two-year period prior to the date of this
Agreement.

     (c) WMI has heretofore delivered to Atmos and Energy true and complete
copies of WMI's Articles of Incorporation and Bylaws, including all amendments
thereto, and the LLC Documents, including all amendments thereto.

     SECTION 1.2. Subsidiaries. Other than its 55% ownership interest in the LLC
and 345,500 shares of Common Stock, WMI does not own, directly or indirectly,
any equity or similar interest in any corporation, partnership, limited
liability company, joint venture or other business association or entity. The
entire ownership interest in the LLC consists of 100 Units of LLC Membership
Interests, all of which are issued and outstanding. All of such ownership
interest is duly authorized, validly issued, fully paid and, except as provided
in the LLC Documents, non-assessable and free of preemptive rights. WMI and
Energy are the only members of the LLC, and no other person or entity owns or
has the right to acquire any ownership interest in the LLC by, through or under
WMI. Except as provided in the LLC Documents, there are no options, warrants, or
other rights, agreements, arrangements, or commitments of any character relating
to WMI's ownership interest in the LLC or obligating the LLC to issue or sell
any such ownership interest, or any securities convertible into or evidencing
the right to purchase any such ownership interest or other equity interests in
the LLC. There are no obligations, contingent or otherwise, of the LLC to
repurchase, redeem or otherwise acquire any of its ownership interest except as
provided in the LLC Documents.

     SECTION 1.3. Capitalization. The entire authorized capital stock of WMI
consists of 100,000 shares, par value $0.01 per share, of common stock (the "WMI
Stock"), of which 1,695 shares of WMI Stock are issued and outstanding.

     SECTION 1.4. Authority Relative to this Agreement. WMI has all requisite
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a signatory, and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Ancillary
Agreements to which WMI is a signatory have been duly and validly authorized by
WMI's board of directors and stockholders, and no other corporate proceedings on
the part of WMI are necessary to authorize this Agreement or the Ancillary
Agreements to which WMI is a signatory or to consummate the transactions
contemplated herein and therein. This Agreement has been, and the Ancillary
Agreements to which they are signatories will be, duly and validly executed and
delivered by WMI and, assuming that this Agreement constitutes, and the
Ancillary Agreements to which they are

                                       4
<PAGE>

signatories will constitute when signed, the legal, valid and binding
obligations of the other parties hereto and thereto, each such agreement
constitutes or will constitute the legal, valid and binding obligation of WMI,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
(including court decisions) and doctrines affecting the rights of creditors
generally and general equitable principles.

     SECTION 1.5. No Conflicts.

     (a) Except as set forth in the WMI Disclosure Schedule, the execution,
delivery and performance of this Agreement and the Ancillary Agreements to which
WMI is a signatory by WMI and the consummation by WMI of the transactions
contemplated hereby and thereby do not and will not conflict with or constitute
a breach or violation of or default under, or trigger any payment or other
material obligations pursuant to, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of WMI or the LLC
pursuant to, any contract, indenture, mortgage, loan agreement, note, license,
franchise, permit, lease or other instrument to which WMI or the LLC is a party
or by which either of them is or may be bound or to which any of their
respective properties or assets is subject, nor will such action result in any
breach or violation of, or default under, the provisions of the Articles of
Incorporation or Bylaws of WMI or the LLC Documents or of any applicable law,
administrative regulation or administrative or court decree.

     (b) Except as set forth in the WMI Disclosure Schedule, the execution,
delivery and performance of this Agreement and the Ancillary Agreements to which
they are signatories by Woodward and Kifer and the consummation by Woodward and
Kifer of the transactions contemplated hereby and thereby do not and will not
conflict with or constitute a breach or violation of or a default under, any
contract, indenture, mortgage, loan agreement, note or other instrument to which
Woodward or Kifer is a party or by which either of them is or may be bound, nor
will such action result in any breach or violation of, or default under any
applicable law, administrative regulation or administrative or court decree.

     SECTION 1.6. Required Filings and Consents. No authorization, approval or
consent of, or registration or filing with, any Person is required for the
execution, delivery or performance by WMI, Woodward or Kifer of this Agreement
or the Ancillary Agreements to which they are signatories or the consummation by
WMI, Woodward or Kifer of the transactions contemplated herein and therein,
except (i) the applicable requirements of federal and state securities laws,
(ii) the filing requirements under the Hart-Scott-Rodino Act and (iii) the
consents of those Persons listed in Section 1.6 of the WMI Disclosure Schedule.

     SECTION 1.7. Compliance. Neither WMI nor the LLC is in breach, default or
violation of, and no event has occurred or is occurring that with notice or
lapse of time or both would become a breach, default or violation of (i) WMI's
Articles of Incorporation or Bylaws or the LLC Documents, (ii) any law, rule,
regulation, order, judgment or decree applicable to WMI or the LLC or by which
WMI or the LLC or any of their respective properties is bound or affected, or
(iii) any material contract, indenture, mortgage, loan agreement, note, license,
franchise, permit, lease or other instrument to which WMI or the LLC is a party
or by which either of them

                                       5
<PAGE>

is or may be bound or to which any of their respective property or assets is
subject, nor has WMI or the LLC received and not finally resolved any written
notice of a breach, default or violation of any of the foregoing nor, to the
best of WMI's Knowledge, are any threatened, except for any such breaches,
defaults or violations that would not reasonably be expected to have a Material
Adverse Effect on WMI or the LLC.

     SECTION 1.8. Contracts. The WMI Disclosure Schedule contains a list of all
material contracts, including without limitation, gas purchase agreements, gas
sales agreements, pipeline transportation agreements, loan agreements, natural
gas hedging, trading and gas commodity futures, options and swap agreements,
indentures, commitments, indemnities and other material agreements or
arrangements to which WMI or the LLC is a party or by which WMI or the LLC or
any of their respective properties is bound as of the date of this Agreement.
All such contracts and instruments have been duly and validly authorized,
executed and delivered by WMI or the LLC, are in full force and effect and
neither WMI nor the LLC are in breach or default of any obligation, agreement,
covenant or condition contained in any such contract or instrument, other than
breaches or defaults which, singly or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on WMI or the LLC; none of such
contracts or instruments has been assigned by WMI or the LLC and neither WMI nor
the LLC has received written notice of any present condition or fact which would
prevent compliance by WMI or the LLC with the terms of any such contract or
instrument in all material respects; and neither WMI nor the LLC has received
written notice that any other party to any such contract or instrument has any
intention not to render full performance in all material respects as
contemplated by the terms thereof.

     SECTION 1.9. Financial Statements.

     (a) WMI has heretofore delivered to Atmos and Energy the unaudited
financial statements of WMI and the audited financial statements of the LLC for
the fiscal years ended December 31, 1998 and 1999 and the unaudited financial
statements of WMI and the LLC for the four month period ended April 30, 2000
attached hereto as Schedule 1.9(a) (collectively, the "Financial Statements").
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby and fairly present in all material respects the
financial condition, results of operations and cash flows, as the case may be,
of WMI and the LLC as of and for the respective dates or periods indicated,
except in the case of interim statements, for the omission of note disclosure
and normal year end adjustments not expected to be material in amount.

     (b) Since December 31, 1999, and except as contemplated by this Agreement
or described in the WMI Disclosure Schedule, (i) WMI and the LLC have conducted
their business only in the ordinary course of business and have taken no action
of the type referred to in Section 4.1, (ii) to the Knowledge of WMI, there has
been no Material Adverse Effect on WMI or the LLC, whether or not arising in the
ordinary course of business, (iii) there have been no transactions, agreements
or arrangements entered into by WMI or the LLC, other than those in the ordinary
course of business, which are material with respect to WMI or the LLC and (iv)
there has been no dividend or distribution of any kind declared, paid or made by
WMI on its capital stock.

                                       6
<PAGE>

     (c) Neither WMI nor the LLC has any liabilities or obligations (whether
accrued, absolute, contingent, known or otherwise) that are material in amount,
whether individually or in the aggregate, except for liabilities and obligations
that (i) are accrued or reserved against in the balance sheets of WMI and the
LLC as of April 30, 2000 included in the Financial Statements, or disclosed in
the notes to the balance sheets of WMI and the LLC as of December 31, 1999
included in the Financial Statements, (ii) were incurred after April 30, 2000 in
the ordinary course of business consistent with past practice (none of which is
materially adverse), or (iii) arise under any contract, commitment or agreement
disclosed in the WMI Disclosure Schedule and, in the case of any liability
relating to any default, violation or performance at a loss thereunder that
could reasonably be expected to have a Material Adverse Effect on WMI or the
LLC, are disclosed in the WMI Disclosure Schedule.

     (d) WMI has no trading activity.

     SECTION 1.10. Books and Records. WMI has made available to Atmos and
Energy, and will continue to make available to Atmos and Energy, all of the
books, records and certificates of WMI and the LLC. The books and records of WMI
and the LLC fairly reflect in all material respects the transactions to which
WMI or the LLC is or was a party or by which any of their respective properties
are or were bound, and such books and records are and have been properly kept
and maintained in all material respects, with the revenues, expenses, assets and
liabilities of WMI and the LLC accurately recorded therein in all material
respects.

     SECTION 1.11. Litigation. The WMI Disclosure Schedule contains a list of
all material claims, actions, suits, investigations or proceedings pending or,
to WMI's Knowledge, threatened against or affecting WMI or the LLC or any of
their respective properties or rights at law or in equity before or by any
court, arbitrator or administrative, governmental or regulatory authority or
body. None of such claims, actions, suits, investigations or proceedings is
reasonably expected to have a Material Adverse Effect on WMI or the LLC or to
hinder in any material respect or prevent the consummation by WMI of the
transactions contemplated by this Agreement and the Ancillary Agreements.
Neither WMI, the LLC nor any of their respective properties is subject to any
order, writ, judgment, injunction, decree, determination or award reasonably
expected to have a Material Adverse Effect on WMI or the LLC.

     SECTION 1.12. Title to, and Condition of, Assets. WMI and the LLC each have
good and indefeasible title to, or a valid leasehold interest in, all of its
assets and properties, real and personal, including the properties, assets and
leasehold interests reflected in the Financial Statements (except for any
properties or assets disposed of in the ordinary course of business), necessary
or appropriate for the operation of its business, free and clear of all liens,
mortgages, pledges, security interests or other encumbrances, except for such
liens, mortgages, pledges, security interests or other encumbrances that, if
present, would not reasonably be expected to have a Material Adverse Effect on
WMI or the LLC (collectively, the "Permitted Encumbrances"). All of the personal
property and assets of WMI and the LLC are, in all material respects, in good
condition and repair, taken as a whole, ordinary wear and tear excepted, and are
adequate and sufficient for the conduct of the business of WMI and the LLC as
conducted as of the date hereof.

                                       7
<PAGE>

     SECTION 1.13. Real Property Interests. Neither WMI nor the LLC has ever
owned any real property or, except for leases of office facilities, had any
interest in real property. All real property now or heretofore leased by WMI or
the LLC was and has been used in compliance, in all material respects, with all
Environmental Requirements. No Hazardous Materials were or have been generated,
stored, transported, disposed of on site or sent off-site by WMI or the LLC
from, in, on, at or upon the premises so leased except materials of a type and
used and stored in quantities normally used or stored in connection with the
operation of office facilities. Neither WMI nor the LLC has received any written
notice asserting any violation of Environmental Requirements or any obligation
or liability of WMI or LLC to remediate any condition or pay any costs in
respect of remediation or other environmental response.

     SECTION 1.14. Taxes.

     (a) Tax Returns Filed and Taxes Paid. All Tax Returns required to be filed
by or on behalf of WMI and the LLC have been duly filed (or extensions obtained,
as disclosed in the WMI Disclosure Schedule), and such Tax Returns are true,
complete and correct in all material respects. All Taxes reflected on such Tax
Returns or any subsequent assessments with respect thereto have been paid in
full on a timely basis, and no other Taxes that are material in amount, whether
individually or in the aggregate, are payable by WMI or the LLC with respect to
items or periods covered by such Tax Returns (whether or not shown on or
reportable on such Tax Returns) or with respect to any period prior to the date
of this Agreement. WMI and the LLC have withheld and paid over all Taxes that
are material in amount, whether individually or in the aggregate, required to
have been withheld and paid over, and complied with all information reporting
and backup withholding requirements, including maintenance of required records
with respect thereto, in connection with amounts paid to any employee, creditor,
independent contractor, or other third party. There are no liens on any of the
assets of WMI or the LLC with respect to Taxes, other than liens for Taxes not
yet due and payable. Neither WMI nor the LLC does any material business in or
derives any material income from any state, local, territorial or foreign taxing
jurisdiction other than those for which all Tax Returns required to be filed by
WMI or the LLC have been furnished to Atmos and Energy.

     (b) Tax Returns Furnished. WMI has furnished to Atmos and Energy true,
correct and complete copies of (i) income tax audit reports, statements of
deficiencies, closing or other material agreements received by the LLC relating
to Taxes, and (ii) all federal and state income or franchise Tax Returns for the
LLC for all periods ending on and after 1995.

     (c) Tax Deficiencies. To the Knowledge of WMI, no deficiency for any Taxes
that are material in amount, whether individually or in the aggregate, has been
proposed, asserted, assessed or threatened against WMI or the LLC that has not
been resolved and paid in full. WMI and the LLC are neither a party to any
action or proceeding for assessment or collection of Taxes, nor has WMI received
written notice that such an event has been asserted or threatened against WMI,
the LLC or any of their assets. No waiver or extension of any statute of
limitations is in effect with respect to Taxes or Tax Returns of WMI or the LLC.

     (d) Tax Sharing Agreements. Neither WMI nor the LLC is (nor has either of
them ever been) a party to any Tax sharing agreement and have not assumed the
Tax liability of any other person under contract.

                                       8
<PAGE>

     (e) Tax Elections and Special Tax Status. The LLC is not a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. From the formation of WMI, all stockholders of WMI have been individuals,
and no stockholder of WMI has ever been a person other than a United States
person within the meaning of Code Section 7701(a)(30). WMI is not a "foreign
person" (as that term is defined in Sections 1445 and 6038A(c)(3) of the Code).
The LLC has not entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a nondeductible
expense to the LLC pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code. The LLC has not
agreed, nor is it required to make, any adjustment under Code Section 481(a) by
reason of a change in accounting method or otherwise.

     (f) Tax Status. From its formation, the LLC has been treated as a
partnership for federal tax purposes pursuant to Treasury Regulation Section
301.7701-3. For each taxable year of WMI since its formation, WMI (i) has had a
validly existing S corporation election in effect for federal income tax
purposes, (ii) has filed all federal Tax Returns as an S corporation, and (iii)
has taken no action, and its stockholders have taken no action, that would
terminate the S corporation election.

     SECTION 1.15. Employee Benefit Plans. Except as otherwise set forth in the
WMI Disclosure Schedule or as not reasonably expected to have a Material Adverse
Effect on WMI or the LLC:

     (a) The WMI Disclosure Schedule sets forth (i) the name of each Plan and
indicates any Plan that is a "multiemployer plan," as defined in ERISA Section
4001, (ii) the name of any other employee benefit plan as defined in Section
3(3) of ERISA with respect to which WMI, the LLC or any Group Member is a "Party
in Interest," as defined in Section 3(14) of ERISA and (iii) the name of any
other Employee Benefit Arrangement.

     (b) Each Plan is now, and has been from its inception, administered in
accordance with its terms and in compliance in all material respects with the
provisions of applicable law, including without limitation ERISA and the Code.
Each Plan intended to be qualified under Section 401(a) of the Code is so
qualified and has been determined to be so qualified by the IRS, and nothing has
occurred since the date of the last such determination which resulted or is
likely to result in the loss of such qualification. All required reports and
descriptions of each Plan have been timely filed and distributed as required by
ERISA.

     (c) There has not occurred with respect to any Plan any "Prohibited
Transaction," as defined in either Section 406 of ERISA or Section 4975 of the
Code. With respect to each Plan and Employee Benefit Arrangement and any other
similar plan or arrangement either currently or previously terminated,
maintained, or contributed to by any current or former Group Member, no event
has occurred and no condition exists that after the Closing Date could subject
Atmos, WMI or the LLC, directly or indirectly, to any material liability
(including liability under any indemnification agreement) under Section 412,
413, 4971, 4975, or 4980B of the Code or Section 302, 502, 515,601, 606, or
Title IV of ERISA.

                                       9
<PAGE>

     (d) There has not occurred with respect to any Plan any "Reportable Event,"
as defined in Section 4043 of ERISA, for which the thirty-day notice requirement
has not been waived under applicable PBGC requirements. No Plan has applied for
or obtained a waiver from the IRS of any minimum funding requirement under
Section 412 of the Code. The funding method used in connection with each ERISA
Pension Plan meets the requirements of ERISA and the Code and the actuarial
assumptions used in connection with each such plan are reasonable, given the
experience of such ERISA Pension Plan and reasonable expectations. The fair
market value of the plan assets of each Plan are at least equal to (i) the
present value of its benefit liabilities (as defined in ERISA Section
4001(a)(16), including any unpredictable contingent event benefits within the
meaning of Code Section 412(l)(7), and determined on the basis of assumptions
prescribed by the PBGC for purposes of ERISA Section 4044), and (ii) the
Projected Benefit Obligations thereunder, as defined in Statement of Financial
Accounting Standards No. 87, including any allowance for indexation and ad hoc
increases.

     (e) (i) No Plan has been terminated, and no complete or partial withdrawal
from or insolvency or reorganization with respect to any "multiemployer plan,"
as defined in Section 4001 of ERISA, has occurred since the inception of any
Plan under circumstances that have given rise to, or would give rise to, any
actual or potential liability to the PBGC, or any multiemployer plan, or any
other person (excluding liabilities to participants for benefits payable in the
normal course of events pursuant to any such termination); (ii) no event or
condition exists which presents a risk of termination of any Plan by the PBGC;
and (iii) there is no actual or potential liability to the PBGC or any other
person (other than any liability for Plan benefits) expected by WMI, the LLC, or
any Group Member to be incurred with respect to any Plan, including, but not
limited to, any liability for premium payments, for any liability for
accumulated funding deficiency as defined in Section 302 of ERISA, or for any
minimum funding contribution under Section 302 of ERISA.

     (f) No lien imposed under Section 412(n) of the Code exists in favor of any
Plan upon any property belonging to a Group Member.

     (g) WMI has previously delivered or made available to Atmos and Energy true
and correct copies of each Plan and each Employee Benefit Arrangement, together
with, if applicable, true and correct copies of the annual reports and actuarial
reports filed with respect to each such Plan and Employee Benefit Arrangement
for the preceding two plan years, summary plan descriptions and any other
communications to employees relating to each such Plan and Employee Benefit
Arrangement, documents (including financial statements) relating to any trust or
third-party funding vehicle, and all letters and other correspondence to and
from the IRS, if any, including but not limited to written confirmation of the
tax-exempt status or qualification of any Plan under Section 401(a) of the Code.

     (h) Neither (i) WMI, the LLC or any Group Member, or any director, officer,
employee or agent of WMI, the LLC or any Group Member has, with respect to any
Plan, nor (ii) any Plan or trust created thereunder or trustee or administrator
thereof has, engaged in any conduct that would result in any penalties under
Section 502 of ERISA or any liability under Section 409 of ERISA. All benefits
due under each Plan and Employee Benefit Arrangement have been timely paid, and
no civil or criminal action or claim (other than uncontested claims for
benefits) is pending or, to the best of WMI's Knowledge, threatened with respect
to any Plan.

                                       10
<PAGE>

All contributions and payments to or with respect to each Employee Benefit
Arrangement or Plan have been timely made.

     (i) Each Plan or Employee Benefit Arrangement maintained by WMI, the LLC or
any Group Member specifically provides that it may be terminated at any time by
its sponsoring employer (subject, in the case of any Plan which is subject to
Title IV of ERISA, to the provisions of Section 4041 of ERISA), and there are no
circumstances or conditions that exist prior to Closing that would prevent the
applicability of those provisions. Each Plan or Employee Benefit Arrangement can
be terminated or amended unilaterally by WMI or the LLC on not more than 90 days
notice, and none of WMI, the LLC, or any Group Member or any director, officer
or employee of any of the foregoing have taken any action that would commit WMI,
the LLC or any Group Member to continue any Plan or Employee Benefit Arrangement
or any benefit thereunder for any present or former employee of WMI, the LLC or
any Group Member or that would prevent WMI, the LLC or any Group Member from
changing or terminating any such benefit or plan.

     (j) Neither WMI nor the LLC now have in effect, and neither WMI nor the LLC
have previously had in effect, any welfare benefit plan, commitment or
arrangement providing for medical or death benefits (whether insured or
uninsured) with respect to current or former employees beyond their date of
retirement or other termination of service (other than coverage mandated by
Section 4980B of the Code and Section 601 of ERISA, the cost of which is fully
paid by the former employee or his or her dependents). Except as disclosed in
the WMI Disclosure Schedule, no Employee Benefit Arrangement or Plan provides
for any severance pay, accelerated payments, deemed satisfaction of goals or
conditions, new or increased benefits, forgiveness or modification of loans, or
vesting conditioned in whole or in part upon a change in control of any Group
Member or any plant closing.

     (k) Neither WMI, the LLC nor any Group Member maintains, participates in,
contributes to, or has any obligation to contribute to any liability with
respect to any multiple employer plan, or has had any obligation with respect to
such a plan during the six years immediately preceding the date of this
Agreement.

     SECTION 1.16. Labor Matters. None of WMI's or the LLC's employees is
covered by any collective bargaining agreement, and there are no employee
activities or controversies (including, but not limited to, any labor organizing
activities, election petitions or proceedings or proceedings preparatory
thereto, unfair labor practice complaints, labor strikes, employment
discrimination claims, disputes, slowdowns or work stoppages) pending or, to
WMI's Knowledge, threatened, between WMI or the LLC and any of their respective
employees.

     SECTION 1.17. Transactions with Affiliates, Directors, Officers and
Employees. The WMI Disclosure Schedule contains a list and description of all
agreements, arrangements, commitments or other transactions between WMI or the
LLC and any controlling Affiliates of WMI currently in effect or entered into at
any time within the three years prior to the date of this Agreement. The WMI
Disclosure Schedule contains a list and description of all agreements,
arrangements, commitments or other transactions between WMI or the LLC and any
of their respective directors, officers, managers or employees (other than
managers appointed by Energy)

                                       11
<PAGE>

currently in effect or entered into at any time within the three years prior to
the date of this Agreement, the terms of which are not generally available or
applicable to employees as a group.

     SECTION 1.18. Insurance. WMI has listed in the WMI Disclosure Schedule all
insurance policies or binders maintained by the LLC with respect to its
properties and business, and the LLC is not in default with respect to any
provision contained in any such policy or binder or has not failed to give any
material notice or present any material claim under any such policy or binder in
due and timely fashion. There are no outstanding unpaid claims under any such
policy or binder, and the LLC has not received any written notice of any
material claim against the LLC that is not fully covered by the listed insurance
policies (subject to the deductibles and other terms and provisions thereof).
The LLC has not received written notice of cancellation or nonrenewal of any
such policy or binder, and the consummation of the Merger will not result in the
automatic termination of any of such policies or binders or give the insurance
carrier any right to terminate any such policy or binder. WMI does not maintain
any insurance policies, nor is it covered by any insurance policies or binders
of the LLC.

     SECTION 1.19. Absence of Unethical Business Practices. Neither WMI, the LLC
nor, to the best of WMI's Knowledge, any manager of the LLC designated by WMI,
or any director, officer, employee or Affiliate of WMI or the LLC (excluding
Atmos, Energy or any manager designated by Energy), has directly or indirectly
given or agreed to give any gift or similar benefit to any customer,
subcontractor, supplier, government employee, or other person who was or is in a
possible position to help or hinder WMI or the LLC, which gift or benefit (a)
would reasonably be expected to subject WMI or the LLC to any damages or
penalties in any civil or criminal proceeding, or (b) would reasonably be
expected to have had, singly or in the aggregate, a Material Adverse Effect on
WMI or the LLC if not given or continued.

     SECTION 1.20. Brokers and Finders. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of WMI, the LLC, Woodward or Kifer.

     SECTION 1.21. Limitation on Trading Position. The Net Position of WMI and
the LLC does not exceed 2,500,000 MMBTUs. The WMI Disclosure Schedule contains a
complete list of all open New York Mercantile Exchange commodity future, option
or swap contracts or other gas purchase or gas sales contracts to which WMI or
the LLC is a party as of the date hereof, the quantity of natural gas (in
MMBTUs) which each contract represents, the current value, in dollars, of each
contract, the exercise or strike date of each such contract and the approximate
current value (positive or negative) of each contract. On the Closing Date, WMI
shall provide Atmos with a revised WMI Disclosure Schedule that will indicate
the then current information with respect to such contracts. All such contracts
have been incurred in the normal course of business consistent with the amended
risk policy of the LLC, copies of which have been distributed to the board of
managers of the LLC.

                                       12
<PAGE>

                                  ARTICLE II.
                          CERTAIN REPRESENTATIONS AND
                     WARRANTIES OF WMI, WOODWARD AND KIFER

     WMI and each of Woodward and Kifer, severally (and not jointly), hereby
represent and warrant to Atmos and Energy (as to itself or himself, and not the
others) that the statements set forth in this Article II are true, correct and
complete, except as set forth in the WMI Disclosure Schedule.

     SECTION 2.1.  Understanding that Shares will Be Issued without
Registration.  WMI, Woodward and Kifer understand that the shares of Common
Stock to be issued pursuant to this Agreement (the "Shares") will be issued
without registration under the Securities Act, in reliance upon exemptions from
registration under the Securities Act including the safe harbor provided by
Regulation D promulgated under Section 4(2) of the Securities Act.  WMI,
Woodward and Kifer further understand that such exemptions depend in part upon,
and such shares will be issued in reliance on, the representations and
warranties made by WMI, Woodward and Kifer in this Article II.

     (a) Investment Intent.  WMI, Woodward and Kifer will acquire the Shares for
their own respective accounts for investment purposes only and not with a view
to resale or other distribution thereof, in whole or in part; provided, however,
that, subject to the terms hereof, the disposition of WMIs, Woodward's and
Kifer's property shall at all times be within their control; and WMI, Woodward
and Kifer will not assign, sell, hypothecate or otherwise transfer the Shares
unless (i)(a) a registration statement is in effect under the Securities Act
with respect to such Shares or (b) a written opinion of counsel acceptable to
Atmos is obtained to the effect that no such registration is required (except
for the transfers from WMI to  Woodward and Kifer in the liquidation of WMI),
and (ii) they have complied with all applicable holding periods imposed by the
Securities Act (and the regulations thereunder) and this Agreement.  Woodward
and Kifer have no reason to anticipate any change in their personal
circumstances, financial or otherwise, that would cause or require any sale or
distribution of the Shares in violation of this Section 2.1(a).

     (b) Investor Awareness.  WMI, Woodward and Kifer acknowledge, agree and are
aware that:  (i) no United States federal or state or any foreign agency has
passed upon the accuracy, validity or completeness of this Agreement or made any
finding or determination as to the fairness of an investment in the Shares; (ii)
pursuant to the terms of this Agreement, there are substantial restrictions on
the transferability of the Shares; (iii) the Shares have not been registered
under the Securities Act or under the securities laws of any other jurisdiction;
(iv) an offer or sale of any of the Shares by WMI, Woodward or Kifer in the
absence of registration under the Securities Act will require the availability
of an exemption thereunder; and (v) a restrictive legend is or shall be placed
on the certificates representing the Shares and a notation shall be made in the
appropriate records of Atmos indicating that the Shares are subject to
restrictions on transfer.

     SECTION 2.2.  Accredited Investor.  WMI qualifies as an "accredited
investor" within the meaning of Rule 501 under the Securities Act, because it
has total assets exceeding $5,000,000.  J.D. Woodward, III, and James Kifer each
qualify as an "accredited investor" within

                                       13
<PAGE>

the meaning of Rule 501 under the Securities Act, because either (i) each has an
individual net worth, or a joint net worth with their respective spouses,
exceeding $1,000,000; or (ii) each had an individual income in excess of
$200,000 in each of the two years immediately preceding the date hereof, or each
had joint income with their respective spouses in excess of $300,000 in each of
those years, and each of J.D. Woodward and James Kifer has a reasonable
expectation of reaching the same income level in the current year.

     SECTION 2.3.  Receipt of Information; Access to Information.  WMI, Woodward
and Kifer each acknowledge that they:

     (a) have been furnished with the Articles of Incorporation and Bylaws of
Atmos, the Atmos SEC Reports and any documents that may have been made available
upon its or his request (collectively, the "Other Documents"), and are capable
of understanding and evaluating the risks of acquiring the Shares;

     (b) have been given the opportunity to ask questions of, and receive
answers from, Atmos and its officers and employees concerning the terms and
conditions of the acquisition of the Shares and other matters pertaining to an
investment in the Shares, have been given the opportunity to obtain such
additional information necessary to evaluate the merits and risks of acquiring
the Shares to the extent Atmos possesses such information, and have received all
documents and information that each of them has requested relating to an
investment in the Shares;

     (c) have not relied upon any representations or other information (whether
oral or written) from Atmos or its directors, officers or affiliates, or from
any other persons, other than the representations of Atmos made in this
Agreement and the Other Documents;

     (d) are familiar with the nature of and risks attendant to investments in
the business of Atmos and securities in general and have carefully considered
and have, to the extent each of them believes such discussion necessary,
discussed with their respective professional legal, financial and tax advisers
the suitability of an investment in the Shares for their respective financial
and tax situations and have determined that the Shares are a suitable investment
for each of them; and

     (e) have made, and are solely responsible for making, their respective own
independent evaluations of the economic and other risks involved in their
respective investments in the Shares and their own respective independent
decisions to make such investments.

     SECTION 2.4.  WMI Stockholders.  Woodward and Kifer are the only beneficial
and record stockholders of WMI, and no other Person owns or has the right to
acquire any shares of capital stock of WMI.

     SECTION 2.5.  Authority Relative to this Agreement.  Woodward and Kifer
have all requisite legal right, power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which they are signatories and to
perform their respective obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby.  This Agreement has been, and
the Ancillary Agreements to which they are signatories will be, duly and validly
executed and delivered by Woodward and Kifer and, assuming that this Agreement

                                       14
<PAGE>

constitutes, and the Ancillary Agreements to which they are signatories will
constitute when signed, the legal, valid and binding obligations of the other
parties hereto and thereto, each such agreement constitutes or will constitute
the legal, valid and binding obligation of Woodward and Kifer, as the case may
be, enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
(including court decisions) and doctrines affecting the rights of creditors
generally and general equitable principles.

     SECTION 2.6.  No Conflicts.  Except as set forth in the WMI Disclosure
Schedule, the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which they are signatories by Woodward and Kifer and the
consummation by Woodward and Kifer of the transactions contemplated hereby and
thereby do not and will not conflict with or constitute a breach or violation of
or a default under, any contract, indenture, mortgage, loan agreement, note or
other instrument to which Woodward or Kifer is a party or by which either of
them is or may be bound or to which any shares of WMI Stock held by either of
them are subject, nor will such action result in any breach or violation of, or
default under, any applicable law, administrative regulation or administrative
or court decree.

                                 ARTICLE III.
                        REPRESENTATIONS AND WARRANTIES
                             OF THE ATMOS ENTITIES

     The Atmos Entities, jointly and severally, hereby represent and warrant to
WMI, Woodward and Kifer that the statements set forth in this Article III are
true, correct and complete, except as set forth in the Atmos Disclosure Schedule
attached hereto as Exhibit B.
                   ---------

     SECTION 3.1.  Organization and Qualification.  Atmos is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and the Commonwealth of Virginia.  Energy is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware.  Each of the Atmos Entities has all requisite corporate or
limited liability company power and authority and possesses all Governmental
Authorizations necessary to own, lease and operate its properties and assets and
to carry on its business as it is presently conducted, except where the failure
to have any of such Governmental Authorizations would not have a Material
Adverse Effect on Atmos and its Subsidiaries taken as a whole.  Each of the
Atmos Entities is duly qualified as a foreign corporation or foreign limited
liability company, respectively, to do business and is in good standing in each
jurisdiction in which the character of the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect on Atmos and its Subsidiaries taken as a whole.  Atmos has
heretofore delivered or made available to WMI true and complete copies of the
Articles of Incorporation and Bylaws of Atmos and the organizational documents
of Energy, including all amendments thereto.

     SECTION 3.2.  Capitalization.

     (a) The entire authorized capital stock of Atmos consists of 100,000,000
shares of Common Stock.  As of August 4, 2000, (i) 31,794,899 shares of Common
Stock were issued and

                                       15
<PAGE>

outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable and free of statutory preemptive rights, and (ii) no shares of
Common Stock are held in the treasury of Atmos. No such shares were issued in
violation of any contractual or statutory preemptive rights. As of the date
hereof, other than options granted by Atmos under its 1998 Long-Term Incentive
Plan and the Long-Term Stock Plan for the United Cities Gas Company Division and
stock units under its Equity Incentive and Deferred Compensation Plan for Non-
Employee Directors or as described in the Atmos SEC Reports, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the capital stock of Atmos or obligating Atmos to
issue or sell any shares of capital stock of, or any securities convertible into
or evidencing the right to purchase any shares of capital stock of or other
equity interests in, Atmos. There are no obligations, contingent or otherwise,
of Atmos to repurchase, redeem or otherwise acquire any shares of Common Stock.

     (b) All of the issued and outstanding member interests of Energy are duly
authorized, validly issued, fully paid and nonassessable and owned by Atmos.

     (c) When issued, the Shares will be duly authorized, validly issued, fully
paid, nonassessable and free of any preemptive rights.

     SECTION 3.3.  Authority Relative to This Agreement.  Each of the Atmos
Entities has all requisite corporate or limited liability company power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which they are signatories and to perform their respective obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.  The execution and delivery of this Agreement and the Ancillary
Agreements to which they are signatories have been duly and validly authorized
by the board of directors of Atmos and by the managers of Energy, and no other
proceedings on the part of the Atmos Entities are necessary to authorize this
Agreement or the Ancillary Agreements to which they are signatories or to
consummate the transactions contemplated herein and therein.  This Agreement has
been, and the Ancillary Agreements to which they are signatories will be, duly
and validly executed and delivered by the Atmos Entities and, assuming that this
Agreement constitutes, and the Ancillary Agreements will constitute when signed,
the legal, valid and binding obligations of the other parties hereto and
thereto, each such agreement constitutes or will constitute the legal, valid and
binding obligation of the Atmos Entities, as the case may be, enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws (including
court decisions) and doctrines affecting the rights of creditors generally and
general equitable principles.

     SECTION 3.4.  No Conflict.  The issuance by Atmos of the Shares, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements to which they are signatories by the Atmos Entities, and the
consummation by the Atmos Entities of the transactions contemplated hereby and
thereby do not and will not conflict with or constitute a breach or violation
of, or a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Atmos Entities pursuant
to, any contract, indenture, mortgage, loan agreement, note, license, franchise,
permit, lease or other instrument to which the Atmos Entities is a party or by
which it is or may be bound or to which any of its property or assets is
subject, nor will such action result in any breach or violation of, or

                                       16
<PAGE>

default under, the provisions of the Articles of Incorporation or Bylaws of
Atmos or the organizational documents of Energy or of any applicable law,
administrative regulation or administrative or court decree.

     SECTION 3.5.  Required Filings and Consents.  No authorization, approval or
consent of, or registration or filing with, any Person is required for the
issuance of the Shares by Atmos, the execution, delivery or performance by the
Atmos Entities of this Agreement or the Ancillary Agreements to which the Atmos
Entities are signatories or the consummation by the Atmos Entities of the
transactions contemplated herein and therein, except (i) the applicable
requirements of federal and state securities laws, (ii) the filing requirements
under the Hart-Scott-Rodino Act, and (iii) the approvals of the Colorado Public
Utilities Commission, Georgia Public Service Commission, Kentucky Public Service
Commission, Illinois Corporation Commission, Tennessee Regulatory Authority, and
the Virginia Corporation Commission.

     SECTION 3.6.  SEC Filings; Financial Statements, Absence of Undisclosed
Liabilities.

     (a) Atmos has filed all forms, reports and documents required to be filed
with the SEC since September 30, 1998, and has heretofore delivered or made
available to WMI, Woodward and Kifer, in the form filed with the SEC, (i) its
Annual Reports on Form 10-K for the fiscal years ended September 30, 1998 and
1999, (ii) its Quarterly Reports on Form 10-Q for the periods ended December 31,
1999 and March 31, 2000, and (iii) all proxy statements relating to Atmos'
meetings of shareholders (whether annual or special) held since September 30,
1999, (iv) all Forms 8-K filed by Atmos with the SEC since September 30, 1999,
(v)all other reports or registration statements filed by Atmos with the SEC
since September 30, 1999, and (vi) all amendments and supplements to all such
reports and registration statements filed by Atmos with the SEC since September
30, 1999 (collectively, the "Atmos SEC Reports").  The Atmos SEC Reports were
prepared in substantial compliance, in all material respects, with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

     (b) Atmos has heretofore delivered or made available to WMI, Woodward and
Kifer, its audited consolidated financial statements of Atmos and its
subsidiaries (together with the notes thereto) for its fiscal years ended
September 30, 1998 and 1999 and its unaudited consolidated financial statements
for the period ended March 31, 2000.  All such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby (subject, in the case
of any such financial statements that are unaudited, to year-end adjustments in
such amount and of such type as are or will be consistent with adjustments made
in prior fiscal years).  Such financial statements (together with the notes
thereto) fairly, in all material respects, present the financial condition and
results of operations and cash flows of Atmos and its Subsidiaries on a
consolidated basis at the dates and for the periods set forth therein.

     (c) Since September 30, 1999, there has been no Material Adverse Effect on
Atmos or its subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business.

                                       17
<PAGE>

     (d) Neither Atmos nor its Subsidiaries have any material liabilities
(whether accrued, absolute or contingent) whether individually or in the
aggregate, except for liabilities that (i) are accrued or reserved against in
the consolidated balance sheet of Atmos and its Subsidiaries, as at September
30, 1999 or reflected in the notes thereto, or are not required by generally
accepted accounting principles to be so accrued, reserved or reflected, (ii)
were incurred after the date of such balance sheet, (iii)were disclosed in the
Atmos SEC Reports.

     SECTION 3.7.  Brokers and Finders.  No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Atmos Entities.

     SECTION 3.8.  Litigation.  Except as described in the Atmos SEC Reports,
there are no claims, actions, suits, investigations or proceedings pending or,
to Atmos' Knowledge, threatened against Atmos or any of its Subsidiaries or any
of their respective properties or rights at law or in equity before or by any
court, arbitrator or administrative, governmental or regulatory authority or
body that are reasonably expected to have a Material Adverse Effect on Atmos and
its Subsidiaries, taken as a whole, or to hinder in any material respect or
prevent the consummation by the Atmos Entities of the transactions contemplated
by this Agreement and the Ancillary Agreements.

                                  ARTICLE IV.
              AGREEMENTS AND COVENANTS REGARDING WMI AND THE LLC

     SECTION 4.1.  Conduct of Business by WMI Pending the Closing.  Except for
the distributions to Woodward and Kifer of certain assets other than the LLC
Membership Interests and shares of Common Stock as disclosed in the WMI
Disclosure Schedule and contemplated by Section 7.2, between the date of this
Agreement and the Closing Date, unless Atmos and Energy shall otherwise agree in
writing, WMI shall, and shall cause the LLC to, conduct its business only in the
ordinary course and in a manner consistent with past practice; and WMI shall
maintain the corporate existence of WMI and the limited liability company
existence of the LLC, preserve intact the business and organization of WMI and
the LLC, keep available the services of its present officers, employees and
consultants, and preserve the relationships and goodwill of WMI and the LLC with
its customers, suppliers and other persons with which WMI or the LLC has
significant business relations.  By way of amplification, but not limitation,
except for the distributions to Woodward and Kifer of all its assets other than
the LLC Membership Interests and 345,500 shares of Common Stock and
distributions contemplated by Section 7.2, WMI shall not, and shall cause the
LLC not to, between the date of this Agreement and the Closing Date, directly or
indirectly, do any of the following without the prior written consent of Atmos
and Energy or, in the case of the LLC, the approval of a Super-Majority in
Interest (as defined in the LLC Agreements) (as to which approval neither Atmos
nor Energy shall have any obligation):

     (a) amend or otherwise change its Articles of Incorporation or Bylaws or
LLC Documents;

     (b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of (i)any shares of capital stock of
any class, or any options,

                                       18
<PAGE>

warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock of, or any other equity interest in, WMI (except in
accordance with the WMI Shareholders' Agreement) or the LLC or (ii) any assets
of WMI or the LLC (except for sales of assets in the ordinary course of business
and in a manner consistent with past practice);

     (c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock or other equity interest;

     (d) distribute, pay out or set aside any of its cash or assets;

     (e) reclassify, combine, split, subdivide, redeem, purchase or otherwise
acquire or offer to acquire, directly or indirectly, any of its capital stock or
other equity interests;

     (f) acquire (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or acquire any shares of WMI Stock or other equity interests except pursuant to
the WMI Shareholders' Agreement;

     (g) incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or advances,
except, in the case of the LLC, in the ordinary course of business consistent
with past practice or the Bank of America Facility;

     (h) enter into or amend any contract, agreement, commitment or arrangement
other than in the ordinary course of business consistent with past practice;

     (i) authorize any capital expenditures that are in excess of $150,000 in
the aggregate during a calendar year, plus up to $450,000 for compressors and
related equipment;

     (j) increase the compensation payable or to become payable to its managers,
directors, officers or employees, except for increases in salary or wages of
non-officer employees in accordance with past practices, or grant any severance
or termination pay or stock options to, or enter into any employment or
severance agreement with any manager, director, officer or other employee, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former managers, directors, officers or employees, except as required
by contract disclosed in the WMI Disclosure Schedule or by law, and except for
the termination of consulting and other agreements with former directors of WMI;

     (k) make any loan or advance (except for normal business expense advances)
to any of its managers, directors, officers, employees or stockholders, or to
any other person or entity or cancel without payment in full any note, loan or
other obligation receivable from any manager, director, officer, employee or
stockholder or any member of their families or from any corporation or other
entity in which any manager, director, officer, employee or stockholder or any
member of their families has any direct or indirect interest known to Woodward
or Kifer;

     (l) take any action other than in the ordinary course of business and in a
manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with

                                       19
<PAGE>

respect to accounting policies or procedures and the filing of Tax Returns
(including procedures with respect to the payment of accounts payable and
collection of accounts receivable);

     (m) make any tax election or settle or compromise any material federal,
state, local or foreign income tax liability or settle, waive or compromise any
other material claim, including litigation;

     (n) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or asserted contingent or otherwise),
other than as may be paid, discharged or satisfied in the ordinary course of
business and consistent with past practice;

     (o) take any action or omit to take any necessary action, which action or
omission results in any breach of or constitutes a default (or an event that
with notice or lapse of time or both would become a default) under any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which it is a party or by which
it or its properties is bound or affected and is reasonably expected to have a
Material Adverse Effect on WMI or the LLC; or

     (p) permit the Net Position of WMI and the LLC to exceed 2,500,000 MMBTUs
of natural gas.

     SECTION 4.2.  No Solicitation of Transactions.  WMI will not, and will not
authorize or permit the LLC or any manager, director, officer, employee or agent
of WMI or the LLC to:

     (a) solicit, initiate or encourage the submission of proposals or offers
from any person or entity (other than Atmos, Energy or an Affiliate of Atmos)
relating to,

     (b) participate (except with Atmos) in any negotiations regarding, or
furnish to any person any information with respect to WMI or the LLC for the
purposes of, or

     (c) cooperate with, assist or participate in, facilitate or encourage
(except, in each case, with Atmos) any effort or attempt by any person to seek
or effect,

any merger or other business combination involving WMI or the LLC or the
purchase of all or a substantial portion of WMI's or the LLC's assets or any
equity interest in WMI or the LLC.  WMI and Atmos will each promptly notify the
other if any such proposal or offer, or any inquiry by, or contact with any
person with respect thereto, is made.

     SECTION 4.3.  Access to Information; Confidentiality.  (a)  From the date
hereof to the Closing Date, WMI will, and will direct the LLC and the managers
of the LLC designated by WMI, directors, officers, employees and agents of WMI
and the LLC to, permit and afford Atmos, Energy and their respective
representatives full and complete access at all reasonable times and with
reasonable prior notice to the employees, offices, properties, books and records
of WMI and the LLC, including the work papers of its certified public
accountants and Tax Returns of WMI, for a due diligence review and will furnish
Atmos and Energy with all Tax Returns, financial, operating and other data and
information of WMI or the LLC as Atmos or Energy, through its officers,
managers, employees or representatives, may reasonably request.  In addition,
WMI will permit Atmos and Energy to perform other inspections and tests
(including

                                       20
<PAGE>

leak surveys) of WMI's and the LLC's physical properties as Atmos or Energy may,
in its sole discretion and at its sole expense, elect to perform. Further, WMI
understands and agrees that Atmos, Energy or their respective employees, agents
and representatives may find it appropriate to contact Governmental Bodies in
connection with their analyses of certain environmental information concerning
WMI or the LLC, and WMI hereby consents to such contact.

     (b) WMI, Woodward and Kifer acknowledge that they may receive or have
received from Atmos and Energy information and data regarding Atmos and Energy
that is non-public and proprietary in nature.  WMI, Woodward and Kifer shall
hold in confidence all such information and data and shall ensure that its
directors, officers, employees and agents do not disclose such information and
data to others without the prior written consent of Atmos or Energy, as the case
may be.  In the event that this Agreement is terminated, upon receipt of a
written request, WMI, Woodward and Kifer will return to Atmos and Energy all
such documents and other material (and all copies thereof) obtained from Atmos
and Energy, respectively, in connection with the transactions contemplated
hereby and will destroy all such documents and other material prepared by WMI,
Woodward or Kifer or their agents, representatives or advisors that reflect non-
public information received by WMI, Woodward or Kifer in connection with the
transactions contemplated hereby.

     SECTION 4.4.  Insurance.  Through the Closing Date, WMI shall cause the LLC
to maintain in full force and effect all of its policies of insurance that were
in effect on the date hereof or insurance comparable to the coverage afforded by
such policies.

     SECTION 4.5.  Preparation of Tax Returns and Payment of Taxes.  (a)  WMI
shall prepare and timely file at its expense, and cause the LLC to prepare and
timely file at the LLC's expense, all Tax Returns and amendments thereto
required to be filed by WMI or the LLC on or before the Closing Date.  WMI and
the LLC shall each pay and discharge all Taxes, assessments and governmental
charges upon or against it or any of its properties or assets, and all
liabilities at any time existing, before the same shall become delinquent and
before penalties accrue thereon, except to the extent and as long as the same
are being contested in good faith and by appropriate proceedings pursued
diligently and in such a manner as not to cause any Material Adverse Effect on
WMI or the LLC.

     (b) Atmos shall prepare and timely file at its expense, or cause to be
prepared and timely filed, when due, all Tax Returns and amendments thereto
required to be filed by the LLC for any Tax periods ending after the Closing
Date (including all Tax periods that begin before and end after the Closing
Date).  Woodward and Kifer shall have a reasonable opportunity to review and
comment on all such Tax Returns and amendments thereto to the extent such Tax
Returns cover tax periods that begin before the Closing Date.

     SECTION 4.6.  Certain Tax Covenants.  Prior to the Closing Date, WMI shall
not, and shall cause the LLC not to, take any of the following actions:

     (a) make, revoke or amend any Tax election;

     (b) execute any waiver of restrictions on assessment or collection of any
Tax; or

     (c) enter into or amend any agreement or settlement with any Tax Agency.

                                       21
<PAGE>

                                  ARTICLE V.
                           AGREEMENTS AND COVENANTS
                          OF WMI, WOODWARD AND KIFER

     SECTION 5.1.  Compliance with Securities Regulations.  WMI, Woodward and
Kifer shall not sell, offer to sell or otherwise dispose of any Shares for a
period of one year after the date of issuance of such Shares, whether issued on
the Closing Date or issued after the Closing Date, except for the offer, sale or
disposition of the Included Shares to the extent, if any, permitted by Rule 144
under the Securities Act in a transaction which, in the opinion of legal counsel
(such opinion being reasonably satisfactory to Atmos), is so exempt from the
registration requirements of the Securities Act.  After such one-year periods,
WMI, Woodward and Kifer shall not sell, offer to sell or otherwise dispose of
any Shares, except (A) pursuant to an effective registration statement or (B)in
a transaction which, in the opinion of legal counsel (such opinion being
reasonably satisfactory to Atmos), is exempt from the registration requirements
of the Securities Act.  WMI, Woodward and Kifer acknowledge that certificates
representing the Shares may contain a legend setting forth the restrictions that
such shares may be sold only as provided herein.  Notwithstanding the foregoing,
the Shares may be transferred to Woodward and Kifer in the liquidation of WMI.

     SECTION 5.2.  Covenant Not to Compete.

     (a) Other than in the course of performing their duties from their
employment by Atmos or the LLC, WMI, J.D. Woodward and James Kifer will not, for
a period of five years from and after the Closing Date (the "Non-Competition
Period"), directly or indirectly (whether through WMI, any Affiliate or
otherwise), engage in any of the following activities in the States of Texas and
Tennessee, and all other States in which WMI or the LLC has or has had
customers, to or from which WMI or the LLC has purchased or sold natural gas, or
in which the other parties to the contracts of WMI or the LLC for the purchase
or sale of natural gas, or any other future, option, swap or other derivative
instrument in respect thereof, are or were located (collectively, the "Non-
Competition Area"):  (i) conduct or participate in any business or enterprise
involved in purchasing and selling natural gas, entering into or trading in
contracts for the purchase or sale of natural gas, and any future, option, swap
or other derivative instrument in respect thereof, including the gas marketing
business of providing natural gas or derivatives thereof to municipalities and
industrial customers, or (ii) solicit, attempt to solicit or assist any other
person or entity in soliciting or attempting to solicit customers of the
business operated by WMI or the LLC prior to the Closing Date or the employees
of WMI or the LLC prior to the Closing Date to cease doing any business with the
LLC or ceasing their employment with the LLC.  J.D. Woodward and James Kifer
shall not be deemed to be so competing solely by reason of purchasing or owning
securities in companies listed on the New York Stock Exchange, the American
Stock Exchange, or quoted on the National Association of Securities Dealers
Automatic Quotation System (NASDAQ), provided that the direct and beneficial
ownership of any class of securities in any of such entities by them, together
with their respective Affiliates, is less than 2% of the aggregate number of
outstanding units, interests or units of such class of securities.  The parties
hereto expressly acknowledge and agree that (A) the agreements set forth in this
Section 5.2 contain reasonable limitations as to time, geographical area and
scope of activity, (B) WMI, J.D. Woodward and James Kifer have heretofore been
engaged in purchasing and selling natural gas, traded in contracts for the
purchase and sale of natural gas, and future,

                                       22
<PAGE>

option, swaps and other derivative instruments in respect thereof, including the
gas marketing business and related activities incidental thereto, in the Non-
Competition Area and (C) in light of the operations heretofore conducted by WMI,
J.D. Woodward and James Kifer, the interests of the parties hereto and the
nature of the transactions contemplated by this Agreement, the agreements
contained in this Section 5.2 are reasonable and do not impose a greater
restraint than is necessary to protect the goodwill and other business interests
associated with the LLC. However, notwithstanding the foregoing to the contrary,
each of WMI, J.D. Woodward and James Kifer may continue, directly or indirectly,
(1) to operate (and have ownership interests in) the gas gathering and metering
systems described in Schedule 5.2 hereto and extensions thereof, (2) to conduct
the oil and gas exploration and production described in Schedule 5.2 hereto, (3)
buy, sell, transport or store oil and gas purchased, sold, gathered or produced
through such businesses and (4) engage in trading, hedging or similar financial
transactions for the oil and gas gathered, produced, transported or stored in
such businesses to the extent such transactions do not interfere with the
performance of their duties from their employment by Atmos or the LLC.

     (b) From and after the Closing Date, WMI, J.D. Woodward and James Kifer
will keep confidential and not disclose any confidential or proprietary
information concerning the Acquired Assets or the LLC or its business, including
any information regarding the customers of the LLC; provided that they may
disclose such information if it relates to information of WMI (other than
relating to the LLC) and may disclose such information of WMI or the LLC if it
becomes generally available to the public other than by breach of this Section
5.2(b) or the disclosure is required by applicable law or the disclosure is in
connection with the enforcement or defense of claims under this Agreement and
the documents and instruments entered into in connection herewith or in
connection with the employment of Woodward or Kifer by Atmos or the LLC.

     (c) It is expressly understood and agreed that if any of the agreements set
forth in this Section 5.2 are found to be unreasonably broad, oppressive or
unenforceable in an action, suit or proceeding before any federal or state court
or other governmental authority, such court or other governmental authority (i)
shall narrow the Non-Competition Period or the Non-Competition Area or shall
otherwise endeavor to reform the scope of such agreements in order to ensure
that the application thereof is not unreasonably broad, oppressive or
unenforceable and (ii) to the fullest extent permitted by law, shall enforce
such agreements as so reformed.

     (d) Any threatened or actual breach or violation of this Section 5.2 shall
entitle Atmos or Energy to an injunction restraining any further or continued
breach or violation. Such right to an injunction shall be in addition to and
cumulative with (and not in lieu of) any other remedies to which Atmos or Energy
may be entitled because of such breach or violation.

     (e) The provisions of Section 5.2 supersede the provisions of Section 7.2
of the Transfer Restriction Agreement, which Section is hereby terminated
effective as of the Closing.  If this Agreement is terminated, the provisions of
Section 7.2 of the Transfer Restriction Agreement shall remain applicable.

     SECTION 5.3.  Rights to Name.  On the Closing Date, WMI shall change its
name to a name other than "Woodward Marketing," and WMI, Woodward and Kifer will
assign all of their right, title and interest in and to the name, "Woodward
Marketing" or any derivation thereof, and

                                       23
<PAGE>

all goodwill associated therewith, to Energy, such assignment to be effective in
perpetuity; provided that Woodward may use "Woodward Pipeline," "Woodward
Development" and "Woodward Partners" and may use the name "Woodward" in any
other manner that is not confusingly similar to "Woodward Marketing" for any
business other than a business described in Section 5.2(a)(i).

                                  ARTICLE VI.
                           AGREEMENTS AND COVENANTS
                             OF THE ATMOS ENTITIES

     SECTION 6.1.  Access to Information; Confidentiality.

     (a) From the date hereof to the Closing Date, the Atmos Entities will, and
will cause their respective directors, managers, officers, employees and agents
to, permit and afford WMI, Woodward and Kifer and their respective
representatives reasonable access at all reasonable times and with reasonable
prior notice to the employees, offices, properties, books and records of the
Atmos Entities for a due diligence review and will furnish WMI, Woodward and
Kifer with all information of the Atmos Entities as WMI, Woodward or Kifer may
reasonably request.

     (b) The Atmos Entities acknowledge that they may receive or have received
from WMI, Woodward or Kifer information and data regarding WMI, Woodward or
Kifer that is non-public and proprietary in nature.  The Atmos Entities agree to
hold in confidence all such information and data and shall ensure that their
respective directors, managers, officers, employees and agents do not disclose
such information and data to others without the prior written consent of WMI,
Woodward or Kifer, as the case may be.  In the event that this Agreement is
terminated, upon receipt of a written request, the Atmos Entities will return to
WMI, Woodward or Kifer, as the case may be, all such documents and other
material (and all copies thereof) obtained from WMI, Woodward or Kifer in
connection with the transactions contemplated hereby and will destroy all such
documents and other material prepared by the Atmos Entities or their respective
agents, representatives or advisors that reflect non-public information received
by the Atmos Entities in connection with the transactions contemplated hereby.

     SECTION 6.2.  Employees and Employee Benefits.

     (a) As of the Closing Date, the employees of the LLC other than J.D.
Woodward shall continue as employees of the LLC.  Subject to contractual
obligations disclosed in the WMI Disclosure Schedule, such employees' salaries
or wages, benefits, job titles and job duties from and after the Closing Date
will be determined by the LLC in its sole discretion.  Subject to contractual
obligations, such employees will be employed with the LLC on an "at will" basis.

     (b) Atmos will retain J.D. Woodward and will cause the LLC to amend the
terms of retention of James Kifer, each as employees, and Messrs. Woodward and
Kifer agree to such retention as employees, beginning with the Closing Date.
Subject to contractual obligations, such employees will be employed with Atmos
or the LLC, as the case may be, on an "at will" basis.  The specific terms of
employment (which shall supersede the current terms of employment as of the
Closing Date) are set forth in Exhibits C and D, respectively.  The terms
                               ----------------

                                       24
<PAGE>

and conditions contained in Exhibit C are intended to be similar to those
                            ---------
applicable to other employees of Atmos of comparable qualifications and
experience. Moreover, the LLC will enter into change in control agreements with
the employees of the LLC who have been identified as "Key Employees" by WMI and
agreed to by Atmos, beginning with the Closing Date. The specific terms of such
change in control agreements shall be mutually acceptable to Atmos and Woodward.

     (c) Atmos will cause the LLC initially to provide compensation and benefits
substantially comparable in the aggregate to that currently provided by the LLC
to its employees, except for the Woodward Marketing, L.L.C. Performance Plan
("Performance Plan").  The rights of the existing LLC employees to benefits on
or after the Closing Date shall be governed by the terms, as may be amended or
modified from time to time, of any LLC plan or program in which they may
participate, and such employees will have no rights in or claims against Atmos'
welfare, pension or retirement plans as of the Closing Date.  Such employees
will not participate in the Atmos Total Rewards program.  On or prior to the
Closing, the Performance Plan will be terminated and payments to participants
therein will be made by the LLC in accordance with the accrued amounts provided
in the Financial Statements therefor.  Neither Woodward nor Kifer are or will be
participants under the Performance Plan.  After the Closing, the Atmos Entities
will cause the LLC to adopt an incentive compensation program for LLC employees
as shall be mutually acceptable to Atmos and Woodward.

     (d) It is expressly understood by the parties hereto that Atmos assumes no
responsibility, and makes no commitment, for the maintenance and continuation,
after the Closing, of any Plan or Employee Benefit Arrangement previously
adopted or maintained by the LLC or any Group Member, or for any continued
employment or the terms and conditions of any employment for any of the LLC's
employees.

     SECTION 6.3.  Registration Rights.  Atmos agrees to enter into a
registration rights agreement with Woodward and Kifer on the Closing Date,
providing certain "piggy-back" registration rights, in substantially the form of
Exhibit E attached hereto (the "Registration Rights Agreement").
---------

                                 ARTICLE VII.
                        MUTUAL AGREEMENTS AND COVENANTS
               OF THE ATMOS ENTITIES, WMI AND WOODWARD AND KIFER

     SECTION 7.1.  Consents and Approvals.

     (a) Each of the parties hereto shall use all reasonable efforts to obtain
all consents, waivers, approvals, authorizations, opinions and orders of all
third parties (including attorneys and accountants) and local, state and federal
governmental authorities (including, but not limited to, the approvals of the
Colorado Public Utilities Commission, Georgia Public Service Commission,
Kentucky Public Service Commission, Illinois Corporation Commission, Tennessee
Regulatory Authority, and the Virginia Corporation Commission referred to in
Sections 1.6 and 3.5 above) required in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.  Each of the parties hereto shall attend all
proceedings of, and file all documents with the Colorado Public

                                       25
<PAGE>

Utilities Commission, Georgia Public Service Commission, Kentucky Public Service
Commission, Illinois Corporation Commission, Tennessee Regulatory Authority, and
the Virginia Corporation Commission as reasonably necessary to obtain each of
such commissions' approval of the purchase of the Acquired Assets and/or the
issuance of the Shares. Each of the parties hereto shall also reasonably
cooperate with and assist each of the other parties hereto in all proceedings
before and in the preparation and filing of any documents they are required to
file with the Colorado Public Utilities Commission, Georgia Public Service
Commission, Kentucky Public Service Commission, Illinois Corporation Commission,
Tennessee Regulatory Authority, and the Virginia Corporation Commission.

     (b) Each of the parties hereto shall, as soon as reasonably practicable
after the date of this Agreement, file any Notification and Report Forms and
related material that they may be required to file with the Federal Trade
Commission and the Antitrust Division of the Department of Justice under the
Hart-Scott-Rodino Act, shall use their respective reasonable efforts to obtain
an early termination of the applicable waiting period and shall make any further
filings pursuant thereto that may be necessary, proper or advisable and respond
as promptly as practicable to all inquiries received from the Federal Trade
Commission or the Antitrust Division of the Department of Justice for additional
information or documentation.

     (c) The parties hereto shall have the right to review in advance all
characterizations of the information relating to this Agreement and the
transactions contemplated hereby that appear in any filing made as contemplated
herein.

     SECTION 7.2.  Distributions.  The parties agree to the following
distributions:

     (a) In recognition of changes in distribution restrictions imposed by
lenders to the LLC, the parties hereto agree that they shall cause Energy and
WMI to approve monthly distributions of cash by the LLC to its members from the
date hereof through the Closing equal to the aggregate amount of net income
(adjusted to disregard unrealized gains and losses resulting from the marked to
market forward positions as of the end of each month) of the LLC for each month
beginning on May 1, 2000 and ending on the close of business on the date
preceding the Closing, that have not been previously distributed and that can be
distributed from the cash flow of the LLC subsequent to April 30, 2000 without
requiring capital contributions or borrowings (the "Ordinary Cash
Distributions").  The amount of the Ordinary Cash Distributions shall be
estimated by Atmos and WMI in good faith and paid by the LLC within 75 days
after the end of each such month or, in the case of the month in which the
Closing occurs, within 75 days after the Closing.  Any true-up adjustments shall
be paid as provided in Section 7.2(c), subject to the right of WMI, Woodward and
Kifer (and their respective representatives) to review the books and records of
the LLC with respect to such calculations.

     (b) As soon as practicable but not later than seventy-five (75) days
following the Closing Date, Atmos shall prepare and deliver to WMI, Woodward and
Kifer a certificate showing the calculation of the Ordinary Cash Distributions
of the LLC through the close of business on the date preceding the Closing Date
("Actual Amount"), together with reasonably detailed substantiation therefor.
In the absence of notice of objection or exercise of review rights within ninety
(90) days after the delivery of such certificate and substantiation, the amount
reflected in such certificate will be deemed accepted.

                                       26
<PAGE>

     In the event Woodward and Kifer dispute the certificate, they shall provide
written notification of objection within such ninety (90) day period (or, if a
review is requested, within sixty (60) days after commencement of such review
and, for a period of thirty (30) days after such notification (or expiration of
such sixty (60) day period, as the case may be), Woodward and Kifer and Atmos
shall attempt to resolve the dispute in good faith by mutual agreement.  If a
review is requested, Atmos agrees to cooperate in good faith to facilitate such
review of the books and records of the LLC.  When the parties are in agreement,
any adjustment to the payment shall be calculated and, prior to the end of the
next calendar month, paid.

     SECTION 7.3.  Notice of Certain Events.  Each of the parties hereto shall
give prompt written notice to the other parties of (i) the occurrence or non-
occurrence of any event, the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate and (ii) any failure of such party to
comply with or satisfy any term, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.3 shall not limit or otherwise affect the remedies
available hereunder to the other parties hereto.

     SECTION 7.4.  Reorganization.  Each party hereto shall treat the sale of
the Acquired Assets contemplated hereby for income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.  From and after
the date hereof, no party to this Agreement shall take any action, or fail to
take any action, that would, in the reasonable determination of such party (in
the case of the Atmos Entities, by the chief financial officer of Atmos, and in
the case of WMI, Woodward and Kifer, by J.D. Woodward), jeopardize qualification
of such sale as a reorganization within the meaning of Section 368(a) of the
Code, including, for a period of at least two years from the Closing, the
agreement of Atmos and its Affiliates to (i) refrain from making a contribution
of capital to the LLC other than capital contributions in the ordinary course of
business, with respect to any post-Closing acquisitions, expansions, or
investments, or otherwise approved by J.D. Woodward as the executive officer in
charge of the non-utility operations of Atmos, and (ii) not repay any debt of
the LLC existing as of the Closing Date other than in the ordinary course of
business of the LLC or otherwise in connection with a refinancing of such debt
by the LLC.

     SECTION 7.5.  Expenses.  Except as otherwise expressly set forth herein,
WMI, Woodward, Kifer, and the Atmos Entities shall each be responsible for, and
will pay, his or its own legal, accounting and other expenses incurred in
connection with the preparation and negotiations of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby.  The LLC shall not pay or be liable for any such expenses.

     SECTION 7.6.  Tax Controversies.

     (a) In the case of an audit, claim or other action taken or proposed to be
taken by the IRS or any other taxing authority or agency (a "Tax Agency") with
respect to the Tax Returns of the Atmos Entities relating to the tax
consequences of the transactions contemplated hereby, the Atmos Entities shall
have the right to defend or contest such audit, claim or other action and to
exercise complete control of the defense of such audit, claim or other action;
provided, however, that the Atmos Entities shall not take a position in
connection with such audit, claim or other

                                       27
<PAGE>

action inconsistent with the treatment of the transactions contemplated hereby
as a tax-free reorganization. WMI, Woodward and Kifer will cooperate with the
Atmos Entities or their representatives in the defense or contest of such audit,
claim or other action.

     (b) In the case of an audit, claim or other action taken or proposed to be
taken by a Tax Agency with respect to the Tax Returns of the LLC for any period
prior to or including the Closing Date, WMI, Woodward and Kifer shall have the
right to defend or contest such audit, claim or other action and to exercise
control of the defense of such audit, claim or other action, except to the
extent Atmos, Energy or (from and after the Closing Date) the LLC has any
liability not fully covered by indemnification of WMI, Woodward and Kifer
hereunder; provided, however, that WMI, Woodward and Kifer shall not take a
position in connection with such audit, claim or other action inconsistent with
the treatment of the transactions contemplated hereby as a tax-free
reorganization.  The Atmos Entities will cooperate with WMI, Woodward and Kifer
or their representatives in the defense or contest of such audit, claim or other
action.

     (c) Between the date hereof and the Closing Date, to the extent Woodward,
Kifer or WMI has Knowledge of the commencement or scheduling of any Tax audit,
the assessment of any Tax, the issuance of any notice of Tax due or any bill for
collection of Tax due, or the commencement or scheduling of any other
administrative or judicial proceeding with respect to the determination,
assessment or collection of any Tax of the LLC, Woodward, Kifer or WMI, as
appropriate, shall provide prompt notice to Atmos and Energy of such matter,
setting forth information (to the extent known) describing any asserted Tax
liability in reasonable detail and including copies of any notice or other
documentation received from the applicable Tax authority with respect to such
matter.

     SECTION 7.7.  Access to Records Following Closing.  Woodward, Kifer, the
LLC, and the Atmos Entities agree that so long as any books, records and files
retained by WMI, Woodward or Kifer relating to the business of WMI or the LLC,
or retained by the Atmos Entities, WMI or the LLC relating to the business of
WMI or the LLC, or the books, records and files delivered to the control of the
Atmos Entities pursuant to this Agreement to the extent they relate to the
operations of WMI or the LLC prior to the Closing Date, remain in existence and
are available, each party (at its expense) shall have the right upon prior
notice to inspect and to make copies of the same at any time during business
hours for any proper purpose.  Woodward, Kifer, the LLC, and the Atmos Entities
and WMI shall use reasonable efforts not to destroy or allow the destruction of
any such books, records and files without first offering in writing to deliver
them to the other.

     SECTION 7.8.  Tax Credits, Tax Refunds and Amended Tax Returns.

     (a) If in any period ending after the Closing Date, the Atmos Entities or
LLC earns any credit or recognizes any loss which cannot be applied against its
Tax liability for such period, and is permitted by law to carry back such credit
or loss to a period ending on or prior to the Closing Date, and if WMI, Woodward
and Kifer shall receive a Tax Benefit for the period to which such credit or
loss is properly carried back, then WMI, Woodward and Kifer shall, within thirty
(30) days following the receipt of such Tax Benefit, remit to the LLC the amount
of such Tax Benefit resulting from such carryback of credit or loss.  WMI,
Woodward and Kifer agree that they will cooperate with the Atmos Entities and
the LLC and their respective

                                       28
<PAGE>

representatives, in a prompt and timely manner, in connection with (i) the
preparation and filing of, and (ii) any administrative or judicial proceedings
involving, any Tax Return or information filed or required to be filed by or for
the LLC or the Atmos Entities.

     (b) If WMI, Woodward or Kifer receives a Tax Benefit with respect to WMI or
WMI's share of Taxes arising from the LLC in the Tax periods ending after the
Closing Date (including all Tax periods that begin before and end after the
Closing Date, but in such situation, only the portion of such period after the
Closing Date), WMI, Woodward and Kifer shall, within thirty (30) days following
the receipt of such Tax Benefit, pay the amount of such Tax Benefit to Atmos.
WMI and, to the extent of their respective Prorata shares thereof (and only to
such extent), Woodward and Kifer shall have joint and several liability for the
amount required to be paid to Atmos in the foregoing sentence.

     (c) Subject to Section 7.10(a), any amended Tax Return or claim for Tax
refund for any Tax period of WMI shall be filed, or cause to be filed, only by
Woodward and Kifer.  Woodward and Kifer shall not without the prior written
consent of Atmos (which consent shall not be unreasonably withheld or delayed,
make or cause to be made, any such filing, to the extent such filing, if
accepted, reasonably might adversely change the Tax liability of the Atmos
Entities or any of Atmos' Subsidiaries or Affiliates for any Tax period.

     SECTION 7.9.  Further Action.  Upon the terms and subject to the conditions
hereof, each of the parties hereto shall (i) promptly make its respective
filings and thereafter make any other required submissions, and (ii) use all
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using all reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Atmos Entities, the LLC and WMI as are
necessary for the consummation of the transactions contemplated by this
Agreement.  In case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
to this Agreement shall use all reasonable efforts to take all such necessary
action.

     SECTION 7.10.  Lease Agreement.  The Atmos Entities agree to cause the LLC
to enter, and WMI agrees to cause Woodward Development, Inc. to enter, into a
lease with respect to the office space and Woodward Pipeline, Inc. ("WPI") to
enter into a lease with respect to the furniture, fixtures and equipment owned
by WPI located therein on substantially the terms and conditions in effect on
the date hereof, which are described in Exhibit F hereto.
                                        ---------

     SECTION 7.11.  Public Announcements.  Between the date of this Agreement
and the Closing Date, each of the parties hereto and any of its directors,
managers, officers, employees, agents or representatives shall not issue any
press release or otherwise make any public statements with respect to this
Agreement and the transactions contemplated hereby without the prior written
consent of the other party; provided, however, that each party reserves the
right to make such statements to regulatory authorities in the ordinary course
of business or as are required, in the opinion of its counsel, by applicable law
or the rules of any stock exchange.

                                       29
<PAGE>

     SECTION 7.12.  Termination of Certain Agreements.  As of the Closing Date,
the Transfer Restriction Agreement is terminated and the parties thereto are
hereby released from any further rights or obligations under any of the
provisions thereof.  No party hereto shall exercise any right under Article III
of the Transfer Restriction Agreement prior to the Closing Date, unless this
Agreement is terminated pursuant to Article X.

                                 ARTICLE VIII.
                             CONDITIONS TO CLOSING

     SECTION 8.1.  Conditions to Obligations of Each Party to Close.  The
respective obligations of each party to effect the closing of the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of the following conditions, except to the extent that such
conditions are waived in writing by Atmos and WMI:

     (a) Utility Commission Approvals.  All necessary approvals of the Colorado
Public Utilities Commission, Georgia Public Service Commission, Kentucky Public
Service Commission, Illinois Corporation Commission, Tennessee Regulatory
Authority, and the Virginia Corporation Commission shall have been granted by
final order and such orders shall not contain any condition which would
reasonably be expected to have a Material Adverse Effect on any of the parties
hereto or the LLC, including a Material Adverse Effect on the current rate
structure of any Atmos business unit regulated thereby;

     (b) Hart-Scott-Rodino Act.  The waiting period (and any extension thereof)
applicable to the consummation of the transactions contemplated hereby under the
Hart-Scott-Rodino Act shall have expired or been terminated; and

     (c) No Order.  No United States or state governmental authority or other
agency or commission or United States or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which in effect restricts, prevents or
prohibits consummation of the transactions contemplated by this Agreement.

     SECTION 8.2.  Additional Conditions to Obligations of Atmos and Energy.
The obligations of Atmos to issue the Shares and of the Atmos Entities to effect
the closing of the transactions contemplated hereby are, at the option of Atmos
and Energy, also subject to the satisfaction at or prior to the Closing Date of
the following conditions, except to the extent that such conditions are waived
in writing by Atmos and Energy:

     (a) Representations and Warranties.  The representations and warranties of
WMI, Woodward and Kifer contained in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date with the same force and effect as if made at and as of the Closing Date
except for changes that are permitted or contemplated by this Agreement, and
Atmos and Energy shall have received a certificate signed by the Chief Executive
Officer and the Chief Financial Officer of WMI and by Woodward and Kifer, in
their respective individual capacities, and dated as of the Closing Date to that
effect;

     (b) Agreements and Covenants.  WMI, Woodward and Kifer shall each have
performed or complied in all material respects with all agreements and covenants
required by

                                       30
<PAGE>

this Agreement to be performed or complied with by it or him at or prior to the
Closing Date, and Atmos and Energy shall have received a certificate signed by
the Chief Executive Officer of WMI and by Woodward and Kifer, in their
respective individual capacities, and dated as of the Closing Date to that
effect;

     (c) Consents Obtained.  All material consents and waivers required to be
obtained by WMI, the LLC, Woodward or Kifer for the authorization, execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby shall have been obtained in form and substance satisfactory
to Atmos;

     (d) Material Adverse Changes.  Since the date of this Agreement, there
shall have occurred no Material Adverse Effect on the LLC;

     (e) Litigation.  No action, suit or proceeding shall be pending against any
of the parties hereto or Known to be threatened before any court or quasi-
judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or the Ancillary Agreements,
(ii) cause any of the transactions contemplated by this Agreement or the
Ancillary Agreements to be rescinded following consummation, (iii) have a
Material Adverse Effect on the right of Atmos or Energy to own the assets and to
operate the business of the LLC in a manner consistent with present practice, or
(iv)have a Material Adverse Effect on the right of the LLC to own its assets and
to operate its business (and no such injunction, judgment, order, decree, ruling
or charge shall be in effect);

     (f) Opinion of WMI's and Woodward and Kifer's Counsel.  Atmos and Energy
shall have received an opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.,
counsel to WMI, Woodward and Kifer, dated as of the Closing Date substantially
in the form and to the effect set forth in Exhibit G hereto; and
                                           ---------

     (g) Deliveries.  Each of WMI, Woodward and Kifer shall have executed and
delivered each Ancillary Agreement to which it is a signatory and shall have
delivered all other documents and items contemplated in Section 9.3 or elsewhere
in this Agreement.

     SECTION 8.3.  Additional Conditions to Obligations of WMI, Woodward and
Kifer.  The obligations of WMI, Woodward and Kifer to effect the closing of the
transactions contemplated hereby are, at the option of WMI, Woodward and Kifer,
also subject to the satisfaction at or prior to the Closing Date of the
following conditions, except to the extent that such conditions are waived in
writing by WMI, Woodward and Kifer:

     (a) Representations and Warranties.  The representations and warranties of
the Atmos Entities contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
with the same force and effect as if made at and as of the Closing Date except
for changes that are permitted or contemplated by this Agreement, and WMI,
Woodward and Kifer shall have received certificates signed by the Presidents or
Chief Financial Officers of the Atmos Entities and dated as of the Closing Date
to that effect;

                                       31
<PAGE>

     (b) Agreements and Covenants.  The Atmos Entities shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them at or prior to the
Closing Date and WMI, Woodward and Kifer shall have received certificates signed
by the Presidents or Chief Financial Officers of the Atmos Entities and dated as
of the Closing Date to that effect;

     (c) Consents Obtained.  All material consents, waivers, approvals,
authorizations or orders required to be obtained by Atmos and Energy for the
authorization, execution and delivery of this Agreement and the Ancillary
Agreements and the consummation by them of the transactions contemplated hereby
and thereby shall have been obtained in form and substance satisfactory to WMI,
Woodward and Kifer;

     (d) Material Adverse Changes.  Since the date of this Agreement, there
shall have occurred no Material Adverse Effect on Atmos and its Subsidiaries,
taken as a whole;

     (e) Opinion of the Atmos Entities' Counsel.  Woodward and Kifer shall have
received an opinion of Gibson, Dunn & Crutcher LLP, counsel to the Atmos
Entities, dated as of the Closing Date substantially in the form and to the
effect set forth in Exhibit H hereto;
                    ---------

     (f) Registration Rights Agreement.  WMI, Woodward and Kifer shall have
received a counterpart of the Registration Rights Agreement duly executed by
Atmos;

     (g) Certain Guaranties. (i) The bank lenders to the LLC shall have released
WMI, Woodward and Kifer from any personal liability for, or guarantee of, or
other security arrangement for, the notes, debts and obligations of the LLC to
such lenders, or (ii) all indebtedness of the LLC to such banks shall have been
repaid and the related credit facilities terminated and WMI, Woodward and Kifer
shall have received an indemnity from Atmos, reasonably satisfactory to them,
from all obligations in respect of such indebtedness.  If Woodward or Kifer has
delivered any other guarantees for the benefit of the LLC, the release of such
guarantees shall also have been obtained or the guaranteed obligations satisfied
and a similar indemnity provided;

     (h) Litigation.  No action, suit or proceeding shall be pending against any
of the parties hereto or Known to be threatened before any court or quasi-
judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or the Ancillary Agreements,
(ii) cause any of the transactions contemplated by this Agreement or the
Ancillary Agreements to be rescinded following consummation, (iii) have a
Material Adverse Effect on the right of Atmos or Energy to own the assets and to
operate the business of the LLC in a manner consistent with present practice, or
(iv)have a Material Adverse Effect on the right of the LLC to own its assets and
to operate its business (and no such injunction, judgment, order, decree, ruling
or charge shall be in effect); and

     (i) Deliveries.  Each of the Atmos Entities shall have executed and
delivered each Ancillary Agreement to which it is a signatory and shall have
delivered all other documents and items contemplated in Section 9.4 or elsewhere
in this Agreement.

                                       32
<PAGE>

                                  ARTICLE IX.
                           CLOSING AND CLOSING DATE
                                 OF THE MERGER

     SECTION 9.1.  Closing.  The closing of the sale of the Acquired Assets, the
issuance of the Shares and the other transactions contemplated hereby (the
"Closing") shall take place either at (i) the offices of Gibson, Dunn & Crutcher
LLP in Dallas, Texas at 10:00 a.m. Central Time on the fifth Business Day
following the date on which the last of the conditions to the consummation of
the Closing that are to be fulfilled or waived in writing, as set forth in
Article VIII of this Agreement (other than those conditions, such as deliveries,
that by their nature are to be fulfilled at the Closing, but subject to the
fulfillment or waiver of such conditions) are fulfilled or waived in accordance
with this Agreement or (ii) such other time and place and on such other date as
the parties hereto shall agree in writing (the "Closing Date").

     SECTION 9.2.  Principal Deliveries.  At the Closing:

     (a) WMI will deliver to Energy instruments of assignment and transfer for
the Acquired Assets, reasonably satisfactory to Atmos, together with one or more
certificates representing 345,500 shares of Common Stock (duly endorsed or
accompanied by stock powers duly signed in blank), and Energy will deliver to
WMI an instrument of assumption of the Assumed Obligations, reasonably
satisfactory to WMI; and

     (b) Atmos will deliver, or cause to be delivered, to WMI (or at its request
to Woodward and Kifer Prorata) one or more certificates representing the Base
Shares, the Included Shares and the Cumulative Shares.

     SECTION 9.3.  Other Deliveries of WMI.  At the Closing, WMI will deliver to
Atmos the materials listed in this Section 9.3 or otherwise contemplated by this
Agreement including the following:

     (a) A certificate, dated the Closing Date, signed by the Secretary or
Assistant Secretary of WMI certifying as to the (i) Articles of Incorporation of
WMI, as amended, (ii) Bylaws of WMI, as amended; (iii) incumbency and signatures
of signing officers of WMI; and (iv)adoption and continued effect of the
resolutions of WMI's stockholders and board of directors approving and
authorizing the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which WMI is a party and the transactions contemplated
hereby.

     (b) A certificate from the Secretary of State of the State of Texas, dated
not more than five Business Days prior to the Closing Date, certifying as to the
good standing of WMI.

     (c) Written evidence satisfactory in form and substance to Atmos that all
material consents or approvals necessary to permit WMI to execute, deliver and
perform this Agreement and the Ancillary Agreements have been obtained and are
final.

     (d) All other documents, instruments and writings required by this
Agreement and the Ancillary Agreements to be delivered by WMI, Woodward or Kifer
at or prior to the Closing.

                                       33
<PAGE>

     SECTION 9.4.  Other Deliveries of the Atmos Entities.  At the Closing, the
Atmos Entities will deliver to WMI, Woodward and Kifer the materials listed in
this Section 9.4 or otherwise contemplated by this Agreement including the
following:

     (a) Certificates, dated the Closing Date, signed by the Secretary or
Assistant Secretary of the Atmos Entities certifying as to the (i) Articles of
Incorporation of Atmos and of Certificate of Formation of Energy, each as
amended; (ii) Bylaws of Atmos and the Limited Liability Company Agreement of
Energy, each as amended; (iii) incumbency and signatures of signing officers of
the Atmos Entities; and (iv)adoption and continued effect of the resolutions of
the board of directors of Atmos, and of the managers and member of Energy
approving and authorizing the execution, delivery and performance of this
Agreement and the Ancillary Agreements to which they are signatories, the
transactions contemplated hereby and, in the case of Atmos, the issuance of the
Shares.

     (b) Certificates from the Secretary of State of the states of their
respective organization, dated not more than five Business Days prior to the
Closing Date, certifying as to the good standing of the Atmos and Energy.

     (c) Written evidence satisfactory in form and substance to WMI that all
material consents or approvals necessary to permit the Atmos Entities to
execute, deliver and perform this Agreement and the Ancillary Agreements have
been obtained and are final.

     (d) All other documents, instruments and writings required by this
Agreement and the Ancillary Agreements to be delivered by the Atmos Entities at
or prior to the Closing.

     SECTION 9.5.  Further Assurances.  At any time and from time to time after
the Closing Date, upon the request of Energy and without any cost or expense
thereto, WMI shall execute and deliver such instruments of conveyance,
assignment and transfer and other documents as Energy may reasonably request to
transfer to and vest in Energy, and to put Energy in possession of, any Acquired
Assets or otherwise to carry out the intent and purpose of this Agreement.

     SECTION 9.6.  Transfer and Other Taxes.  At the Closing, WMI and Energy
shall each pay one-half of any state or local sales and use, ad valorem or
similar transfer-type Taxes ("Transfer Taxes") and recording charges in
connection with the conveyance, assignment, or transfer of the Acquired Assets.
If the final amount of any such Transfer Taxes or recording charge are not
determinable on the Closing Date, WMI and Energy shall pay such Transfer Taxes
or recording charge on the Closing Date based upon the estimated amount thereof
and shall thereafter pay any balance of such Transfer Taxes or recording charge
as soon as it becomes determinable.

                                  ARTICLE X.
                       TERMINATION, AMENDMENT AND WAIVER

     SECTION 10.1.  Termination.  This Agreement may be terminated at any time
prior to the Closing Date:

     (a) by mutual written consent duly authorized by the boards of directors of
Atmos and WMI, the managers of Energy and by Woodward and Kifer; or

                                       34
<PAGE>

     (b) by written notice from Atmos, Energy, WMI, Woodward or Kifer if the
Closing shall not have been consummated on or before February 28, 2001 (except
that this date shall be December 31, 2001 if, on February 28, 2001, the
conditions to the Closing set forth in Section 8.1(a) shall not have been
fulfilled but the Closing Date would otherwise occur) or such later date as may
be agreed to in writing by the parties; provided, however, that the right to
terminate this Agreement under this Section 10.1(b) shall not be available to
any party whose willful failure to fulfill any material obligation under this
Agreement has been the cause of or resulted in the failure of the Closing Date
to occur on or before such date; or

     (c) by written notice from Atmos, Energy, WMI ,Woodward or Kifer if any
condition to the obligations of such party as set forth in Article VIII of this
Agreement has not been met or performed as of the Closing Date and such
condition shall not have been waived in writing by such party; provided,
however, that the right to terminate this Agreement under this Section 10.1(c)
shall not be available to any party whose willful failure to fulfill any
material obligation under this Agreement has been the cause of or resulted in
the failure of such condition to be met or performed on or before such date; or

     (d) by written notice from Atmos or Energy if Woodward or Kifer dies or
becomes "disabled" for more than 180 days, within the meaning of the term
"disabled" as defined in the Atmos Long-Term Disability Plan in effect at the
Closing Date; or

     (e) by written notice from Atmos, Energy, WMI, Woodward or Kifer if (i) any
Governmental Body, the consent of which is a condition to the obligations of the
parties to consummate the Closing, shall have determined not to grant its or
their consent and all appeals of such determination shall have been taken and
have been unsuccessful, (ii) one or more courts of competent jurisdiction in the
United States or any state shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the Closing, and
such order, judgment or decree shall have become final and nonappealable or
(iii) any statute, rule or regulation shall have been enacted by any state or
Federal government or governmental agency in the United States which prohibits
the consummation of the Closing.

     SECTION 10.2.  Effect of Termination.  In the event of the termination of
this Agreement pursuant to Section 10.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, provided,
however, that nothing herein shall relieve any party from liability for any
willful breach hereof.

     SECTION 10.3.  Amendment.  This Agreement may be amended by mutual action
taken by or on behalf of the respective boards of directors of Atmos or WMI or
the managers of Energy and by Woodward and Kifer at any time prior to the
Closing Date.  This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.

     SECTION 10.4.  Waiver.  At any time prior to the Closing Date, any party
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions contained herein of which it is the beneficiary.  Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby

                                       35
<PAGE>

and shall be applicable only with respect to the particular condition or
provision as extended or waived and not to any other condition or provision
herein.

                                  ARTICLE XI.
                                INDEMNIFICATION

     SECTION 11.1.  Indemnification by Woodward and Kifer.  WMI and, to the
extent of their respective Prorata shares thereof (and only to such extent),
Woodward and Kifer, jointly and severally, shall indemnify and hold harmless the
Atmos Entities and their respective representatives, Affiliates, successors and
assigns (collectively, the "Atmos Indemnified Persons") for, and will pay to the
Atmos Indemnified Persons the amount of any loss, liability, claim, damage, or
expense (including costs of investigation and defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third-party claim
(collectively, "Damages"), incurred by an Atmos Indemnified Person arising from:

     (a) any inaccuracy or breach of any representation or warranty made by WMI,
Woodward or Kifer in this Agreement or any other certificate or document
delivered by any of them to the Atmos Entities pursuant to this Agreement (other
than in respect of Taxes, which are addressed in Section 11.2);

     (b) any breach by WMI, Woodward or Kifer of any covenant or obligation of
any of them in this Agreement to the extent performable prior to the Closing
("WMI Pre-Closing Covenant");

     (c) any breach by WMI, Woodward or Kifer of any other covenant or
obligation of either of them in this Agreement; or

     (d) any Retained Liabilities;

provided, however, that, (x) in the case of any Damages arising under clause (a)
--------  -------
or (b) of this Section 11.1, other than in respect of the representations and
warranties in Sections 1.3 and 2.4, ("Certain Indemnifiable Damages"), (1)such
indemnification shall be effective only with respect to claims written notice of
which (specifying the factual basis of any claim in reasonable detail) is
received by Woodward and Kifer from Atmos or Energy no later than eighteen
months after the Closing Date, and (2)no amounts shall be due and payable until
the aggregate amount of the Certain Indemnifiable Damages is equal to at least
$250,000, with no amounts being due and payable for any amounts that in the
aggregate are less than such $250,000 deductible, and (y)in no event shall the
aggregate amount of all payments made by WMI, Woodward and Kifer, taken
together, in respect of Certain Indemnifiable Damages exceed an aggregate of
$4,000,000.  Notwithstanding the foregoing, if the claim for Damages relates to
a breach of representation, warranty or covenant in Articles II or V by Woodward
or Kifer or with respect to shares of WMI stock owned by Woodward or Kifer or
Shares acquired by Woodward or Kifer upon the liquidation of WMI, the indemnity
herein with respect to such breach shall not be borne Prorata but shall be borne
entirely by whichever of Woodward or Kifer caused the breach.

                                       36
<PAGE>

     SECTION 11.2.  Tax Indemnification.

     (a) From and after the Closing Date, WMI, Woodward and Kifer, jointly and
severally, shall protect, defend, indemnify and hold harmless the Atmos
Indemnified Persons from any and all Taxes imposed on an Atmos Indemnified
Person in respect of WMI's income, business, property or operations or for which
WMI may otherwise be liable (i) for any taxable period of WMI, including any
Taxes other than one-half of the Transfer Taxes in connection with the
transactions contemplated hereby, or (ii) for WMI's allocable portion of the
income or gain of the LLC in respect of any taxable period ending on or prior to
the Closing Date, or (iii) resulting from the breach of Woodward's or Kifer's
representations and warranties set forth in Section 1.14 of this Agreement.

     (b) WMI's distributive share of the LLC's income, gain, loss or deduction
for the taxable year of the LLC that includes the Closing Date shall be
determined on the basis of an interim closing of the books of the LLC as of the
close of business on the Closing Date and shall not be based on a proration of
such items for the entire taxable year.

     SECTION 11.3.  Indemnification by Atmos.  The Atmos Entities, jointly and
severally, shall indemnify and hold harmless WMI, Woodward and Kifer, and their
respective representatives, Affiliates, successors and assigns (collectively,
the "Woodward Indemnified Persons") for, and will pay to the Woodward
Indemnified Persons the amount of any Damages arising from:

     (a) any inaccuracy or breach of any representation or warranty made by the
Atmos Entities in this Agreement or in any certificate or document delivered by
the Atmos Entities to WMI, Woodward or Kifer pursuant to this Agreement;

     (b) any breach by the Atmos Entities of any covenant or obligation of the
Atmos Entities in this Agreement to the extent performable prior to the Closing
("Atmos Pre-Closing Covenant"); or

     (c) any breach by the Atmos Entities of any other covenant or obligation of
the Atmos Entities in this Agreement;

provided, however, that (x) in the case of any Damages arising under clause(a)
--------  -------
or (b) of this Section 11.3 ("Certain Indemnifiable Losses"), (1) such
indemnification shall remain in effect only with respect to claims written
notice of which (specifying the factual basis of any claim in reasonable detail)
is received by Atmos from Woodward or Kifer no later than eighteen months after
the Closing Date, and (2)no amounts shall be due and payable until the aggregate
amount of Certain Indemnifiable Losses is equal to at least $250,000, with no
amounts being due and payable for any amounts that in the aggregate are less
than such $250,000 deductible, and (y) in no event shall the aggregate amount of
all payments made by Atmos, taken together, in respect of Certain Indemnifiable
Losses exceed an aggregate of $4,000,000.

     SECTION 11.4.  Procedure for Indemnification - Third Party Claims.

     (a) Promptly after receipt by an indemnified party under Section 11.1, 11.2
or 11.3 of notice of the commencement of any action, suit, arbitration,
investigation or other proceeding

                                       37
<PAGE>

(each a "Proceeding") against it, such indemnified party shall, if a claim is to
be made against an indemnifying party under such section, give written notice to
the indemnifying party of the commencement of such claim, but the failure to
notify the indemnifying party shall not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to the extent that
the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice. Such notice
shall describe the nature of the claim in reasonable detail, including a copy of
the claim if such claim was made in writing, and will indicate the estimated
amount, if practicable, of the Damages that have been or may be sustained by the
indemnified party.

     (b) If any Proceeding referred to in Section 11.4(a) is brought against an
indemnified party, the indemnifying party shall, unless the claim involves
Taxes, be entitled to participate in such Proceeding and, to the extent that it
wishes to assume the defense of such Proceeding with counsel reasonably
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party shall not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 11.4 for any
fees of other counsel (including the indemnified party's counsel) or any other
expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation.  If the
indemnifying party assumes the defense of a Proceeding, (i) it shall be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of legal requirements or any violation of the rights
of any person and no effect on any other claims that may be made against the
indemnified party or the settlement includes a complete and unconditional
release of the indemnified party with respect to the third party's claims in the
Proceeding, and (B) the sole relief provided is monetary damages that are paid
in full by the indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims effected
without its consent.  If the indemnified party desires to participate in, but
not control, any such defense or settlement the indemnified party may do so at
its sole cost and expense.  The indemnified party shall cooperate with the
indemnifying party's defense against any third party claim.  If written notice
as described in Section 11.4(a) is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within
twenty (20) days after the indemnified party's notice is given, give notice to
the indemnified party of its election to assume the defense of such Proceeding,
the indemnifying party will be bound by any determination made in such
Proceeding or any compromise or settlement effected by the indemnified party,
subject to the provisions of this Article XI.

     (c) All references in Sections 11.4 or 11.5 to items being at the cost or
expense of the indemnifying party, or words of similar import, shall in no way
limit the recovery of the indemnified party under the other provisions of
Article XI.

     SECTION 11.5.  Procedure for Indemnification - Other Claims.  A claim for
indemnification for any other matter not involving a third-party claim may be
asserted by written notice to the party from whom indemnification is sought
given prior to the expiration of the

                                       38
<PAGE>

indemnification notice period, stating the nature of such claim in reasonable
detail and indicating the estimated amount, if practicable, but in any event not
later than forty-five (45) days after the indemnified party becomes aware of
such claim (provided that the failure to notify the indemnifying party shall not
relieve the indemnifying party of any liability it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such claim is prejudiced by the indemnified party's failure to give
such notice), and the indemnifying party will have a period of ninety (90) days
within which to respond to such claim, specifying the portion of the claim that
is disputed and the basis for such position. If the indemnifying party does not
respond within such ninety (90) day period the indemnifying party will be deemed
to have accepted such claim (subject to the other provisions of this Article
XI). If the indemnifying party responds within such ninety (90) day period, the
indemnifying party will be deemed to have accepted and be liable for payment of
the undisputed portion of such claim, if any, on demand (subject to the other
provisions of this Article XI). If the indemnifying party rejects any portion of
such claim, the indemnified party will be free to seek enforcement of its rights
to indemnification under this Agreement.

     SECTION 11.6.  LIMITATION OF LIABILITIES.  EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, BUT NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT WHICH
MAY BE TO THE CONTRARY, NEITHER ANY PARTY NOR ANY OF ITS RESPECTIVE DIRECTORS,
OFFICERS, AFFILIATES, EMPLOYEES OR AGENTS SHALL BE LIABLE TO ANY OTHER PARTY OR
ITS RESPECTIVE DIRECTORS, OFFICERS, AFFILIATES, EMPLOYEES OR AGENTS FOR, AND THE
TERM "DAMAGES" FOR PURPOSES OF ARTICLE XI, SHALL NOT INCLUDE, CONSEQUENTIAL
(OTHER THAN FORESEEABLE DIMINUTION IN VALUE), TREBLE, EXEMPLARY OR PUNITIVE
DAMAGES OF ANY TYPE UNDER ANY CIRCUMSTANCES (EXCEPT FOR SUCH DAMAGES OWED TO A
THIRD PARTY) REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE UNDER TEXAS OR
DELAWARE LAW, THE LAW OF ANY OTHER STATE OR JURISDICTION, OR FEDERAL LAW.

     SECTION 11.7.  NEGLIGENCE.  THE INDEMNIFICATION PROVIDED IN THIS AGREEMENT
SHALL BE APPLICABLE WHETHER OR NOT NEGLIGENCE OR STRICT LIABILITY OF THE PERSON
ENTITLED TO INDEMNIFICATION HEREUNDER IS ALLEGED OR PROVEN.

     SECTION 11.8.  Exclusivity.  From and after the Closing Date,
indemnification pursuant to this Article XI shall be the sole and exclusive
remedy of any Indemnified Party for any breach of any representation, warranty,
covenant or other agreement herein, whether such claim may be asserted as a
breach of contract, tort, statute or otherwise, except for fraud or willful
misconduct, and except for injunctive relief and specific performance in respect
of the obligations set forth in Sections 5.1, 5.2, 5.3 and 6.1.

     SECTION 11.9.  Mitigation.  If the amount of any Damages, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance coverage
other than insurance of Atmos (in the case of a claim by any Atmos Indemnified
Person) or WMI, Woodward or Kifer (in the case of a claim by any Woodward
Indemnified Person), or pursuant to any claim, recovery, settlement or

                                       39
<PAGE>

payment by or against any other entity other than an insurance carrier of Atmos
or WMI, Woodward or Kifer, as the case may be, the amount of such reduction,
less any costs, expense or premiums incurred in connection therewith, will
promptly be repaid by the indemnified party to the indemnifying party against
any such third party in respect of the Damages to which the indemnity payment
relates; provided, however, that, until the indemnified party recovers full
payment of its Damages, any and all claims of the indemnifying party against any
such third party on account of such indemnity payment is hereby made expressly
subordinate and subject in right of payment to the indemnified party's rights
against such third party.

     SECTION 11.10.  Effect on Materiality.  For the purposes of this Article
XI, once a determination has been made that a specific breach of a
representation, warranty, covenant or agreement has occurred for purposes of the
indemnification obligation hereunder, the calculation of Damages with respect to
such specific breach shall be made without regard to any other limitation or
qualification as to materiality set forth in such representation, warranty,
covenant or agreement.

     SECTION 11.11.  Other Matters.  The parties acknowledge that the intended
effect of this Agreement and the transactions contemplated hereby is the
acquisition by Atmos through its Affiliates of the equity of the LLC not
currently owned by Energy, without incurring any obligation or liability of WMI
other than the Assumed Obligations, and not to provide Atmos or its Affiliates
with any right of recovery as to the interest in the LLC already held by Energy
as of the date hereof or immediately prior to the Closing Date on account of the
representations and warranties, covenants or indemnities of Woodward, Kifer or
WMI made in this Agreement or any document executed by them in connection with
the Closing.  In addition, the parties also acknowledge that any right of
recovery with respect to a representation or warranty made in this Agreement or
any document executed in connection with the Closing requires the reasonable
reliance thereon of the indemnified party to which such representation or
warranty was made.

     SECTION 11.12.  Election to Deliver Common Stock.  WMI, Woodward and Kifer
shall have the option to elect to pay any amount owing in respect of the Certain
Indemnifiable Claims (and not in respect of any other claims) by delivery of
shares of Common Stock, valued for these purposes at the Trading Value as of the
date of such delivery.

     SECTION 11.13.  Certain Accounting Policies.  The parties agree that,
notwithstanding anything to the contrary in this Agreement, no representation or
warranty of WMI, Woodward or Kifer shall be breached, nor shall WMI, Woodward or
Kifer be obligated to make any payment under Article XI with respect thereto, by
virtue of the tax accounting principles followed by the LLC that were approved
by Energy as a member of the LLC or the manager of the LLC appointed by Energy.

                                 ARTICLE XII.
                                 MISCELLANEOUS

     SECTION 12.1.  Definitions.  For purposes of this Agreement, the following
terms used herein shall have the meanings set forth below:

     "Acquired Assets" has the meaning as set forth in Section A.

                                       40
<PAGE>

     "Affiliate" means, when used with respect to any Person, any other Person
at the time directly or indirectly controlling, controlled by or under direct or
indirect common control with, such Person.  The term "control" as used herein
means the power to direct or cause the direction of the management or policies
of such Person, whether by contract or otherwise.

     "Agreement" means this Agreement, as the same may be amended or
supplemented from time to time, together with the schedules hereto.

     "Ancillary Agreements" means the Registration Rights Agreement, the
assignments contemplated by Section 5.3, and any additional instrument or
agreement delivered pursuant to Section 9.2.

     "Assumed Obligations" has the meaning set forth in Section G.

     "Atmos Entities" means Atmos and Energy.

     "Atmos SEC Reports" has the meaning set forth in Section 3.6(a).

     "Bank of America Facility" means (i) the Credit Agreement providing for an
uncommitted borrowing base demand credit facility in the aggregate amount of up
to $100,000,000 with Bank of America, N.A., as agent, currently being negotiated
by the LLC, in the form finally authorized and executed and delivered by the
LLC, and any amendments thereto, and all guaranties and other agreements
executed and delivered to such agent and the banks parties thereto in connection
therewith or (ii) such other credit facility entered into from time to time
prior to the Closing by the LLC with Bank of America, N.A., or any other
financial institution.

     "Base Shares" has the meaning set forth in Section B.

     "Business Day" means a day other than a Saturday, Sunday or a legal holiday
or a day on which banking institutions are authorized by law to close in Dallas
or Houston, Texas.

     "Change in Control" means any of the following events: any "person" or
"group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act)
becomes, directly or indirectly, the "beneficial owner" (as defined in Rules
13d-3 (other than subsection (d) thereof) and 13d-5 under the Exchange Act), by
way of merger, consolidation or otherwise of 40% or more of the voting power of
Atmos.

     "Closing" has the meaning set forth in Section 9.1.

     "Closing Date" has the meaning set forth in Section 9.1.

     "Code" means the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.

     "Common Stock" has the meaning set forth in the preamble hereof.

     "Cumulative Shares" has the meaning set forth in Section B.

                                       41
<PAGE>

     "Employee Benefit Arrangement" means any employee benefit, fringe benefit,
compensation, or other plan, policy, agreement, or arrangement that is not an
employee benefit plan within the meaning of Section 3(3) of ERISA but which (i)
provides compensation or benefits to any one or more of the current or former
directors, officers or other employees of WMI, the LLC or any Group Member, such
as a bonus, incentive, stock purchase or stock appreciation rights plan, or any
employment or consulting agreement, any termination-or plant closing program, or
any change in control arrangement, or (i) with respect to which WMI, the LLC, or
any Group Member has any liability or obligation or is otherwise bound.

     "Environmental Requirements" means all laws, ordinances, statutes, codes,
rules, regulations, agreements, judgments, orders and decrees now or hereafter
enacted, promulgated or amended, of the United States, the states, the counties,
the cities or any other political subdivisions in which real property is
located, and any other political subdivision, agency or instrumentality
exercising jurisdiction over WMI or the LLC, any real property or the use of the
real property owned or used by either of them, relating to pollution, the
protection or regulation of human health, natural resources or the environment,
or the emission, discharge, release or threatened release of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or waste or
Hazardous Materials into the environment (including, without limitation, ambient
air, surface water, ground water, land or soil).

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

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Excluded Assets" has the meaning set forth in Section A.

     "Financial Statements" has the meaning set forth in Section 1.9(a).

     "Governmental Authorizations" has the meaning set forth in Section 1.1.

     "Governmental Body" means any domestic or foreign national, state or local
government, any subdivision, agency, board, commission, bureau or other
instrumentality or authority thereof, or any quasi-governmental or private body
exercising any regulatory or taxing authority thereunder.

     "Group Member" means any member of any "affiliated service group," as
defined in Section 414(m) of the Code, that includes WMI or the LLC; any member
of any "controlled group of corporations," as defined by Section 414(b) of the
Code, that includes WMI or the LLC; or any member of any group of "trades or
businesses under common control," as defined in Section 414(c) of the Code, that
includes WMI or the LLC; provided that "Group Member" does not include the Atmos
Entities or any of their respective Affiliates.

     "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

     "Hazardous Material" means any substance which is or contains (i) any
"hazardous substance" as now or hereafter defined in (S) 101(14) of the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA") (42 U.S.C. (S)

                                       42
<PAGE>

9601 et M.) or any regulations promulgated under CERCLA; (ii) any "hazardous
waste" as now or hereafter defined in the Resource Conservation and Recovery Act
(42 U.S.C. (S) 6901 et seq.) ("RCRA") or regulations promulgated under RCRA;
(iii) any substance regulated by the Toxic Substances Control Act (15 U.S.C. (S)
2601 et seq.); (iv) gasoline, diesel fuel or other petroleum hydrocarbons; (v)
asbestos and asbestos containing materials, in any form, whether friable or non-
friable; (vi) polychlorinated biphenyls; or (vii) radon gas; and any additional
substances or materials which are now or hereafter classified or considered to
be hazardous or toxic under Environmental Requirements or the common law, or any
other applicable laws. Hazardous Materials shall include, without limitation,
any substance, the presence of which (A) requires reporting, investigation or
remediation under Environmental Requirements; (B) causes or threatens to cause a
nuisance on any real property or adjacent property or poses or threatens to pose
a hazard to the health or safety of persons on any real property or adjacent
property; or (C) which, if it emanated or migrated from the real property, could
constitute a trespass.

     "Included Shares" has the meaning set forth in Section B.

     "IRS" means the Internal Revenue Service.

     "Knowledge" or "Known" means, with respect to any Person, such Person's
actual and conscious knowledge, after reasonably inquiry of the management and
employees of such Person and its Affiliates who are the individuals generally
responsible for the subject matters to which the knowledge is pertinent.

     "Knowledge of Atmos" means the Knowledge of the Atmos Entities.

     "Knowledge of WMI" means the Knowledge of WMI, Woodward and Kifer.

     "LLC Documents" means the Certificate of Formation of the LLC filed with
the Secretary of State of Delaware on January 23, 1995, the Limited Liability
Company Agreement of the LLC dated as of May 1, 1995, as amended, and the
Transfer Restriction Agreement.

     "LLC Membership Interests" means the units of membership interest in the
LLC.

     "Long Position" means the aggregate number of MMBTUs of natural gas which
are either held in inventory by a Person or which a Person has contracted to
purchase (whether by purchase of a contract on a commodities exchange or
otherwise), or which a Person will receive on exchange or the notional quantity
under a swap contract including all option contracts representing the obligation
of a Person to purchase natural gas at the option of a third party, and in each
case, for which a fixed purchase price has been set.  Long Positions shall be
expressed as a positive number.

     "Material Adverse Effect" means a material adverse effect on the
operations, properties, condition (financial or otherwise), assets or
liabilities of the designated party or parties provided that the foregoing shall
not include any material adverse effect attributable to (a) factors affecting
such party's industry generally, (b) general national, regional or local
economic or financial conditions, (c) changes in governmental or legislative
laws, rules or regulations, or (d) contracts (other than agreements or consents
settling any liability, obligation or claim) approved by the Board of Managers
of the LLC by an affirmative vote that includes managers appointed by

                                       43
<PAGE>

Energy after full and fair disclosure of all material information in respect
thereof to such board by management of the LLC.

     "Net Position" means the sum of all Long Positions and Short Positions.

     "Non-Competition Area" has the meaning set forth in Section 5.2(a).

     "Non-Competition Period" has the meaning set forth in Section 5.2(a).

     "Other Documents" has the meaning set forth in Section 2.3(a).

     "PBGC" means the Pension Benefit Guaranty Corporation.

     "Permitted Encumbrance" has the meaning set forth in Section 1.12.

     "Person" means any corporation, association, partnership, limited liability
company, organization, business, individual, trust or a Governmental Body.

     "Plan" means at any time-any employee benefit plan as defined in Section
3(3) of ERISA (i) which is either (1)maintained by WMI, the LLC or any Group
Member, or maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
any of WMI, the LLC or any Group Member is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions, or (2)with respect to which WMI, the LLC or any Group Member has
any liability or obligation or is otherwise bound.

     "Prorata" means prorata in accordance with the ownership of WMI Stock and,
therefore, is 59% as to Woodward and 41% as to Kifer.

     "Purchase Consideration" has the meaning set forth in Section B.

     "Registration Rights Agreement" has the meaning set forth in Section 6.3.

     "Retained Liabilities" shall have the meaning set forth in Section G.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Shares" has the meaning set forth in Section 2.1.

     "Short Position" means the aggregate number of MMBTUs of which a Person has
contracted to sell (whether by sale of a contract on a commodities exchange or
otherwise) or deliver on exchange or under a swap contract, including all option
contracts representing the obligation of a Person to sell natural gas at the
option of a third party and in each case for which a fixed sales price has been
set.  Short Positions shall be expressed as a negative number.

     "Subsidiary" with respect to any entity ("parent") means any entity,
corporation, firm, association or trust of which such parent, at the time in
respect of which such term is used, (a) owns directly or indirectly more than
fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, and (b) owns directly or controls with power to vote, indirectly through
one

                                       44
<PAGE>

or more Subsidiaries, shares of equity or beneficial interest having the power
to cast at least a majority of the votes entitled to be cast for the election of
the directors, trustees, managers or other officials having powers analogous to
those of directors of a corporation.

     "Tax Agency" has the meaning set forth in Section 7.6(a).

     "Tax Benefit" shall mean any refund, credit or actual reduction in
otherwise required Tax payments including any interest payable thereon.  Any Tax
Benefit shall be computed net of any related Tax cost (which shall be computed
in the same manner in which Tax Benefits are otherwise computed pursuant to this
definition).

     "Taxes" shall mean all taxes, however denominated, including any interest,
penalties or other additions to tax, including any transferee or secondary
liability in respect of any tax, whether imposed by law, contractual agreement
or otherwise, that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state income taxes),
real property gains taxes, payroll and employee withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, ad valorem taxes,
excise taxes, franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers' compensation, PBGC premiums and other
governmental charges, value added, alternative minimum and other obligations of
the same or of a similar nature to any of the foregoing, which a person or
entity is required to pay, withhold or collect.

     "Tax Returns" shall mean all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed in
connection with, any Taxes or the determination, assessment or collection of any
Taxes, including information returns or reports with respect to backup
withholding and other payments to third parties, and any amendments or
supplements to any of the foregoing.

     "Transfer Restriction Agreement" means that certain Transfer Restriction
Agreement of the LLC dated as of May 1, 1995 among the LLC, Energy, WMI,
Woodward and Kifer, as amended.

     "WMI Shareholders' Agreement" means that certain WMI Shareholders'
Agreement dated March 1, 1999, among WMI, Woodward and Kifer.

     "WMI Stock" has the meaning set forth in Section 1.3.

     SECTION 12.2.  Survival of Representations, Warranties and Agreements.  The
representations, warranties and agreements in this Agreement shall survive the
Closing Date and any investigation by the parties hereto, except that (i) the
representations and warranties of WMI, Woodward and Kifer set forth in this
Agreement or any document entered into in connection herewith (other than those
in or in respect of Sections 1.3, 1.14 and 2.4) shall terminate on the
expiration of eighteen (18) months after the Closing Date; and (ii) the
agreements set forth in this Agreement or any document entered into in
connection herewith shall survive the Closing indefinitely.

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<PAGE>

     SECTION 12.3.  Notices.  All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or by
facsimile or mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

     (a)  If to the Atmos Entities:

          Atmos Energy Corporation
          1800 Three Lincoln Centre
          5430 LBJ Freeway
          Dallas, Texas 75240
          Attention:  Mr. John P. Reddy
          Facsimile:  (972) 855-3793

          With a copy to:

          Gibson, Dunn & Crutcher LLP
          2100 McKinney Avenue, Suite 1100
          Dallas, Texas 75201
          Attention:  Mr. Irwin Sentilles III
          Facsimile: (214) 698-3100

     (b)  If to WMI, Woodward or Kifer:

          Woodward Marketing, Inc.
          11251 Northwest Freeway, Suite 400
          Houston, Texas 77092
          Attention:  Mr. J.D. Woodward and James Kifer
          Facsimile:  (713) 688-5124

          With a copy to:

          Douglas K. Eyberg, Esq.
          LeBoeuf, Lamb, Greene & MacRae, L.L.P.
          1000 Louisiana, Suite 1400
          Houston, Texas   77002
          Facsimile:  (713) 287-2100

     SECTION 12.4.  Assignment.  This Agreement is not assignable by any of the
parties hereto; provided that Woodward and Kifer shall be permitted, in
conjunction with a transfer of shares of WMI Stock to a trust or other entity
created for estate planning purposes, to assign a corresponding portion of their
respective rights under this Agreement to such trust or other entity prior to
the Closing and to such extent, after any such permitted assignment the terms
"Woodward" and "Kifer" shall also refer to such permitted assignees; provided
that such assignment shall not relieve Woodward or Kifer of their respective
obligations hereunder nor impose any obligations under Article XI on such
permitted assignees.

                                       46
<PAGE>

     SECTION 12.5.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, an 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 is not affected in any manner
adverse to any party.  Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto 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 extent possible.

     SECTION 12.6.  Parties in Interest.  This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

     SECTION 12.7.  Entire Agreement.  This Agreement, together with the
Ancillary Agreements, constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and is not intended to confer
upon any other person any rights or remedies hereunder.

     SECTION 12.8.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

     SECTION 12.9.  Construction; Headings.  The parties hereto have
participated jointly in the negotiation and drafting of this Agreement.  In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.  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.  In
construing this Agreement:

     (a) examples shall not be construed to limit, expressly or by implication,
the matter they illustrate;

     (b) the word "includes" and its derivatives means "includes, but is not
limited to," and corresponding derivative expressions;

     (c) a defined term has its defined meaning throughout this Agreement, and
each exhibit, attachment, and schedule to this Agreement, regardless of whether
it appears before or after the place where it is defined;

     (d) the plural shall be deemed to include the singular, and vice versa;

     (e) each gender shall be deemed to include the other genders;

     (f) all references to prices, values or monetary amounts refer to United
States dollars;

                                       47
<PAGE>

     (g) all references to articles, sections, paragraphs, clauses, exhibits,
attachments or schedules refer to articles, sections, paragraphs and clauses of
this Agreement, and to exhibits, attachments or schedules attached to this
Agreement, unless expressly provided otherwise;

     (h) each schedule to this Agreement is a part of this Agreement, but if
there is any conflict or inconsistency between the main body of this Agreement
and any schedule, the provisions of the main body of this Agreement shall
prevail;

     (i) the words "this Agreement," "herein," "hereof," "hereby," "hereunder"
and words of similar import refer to this Agreement as a whole and not to any
particular subdivision, unless expressly so limited; and

     (j)  the word "or" is not exclusive.

     SECTION 12.10.  Incorporation of Exhibits.  The Exhibits hereto are
incorporated herein by reference and made a part hereof for all purposes.

     SECTION 12.11.  Counterparts.  This Agreement may be executed in
counterparts, each of which will be an original, but all of which together will
constitute one and the same agreement.

                           [SIGNATURES ON NEXT PAGE]

                                       48
<PAGE>

     IN WITNESS WHEREOF, the Atmos Entities, WMI, Woodward and Kifer have
executed this Agreement as of the date first written above by, in the case of
Atmos, Energy and WMI, their respective officers thereunto duly authorized.

                              ATMOS ENERGY CORPORATION

                              By:  /s/  ROBERT W. BEST
                                 ----------------------------
                                   Robert W. Best
                                   Chairman of the Board,
                                   President and CEO

                              ATMOS ENERGY MARKETING, LLC

                              By:  /s/  ROBERT W. BEST
                                 ----------------------------
                                   Robert W. Best
                                   President

                              WOODWARD MARKETING, INC.

                              By:  /s/  J.D. WOODWARD, III
                                 ----------------------------
                                   J.D. Woodward, III
                                   President and Chairman of the Board

                                   /s/  J.D. WOODWARD, III
                              -------------------------------
                              J.D. Woodward, III

                                   /s/  LINDA LEE WOODWARD
                              -------------------------------
                              Linda Lee Woodward

                                   /s/  JAMES KIFER
                              -------------------------------
                              James Kifer

                                   /s/  RITA B. KIFER
                              -------------------------------
                              Rita B. Kifer

                                       49

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