<SUBMISSION>
<ACCESSION-NUMBER>0000950134-02-010106
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>7
<PERIOD>20020630
<FILING-DATE>20020814
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ATMOS ENERGY CORP
<CIK>0000731802
<ASSIGNED-SIC>4924
<IRS-NUMBER>751743247
<STATE-OF-INCORPORATION>TX
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-10042
<FILM-NUMBER>02737183
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1800 THREE LINCOLN CTR
<STREET2>5430 LBJ FREEWAY
<CITY>DALLAS
<STATE>TX
<ZIP>75240
<PHONE>9729349227
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1800 THREE LINCOLN CTR
<STREET2>5430 LBJ FREEWAY
<CITY>DALLAS
<STATE>TX
<ZIP>75240
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ENERGAS CO
<DATE-CHANGED>19881024
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d99023e10vq.txt
<DESCRIPTION>FORM 10-Q FOR QUARTER ENDED JUNE 30, 2002
<TEXT>
<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

      OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to
                               -----------------    ------------------

Commission File Number 1-10042

                            ATMOS ENERGY CORPORATION
             (Exact name of registrant as specified in its charter)


       TEXAS AND VIRGINIA                                      75-1743247
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                              Identification No.)

    Three Lincoln Centre, Suite 1800
    5430 LBJ Freeway, Dallas, Texas                              75240
(Address of principal executive offices)                       (Zip Code)

                                 (972) 934-9227
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X   No
                                       ---     ---

Number of shares outstanding of each of the issuer's classes of common stock, as
of August 5, 2002.

           Class                                      Shares Outstanding
           -----                                      ------------------
       No Par Value                                       41,519,759



<PAGE>

PART 1.   FINANCIAL INFORMATION
Item 1.   Financial Statements

                            ATMOS ENERGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<Table>
<Caption>
                                                                June 30,        September 30,
                                                                  2002              2001
                                                            ---------------    --------------
                                                              (Unaudited)
<S>                                                            <C>               <C>
ASSETS
Property, plant and equipment                               $   2,210,815      $  2,109,867
    Less accumulated depreciation and amortization                826,226           774,469
                                                            -------------      ------------
        Net property, plant and equipment                       1,384,589         1,335,398
Current assets
    Cash and cash equivalents                                       7,003            15,263
    Cash held on deposit in margin account                         10,376            66,666
    Accounts receivable, net                                      158,924           124,046
    Inventories                                                     4,895             6,041
    Gas stored underground                                         55,614            89,555
    Assets from risk management activities                         27,178            95,968
    Deferred gas cost                                                   -            10,999
    Other current assets and prepayments                            8,190            15,713
                                                            -------------      ------------
        Total current assets                                      272,180           424,251
Intangible assets                                                  11,071            12,125
Goodwill                                                           67,386            64,745
Noncurrent assets from risk management activities                   7,359            29,771
Deferred charges and other assets                                 178,387           169,890
                                                            -------------      ------------
                                                            $   1,920,972      $  2,036,180
                                                            =============      ============

SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
    Common stock                                            $         207      $        204
    Additional paid-in capital                                    503,415           489,948
    Retained earnings                                             124,006            95,132
    Accumulated other comprehensive income (loss)                 (1,251)           (1,420)
                                                            -------------      ------------
        Shareholders' equity                                      626,377           583,864
Long-term debt                                                    675,756           692,399
                                                            -------------      ------------
        Total capitalization                                    1,302,133         1,276,263
Current liabilities
    Current maturities of long-term debt                           20,413            20,695
    Short-term debt                                                45,492           201,247
    Accounts payable and accrued liabilities                      144,452            84,471
    Taxes payable                                                  21,365            11,620
    Customers' deposits                                            31,312            32,351
    Liabilities from risk management activities                    20,129           119,484
    Deferred gas cost                                              19,219                 -
    Other current liabilities                                      48,779            41,161
                                                            -------------      ------------
        Total current liabilities                                 351,161           511,029
Deferred income taxes                                             157,488           138,934
Noncurrent liabilities from risk management activities              2,767             7,412
Deferred credits and other liabilities                            107,423           102,542
                                                            -------------      ------------
                                                            $   1,920,972      $  2,036,180
                                                            =============      ============
</Table>

See accompanying notes to condensed consolidated financial statements



                                       2
<PAGE>

                            ATMOS ENERGY CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                      (In thousands, except per share data)

<Table>
<Caption>
                                                                Three months ended
                                                                      June 30
                                                           -----------------------------
                                                              2002               2001
                                                           ----------         ----------
<S>                                                      <C>               <C>
Operating revenues                                       $   161,800       $    164,260
Purchased gas cost                                            87,967            102,981
                                                         -----------       ------------
    Gross profit                                              73,833             61,279

Gas trading margin                                            12,259             (3,195)

Operating expenses
    Operation and maintenance                                 37,832             31,197
    Depreciation and amortization                             20,362             16,129
    Taxes, other than income                                   8,720              7,584
                                                         -----------       ------------
        Total operating expenses                              66,914             54,910
                                                         -----------       ------------
Operating income                                              19,178              3,174
Miscellaneous income (expense)                                  (182)               644
Interest charges, net                                         13,823              9,232
                                                         -----------       ------------
Income (loss) before income taxes                              5,173             (5,414)
Provision (benefit) for income taxes                           1,919             (2,014)
                                                         -----------       ------------
        Net income (loss)                                $     3,254       $     (3,400)
                                                         ===========       ============
Basic net income (loss) per share                        $      0.08       $      (0.08)
                                                         ===========       ============
Diluted net income (loss) per share                      $      0.08       $      (0.08)
                                                         ===========       ============
Cash dividends declared per share                        $      .295       $       .290
                                                         ===========       ============
Weighted average shares outstanding:
    Basic                                                     41,265             40,395
                                                         ===========       ============
    Diluted                                                   41,370             40,395
                                                         ===========       ============
</Table>

See accompanying notes to condensed consolidated financial statements






                                       3
<PAGE>

                            ATMOS ENERGY CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                      (In thousands, except per share data)

<Table>
<Caption>
                                                                 Nine months ended
                                                                      June 30
                                                           ------------------------------
                                                                2002              2001
                                                           -----------        -----------
<S>                                                        <C>                <C>
Operating revenues                                         $   812,623        $ 1,282,163
Purchased gas cost                                             479,542            972,612
                                                           -----------        -----------
    Gross profit                                               333,081            309,551

Gas trading margin                                              29,026            (3,195)
Operating expenses
    Operation and maintenance                                  122,614            102,140
    Depreciation and amortization                               60,875             47,815
    Taxes, other than income                                    29,661             30,395
                                                           -----------        -----------
        Total operating expenses                               213,150            180,350
                                                           -----------        -----------
Operating income                                               148,957            126,006
Equity in earnings of Woodward Marketing, L.L.C.                     -              8,062
Miscellaneous income (expense)                                   (893)            (1,426)
Interest charges, net                                           44,304             31,295
                                                           -----------        -----------
Income before income taxes                                     103,760            101,347
Provision for income taxes                                      38,495             37,701
                                                           -----------        -----------
        Net income                                         $    65,265        $    63,646
                                                           ===========        ===========
Basic net income per share                                 $      1.59        $      1.71
                                                           ===========        ===========
Diluted net income per share                               $      1.59        $      1.70
                                                           ===========        ===========
Cash dividends declared per share                          $      .885        $      .870
                                                           ===========        ===========
Weighted average shares outstanding:
    Basic                                                       41,049             37,318
                                                           ===========        ===========
    Diluted                                                     41,144             37,422
                                                           ===========        ===========
</Table>


See accompanying notes to condensed consolidated financial statements



                                       4
<PAGE>
                            ATMOS ENERGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (In thousands)

<Table>
<Caption>
                                                                               Nine months ended
                                                                                    June 30
                                                                          ---------------------------
                                                                             2002              2001
                                                                          ---------        ----------
<S>                                                                       <C>              <C>
Cash Flows From Operating Activities
    Net income                                                            $  65,265        $   63,646
    Adjustments to reconcile net income to net cash provided
      by operating activities:
      Depreciation and amortization:
          Charged to depreciation and
            amortization                                                     60,875            47,815
          Charged to other accounts                                           1,931             2,068
      Deferred income taxes (benefit)                                        18,454              (191)
      Other                                                                  (3,223)                -
      Net assets/liabilities from risk management activities                (10,780)                -
      Net change in operating assets and liabilities                        169,144            32,180
                                                                          ---------        ----------
          Net cash provided by operating activities                         301,666           145,518
Cash Flows From Investing Activities
    Capital expenditures                                                    (89,768)          (70,305)
    Acquisitions                                                            (15,747)                -
    Retirements of property, plant and
        equipment, net                                                       (1,930)             (515)
    Assets for leasing activities                                            (6,880)           (4,890)
    Increase in cash from acquisition                                             -            13,129
    Proceeds from sale of assets, net                                             -             6,625
                                                                          ---------        ----------
          Net cash used in investing activities                            (114,325)          (55,956)
Cash Flows From Financing Activities
    Net decrease in short-term debt                                        (155,755)         (125,810)
    Cash dividends paid                                                     (36,391)          (32,314)
    Repayment of long-term debt                                             (16,925)          (13,803)
    Net proceeds from issuance of long-term debt                                  -           347,099
    Issuance of common stock                                                 13,470            10,327
    Net proceeds from equity offering                                             -           142,043
                                                                          ---------        ----------
          Net cash provided (used) by financing activities                 (195,601)          327,542
                                                                          ---------        ----------
Net increase (decrease) in cash and cash equivalents                         (8,260)          417,104
Cash and cash equivalents at beginning
    of period                                                                15,263             7,379
                                                                          ---------        ----------
Cash and cash equivalents at end
    of period                                                            $    7,003        $  424,483
                                                                         ==========        ==========
</Table>

See accompanying notes to condensed consolidated financial statements



                                       5
<PAGE>
                            ATMOS ENERGY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2002

1. Unaudited Interim Financial Information

In the opinion of management, all material adjustments (consisting of only
normal recurring accruals) necessary for a fair presentation have been made to
the unaudited interim period financial statements. Because of seasonal and other
factors, the results of operations for the nine month period ended June 30, 2002
are not indicative of expected results of operations for the year ending
September 30, 2002. These interim financial statements and notes are condensed
as permitted by the instructions to Form 10-Q and should be read in conjunction
with the audited consolidated financial statements of Atmos Energy Corporation
in its Annual Report on Form 10-K for the fiscal year ended September 30, 2001.

Principles of consolidation - The accompanying condensed consolidated financial
statements include the accounts of Atmos Energy Corporation and its wholly-owned
subsidiaries. All material intercompany transactions have been eliminated.

Prior to April 1, 2001, we owned a 45 percent interest in Woodward Marketing,
L.L.C. and accounted for that ownership using the equity method of accounting
for investments. Beginning April 1, 2001, we owned 100 percent of Woodward
Marketing and have accounted for that ownership on a consolidated basis.

Common stock - As of June 30, 2002, we had 100,000,000 shares of common stock,
no par value (stated at $.005 per share), authorized and 41,445,585 shares
outstanding. At September 30, 2001, we had 40,791,501 shares outstanding.

Goodwill - Total goodwill was $67.4 million and $64.7 million at June 30, 2002
and September 30, 2001. Goodwill applicable to the utility segment was $37.5
million and $36.9 million at June 30, 2002 and September 30, 2001. Goodwill
applicable to the non-regulated segment was $29.9 million and $27.8 million at
June 30, 2002 and September 30, 2001. Goodwill applicable to the utility segment
resulted from the acquisition of the Louisiana Gas Service Company assets on
July 1, 2001 and is not subject to amortization under the provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"). Goodwill applicable to the non-regulated
segment was amortized over 20 years until September 30, 2001. Effective October
1, 2001, goodwill applicable to the non-regulated segment was not amortized
under the provisions of SFAS No. 142. The proforma effect on goodwill
amortization of adopting SFAS No. 142 is not material.


                                       6
<PAGE>

Under the provisions of SFAS No. 142, we evaluate our goodwill balance annually
for impairment. The initial evaluation took place during the second quarter of
our current fiscal year. No impairment of our goodwill balance was indicated as
a result of this evaluation.

Impairment of Intangible Assets - We periodically evaluate whether events or
circumstances have occurred that indicate that the value of intangible assets
may have been impaired. When such events or circumstances are present, we assess
the value of intangible assets by determining whether the carrying amount will
be recovered through the expected future cash flows. In the event the sum of the
expected future cash flows resulting from the use of the asset is less than the
carrying amount, an impairment loss equal to the excess of the asset's carrying
value over its fair value is recorded. To date, no such impairment has been
recognized.

Revenue recognition - Sales of natural gas are billed on a monthly cycle basis;
however, the billing cycle periods for certain classes of customers do not
necessarily coincide with accounting periods used for financial reporting
purposes. We follow the revenue accrual method of accounting for natural gas
revenues whereby revenues applicable to gas delivered to customers, but not yet
billed under the cycle billing method, are estimated and accrued and the related
costs are charged to expense. Estimated losses due to credit risk are reserved
at the time revenue is recognized.

Accounts receivable and allowance for doubtful accounts - Accounts receivable
consists of natural gas sales to residential, commercial, industrial,
agricultural and other customers. The allowance for doubtful accounts is
computed based on the aging of outstanding accounts receivable and historical
collections experience and, in management's opinion, represents an adequate
allowance to provide for probable uncollectable accounts. The allowance for
doubtful accounts was $17.9 million and $16.2 million at June 30, 2002 and
September 30, 2001.

Risk management assets and liabilities, utility segment - Our business units
entered into financial instruments for the 2001-2002 heating season. The purpose
of entering into these financial instruments was to protect us and our customers
from unusually large winter period gas price increases. We use the
mark-to-market method to account for these activities in accordance with
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended. In accordance with Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation", current period changes in the assets and liabilities from risk
management activities were recorded as deferred gas costs on the condensed
consolidated balance sheet as these costs will ultimately be recovered from
ratepayers. Accordingly, there was no earnings impact as a result of the use of
these financial instruments. Upon maturity, the contracts were recognized in
purchased gas cost.

Risk management assets and liabilities, non-regulated segment - We use storage,
transportation and requirements contracts, forwards, over-the-counter and
exchange-traded options, futures and swap contracts to conduct our risk
management activities.



                                       7
<PAGE>

We use the mark-to-market method to account for these activities in accordance
with Emerging Issues Task Force Issue No. 98-10, "Accounting for Energy Trading
and Risk Management Activities." Under this method, the aforementioned contracts
are reflected at fair value, inclusive of future servicing costs and valuation
adjustments, with resulting unrealized gains and losses recorded as assets or
liabilities from risk management activities on the condensed consolidated
balance sheet. Current period changes in the assets and liabilities from risk
management activities are recognized as net gains or losses on the condensed
consolidated statement of income as gas trading margin. Changes in the assets
and liabilities from risk management activities result primarily from changes in
the valuation of the portfolio of contracts, maturity and settlement of
contracts and newly originated transactions. Market prices used to value these
transactions reflect our best estimate considering various factors including
closing exchange and over-the-counter quotations, time value and volatility
factors underlying the contracts. Values are adjusted to reflect the potential
impact of liquidating our positions in an orderly manner over a reasonable
period of time under present market conditions. Changes in market prices
directly affect our estimate of the fair value of these transactions. Current
period changes in assets and liabilities from risk management activities do not
impact cash in the current period. Cash is impacted when outstanding contracts
are closed.

Comprehensive income - The following table presents the components of
comprehensive income, net of related tax, for the three-month and nine-month
periods ended June 30, 2002 and 2001:

<Table>
<Caption>
                                                             Three months ended
                                                                  June 30
                                                    -------------------------------------
                                                          2002               2001
                                                    ----------------- -------------------
                                                               (In thousands)
<S>                                                      <C>               <C>
Net income (loss)                                        $3,254            $(3,400)
Unrealized holding gains (losses) on investments            (92)                60
                                                    ----------------- -------------------
Comprehensive income (loss)                              $3,162            $(3,340)
                                                    ================= ===================
</Table>


<Table>
<Caption>
                                                             Nine months ended
                                                                  June 30
                                                    -------------------------------------
                                                          2002               2001
                                                    ----------------- -------------------
                                                               (In thousands)
<S>                                                      <C>                <C>
Net income                                               $65,265            $63,646
Unrealized holding gains (losses) on investments             169             (2,221)
                                                    ----------------- -------------------
Comprehensive income                                     $65,434            $61,425
                                                    ================= ===================
</Table>

The only components of accumulated other comprehensive income (loss), net of
related tax, relate to unrealized holding gains and losses associated with
certain available for sale investments.


                                       8
<PAGE>

Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Recently issued accounting standards not yet adopted - In June 2001, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations." This Statement
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This Statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. We are currently in the process of
evaluating the impact the adoption of this Statement will have on our financial
condition, results of operations and net cash flows.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This Statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. The
provisions of this Statement are effective for financial statements issued for
fiscal years beginning after December 15, 2001. We are currently in the process
of evaluating the impact the adoption of this Statement will have on our
financial condition, results of operations and net cash flows.

Reclassifications - Certain prior year amounts have been reclassified to conform
with the current year presentation.

2. Contingencies

Litigation

Greeley Gas Division

On September 23, 1999, a suit was filed in the District Court of Stevens County,
Kansas, by Quinque Operating Company, Tom Boles and Robert Ditto, against more
than 200 companies in the natural gas industry including us and our Greeley Gas
Division. The original plaintiffs have since withdrawn from the case and on
December 31, 2001, were substituted with Will Price, Stixon Petroleum Inc., Tom
Boles and The Cooper Clark Foundation as plaintiffs. The plaintiffs, who purport
to represent a class consisting of gas producers, royalty owners, overriding
royalty owners, working interest owners and state taxing authorities, accuse the
defendants of underpaying royalties on gas taken from wells situated on
non-federal and non-Indian lands throughout the United States and offshore
waters predicated upon allegations that the defendants' gas measurements are
simply inaccurate and that the defendants failed to comply with applicable
regulations and industry standards over the last 25 years. Although the
plaintiffs do not specifically allege an amount of damages, they contend that
this suit is brought to recover billions of dollars in revenues that the
defendants have allegedly unlawfully diverted from the



                                       9
<PAGE>

plaintiffs to themselves. On April 10, 2000, this case was consolidated for
pre-trial proceedings with other similar pending litigation in federal court in
Wyoming in which we are also a defendant along with over 200 other defendants in
the case of In Re Natural Gas Royalties Quitam Litigation. In January 2001, the
federal court in Wyoming remanded this case back to the Kansas state court. A
reconsideration of remand was filed, but it was denied. The Kansas state court
now has jurisdiction over this proceeding and has issued a preliminary case
management order. We believe that the plaintiffs' claims are lacking in merit,
and we intend to vigorously defend this action. While the results of this
litigation cannot be predicted with certainty, we believe the final outcome of
such litigation will not have a material adverse effect on our financial
condition, results of operations or net cash flows because we believe that we
have adequate insurance and/or reserves to cover any damages that may ultimately
be awarded.

Energas Division

On May 18, 2001, a suit was filed in the 99th District Court of Lubbock County,
Texas, by the City of Lubbock, Texas, and the West Texas Municipal Agency
against Stewart & Stevenson Energy Products, Inc., a division of GE Packaged
Power, Inc. ("GE") and our Energas Division. The action arises out of (i) the
construction and installation of a gas-fired electric generating facility
designed and installed by GE and (ii) the design and installation by our Energas
Division of the natural gas pipeline that provides natural gas to the facility.
The plaintiffs allege that they incurred damages as a result of certain
corrosive products that were introduced into the facility's turbine that damaged
the turbine and necessitated repair costs of approximately $0.9 million and
consequential damages of approximately $4.7 million, as a result of electric
power purchases made by the plaintiffs from other sources while the facility was
inoperative or operating below specifications. The causes of action asserted by
the plaintiffs against the Energas Division include breach of contract, breach
of warranty and negligence. We have denied any liability and intend to
vigorously defend against the plaintiffs' claims. While the results of this
litigation cannot be predicted with certainty, we believe the final outcome of
such litigation will not have a material adverse effect on our financial
condition, results of operations or net cash flows because we believe that we
have adequate insurance and/or reserves to cover any damages that may ultimately
be awarded.

On February 13, 2002, a suit was filed in the 287th District Court of Parmer
County, Texas by Anderson Brothers, a Partnership, against Atmos Energy
Corporation, et al. The plaintiffs' claims arise out of an alleged breach of
contract by us and by a number of our divisions and subsidiaries concerning the
sale of natural gas used in irrigation activities since 1998 and an alleged
violation of the Texas Agricultural Gas Users Act of 1985. The Court has ruled
proper venue to be in Parmer County, Texas. We have been responding to numerous
discovery requests from the plaintiffs. We have also filed suit in Travis
County, Texas to have the Texas Agricultural Gas Users Act of 1985 to be
declared unconstitutional. The plaintiffs seek class action status and to
recover unspecified damages plus attorney's fees. We have denied any liability
and intend to vigorously defend against the plaintiffs' claims.



                                       10
<PAGE>

We have a receivable from a supplier related to over payment for deliveries of
gas. A lawsuit was filed and we believe the receivable is fully recoverable.

Atmos Energy Louisiana Gas Division

Prior to our acquisition of the assets of Louisiana Gas Service Company, a
division of Citizens Communications Company, on July 1, 2001, Louisiana Gas
Service Company was involved in a proceeding with the Louisiana Public Service
Commission relating to past costs associated with the purchase of gas that it
charged to its customers. Subsequent to our acquisition of the Louisiana Gas
assets on July 1, 2001, we agreed to take responsibility for assuring the
payment of refunds and/or credits to ratepayers that may arise from Citizens
Communications' past activities with respect to purchased gas costs. On April
10, 2002, the Louisiana Public Service Commission issued a Report of Proceedings
in which it approved a Stipulation and Agreement between Citizens
Communications, Atmos and the Commission Staff. This Stipulation and Agreement
resulted in no refunds being due to customers.

United Cities Propane Gas, Inc.

United Cities Propane Gas, Inc., one of our wholly-owned subsidiaries, is a
party to a suit filed in June 2000 which is pending in the Circuit Court of
Sevier County, Tennessee. The plaintiffs' claims arise out of injuries alleged
to have been caused by a low-level propane explosion. The plaintiffs seek to
recover damages of $13.0 million. Discovery activities have begun in this case.
We have denied any liability, and we intend to vigorously defend against the
plaintiffs' claims. While the results of this litigation cannot be predicted
with certainty, we believe the final outcome of such litigation will not have a
material adverse effect on our financial condition, results of operations or net
cash flows because we believe that we have adequate insurance and/or reserves to
cover any damages that may ultimately be awarded.

We are a party to other litigation and claims that arise in the ordinary course
of our business. While the results of such litigation and claims cannot be
predicted with certainty, we believe the final outcome of such litigation and
claims will not have a material adverse effect on our financial condition,
results of operations or net cash flows because we believe that we have adequate
insurance and/or reserves to cover any damages that may ultimately be awarded.

Environmental Matters

Manufactured Gas Plant Sites

Our United Cities Gas Division is the owner or previous owner of manufactured
gas plant sites in Johnson City and Bristol, Tennessee and Hannibal, Missouri
which were used to supply gas prior to availability of natural gas. The gas
manufacturing process resulted in certain by-products and residual materials
including coal tar. The manufacturing process used by our predecessors was an
acceptable and satisfactory process at the time such



                                       11
<PAGE>

operations were being conducted. Under current environmental protection laws and
regulations, we may be responsible for response actions with respect to such
materials if response actions become necessary.

United Cities Gas Company and the Tennessee Department of Environment and
Conservation entered into a consent order effective January 23, 1997, to
facilitate the investigation, removal and remediation of the Johnson City site.
United Cities began the implementation of the consent order in the first quarter
of 1997 which has continued through June 30, 2002. The investigative phase of
the work at the site has been completed. An interim removal action was completed
in June 2001. United Cities is in the process of conducting a risk assessment at
the site.

In February 2002, the Tennessee Department of Environment and Conservation
contacted our United Cities Gas Division concerning the former manufactured gas
plant in Bristol, Tennessee. In May 2002, our United Cities Gas Division
completed a preliminary assessment of this location to learn more about the
history and operation of the manufactured gas plant, including limited sampling
activities. Our United Cities Gas Division is in the process of identifying and
locating other potentially responsible parties and intends to contact them in an
effort to have them join in any future remedial activities at the site.

On July 22, 1998, we entered into an Abatement Order on Consent with the
Missouri Department of Natural Resources addressing the former manufactured gas
plant located in Hannibal, Missouri. Through our United Cities Gas Division, we
agreed to perform a removal action, a subsequent site evaluation and to
reimburse the response costs incurred by the State of Missouri in connection
with the property. The removal action was conducted and completed in August
1998, and the site evaluation field work was conducted in August 1999. A risk
assessment for the site is currently being performed. On March 9, 1999, the
Missouri Public Service Commission issued an Order authorizing us to defer the
costs associated with this site until March 9, 2001. A renewal of the Order has
been requested. The matter is still pending before the Commission.

As of June 30, 2002, we had incurred costs of approximately $0.9 million for the
investigations of the Johnson City and Bristol, Tennessee and Hannibal, Missouri
sites and had a remaining accrual relating to these sites of $0.7 million.

Mercury Contamination Sites

We have completed investigation and remediation activities pursuant to Consent
Orders between the Kansas Department of Health and Environment and United Cities
Gas Company. The Orders provided for the investigation and remediation of
mercury contamination at gas pipeline sites which utilize or formerly utilized
mercury meter equipment in Kansas. The Final Interim Characterization and
Remediation Report has been submitted to the Kansas Department of Health. We
have agreed to amendments of the Orders with the Kansas Department of Health to
include all mercury meters that belonged to our Greeley Gas Division before the
merger with United Cities Gas



                                       12
<PAGE>

Company on July 31, 1997. These sites will be investigated in 2003 and any
necessary remediation will be performed. As of June 30, 2002, we had incurred
costs of $0.1 million for these sites and had a remaining accrual of $0.3
million for recovery. The Kansas Corporation Commission has authorized us to
defer these costs and seek recovery in a future rate case.

We are a party to other environmental matters and claims, including those
discussed above, that arise in the ordinary course of our business. While the
ultimate results of response actions to these environmental matters and claims
cannot be predicted with certainty, we believe the final outcome of such
response actions will not have a material adverse effect on our financial
condition, results of operations or net cash flows because we believe that the
expenditures related to such response actions will either be recovered through
rates, shared with other parties or covered by adequate insurance or reserves.

3. Short-term Debt

At June 30, 2002, short-term debt was composed of $30.0 million of commercial
paper and $15.5 million outstanding under bank credit facilities.

Committed credit facilities

We have short-term committed credit facilities totaling $318.0 million. One
short-term unsecured credit facility is for $300.0 million and serves as a
backup liquidity facility for our commercial paper program. Effective July 31,
2002, this credit facility was renegotiated for $300.0 million. Our commercial
paper is rated A-2 by Standard and Poor's, P-2 by Moody's and F-2 by Fitch. At
June 30, 2002, $30.0 million of commercial paper was outstanding. We have a
second credit facility in place for $18.0 million. At June 30, 2002, $15.5
million was outstanding under this credit facility. These credit facilities are
negotiated at least annually and are used for working capital purposes.

Uncommitted credit facilities

Our Woodward Marketing subsidiary has an uncommitted demand credit facility for
$125.0 million which is used for its non-regulated business. Atmos Energy
Marketing, LLC, our wholly-owned subsidiary, is the sole guarantor of all
amounts outstanding under this facility. At June 30, 2002, no amount was
outstanding under this credit facility. Related letters of credit totaling $55.6
million reduced the amount available under this facility. This facility is used
for working capital purposes. Effective July 1, 2002, this facility was
renegotiated to increase the amount available to $210.0 million and change the
sole guarantor to Atmos Energy Holdings, Inc., also our wholly-owned subsidiary
and parent company of Atmos Energy Marketing, LLC.

We also have an unsecured short-term uncommitted credit line for $20.0 million.
No amounts were outstanding under this credit facility at June 30, 2002. This
uncommitted line is renewed or renegotiated at least annually with varying
terms, and we pay no fee for the availability of the line. Borrowings under this
line are made on a when- and as-


                                       13
<PAGE>

available basis at the discretion of the bank. This facility is also used for
working capital purposes.

In addition, Woodward Marketing has up to $100.0 million of credit available
from Atmos Energy Marketing, LLC for its non-regulated business. At June 30,
2002, $8.0 million was outstanding. Effective July 1, 2002, Atmos Energy
Holdings, Inc. replaced Atmos Energy Marketing, LLC as the provider of such
credit to Woodward Marketing. This intercompany facility is subordinated in
terms of repayment to the $210.0 million uncommitted demand credit facility
described above.

4. Earnings Per Share

Basic earnings per share has been computed by dividing net income for the period
by the weighted average number of common shares outstanding during the period.
Diluted earnings per share has been computed by dividing net income for the
period by the weighted average number of common shares outstanding during the
period adjusted for the assumed exercise of restricted stock and other
contingently issuable shares of common stock. Net income for basic and diluted
earnings per share are the same, as there are no contingently issuable shares of
stock whose issuance would have impacted net income. A reconciliation between
basic and diluted weighted average common shares outstanding follows:

<Table>
<Caption>
                                                      For the three months ended
                                                               June 30
                                                      --------------------------
                                                        2002              2001
                                                      --------          --------
                                                            (In thousands)
<S>                                                    <C>               <C>
Weighted average common shares - basic                  41,265            40,395
Effect of dilutive securities:
    Restricted stock                                        67                 -
    Stock options                                           38                 -
                                                      --------          --------
Weighted average common shares - assuming
    dilution                                            41,370            40,395
                                                      ========          ========
</Table>


<Table>
<Caption>
                                                      For the nine months ended
                                                               June 30
                                                      -------------------------
                                                        2002            2001
                                                      --------        --------
                                                            (In thousands)
<S>                                                    <C>               <C>
Weighted average common shares - basic                  41,049          37,318
Effect of dilutive securities:
    Restricted stock                                        67              92
    Stock options                                           28              12
                                                      --------        --------
Weighted average common shares - assuming
    dilution                                            41,144          37,422
                                                      ========        ========
</Table>


                                       14
<PAGE>

5. Derivative Instruments and Hedging Activities

Effective October 1, 2000, we adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended. This Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that all
derivative financial instruments be recognized in the financial statements and
measured at fair value regardless of the purpose or intent for holding them. In
our utility operations, changes in the fair value of derivative financial
instruments are recognized periodically as deferred gas costs. The cumulative
effect of the change in accounting for the adoption of this Statement did not
have a material impact on our financial position, results of operations or net
cash flows.

Weather Hedges and Insurance

In July 2000, we entered into an agreement to purchase weather hedges for our
Texas and Louisiana operations effective for the 2000-2001 heating season. The
hedges were designed to help mitigate the effects of weather that was at least
seven percent warmer than normal in both Texas and Louisiana while preserving
any upside. The cost of the weather hedges was approximately $4.9 million which
was amortized over the 2000-2001 heating season. No income was recognized for
the 2000-2001 heating season for these weather hedges due to the colder than
normal weather.

In June 2001, we purchased a three year weather insurance policy with an option
to cancel in the third year if we obtain weather protection in our rate
structures. The policy is for our Texas and Louisiana operations and covers the
entire heating season of October to March beginning with the 2001-2002 heating
season. The cost of the three year policy was approximately $13.2 million which
was prepaid and is being amortized over the appropriate heating seasons based on
degree days. The insurance is designed to protect against weather that is at
least seven percent warmer than normal for the entire heating season. During the
2001-2002 heating season, weather was not at least seven percent warmer than
normal resulting in no claim having been filed under the insurance policy. Only
the amortization of $4.4 million of premiums was recognized during the heating
season.

Utility Hedging Activities

Historically we have effectively hedged 20 percent of the gas supply required
during our annual October through March heating season by utilizing our
underground storage assets. For the 2001-2002 heating season, we covered
approximately 64 percent of our anticipated flowing gas requirements through
storage and futures and fixed forward contracts.

In accordance with Statement of Financial Accounting Standards No. 133, we use
the mark-to-market method to account for our financial instruments discussed
previously.



                                       15
<PAGE>

In accordance with Statement of Financial Accounting Standards No. 71
"Accounting for the Effects of Certain Types of Regulation", current period
changes in the assets and liabilities from risk management activities are
recorded as deferred gas costs on the condensed consolidated balance sheet as
these costs will ultimately be recovered from ratepayers. Accordingly, there is
no earnings impact as a result of the use of these financial instruments. Upon
maturity, the contracts are recognized in purchased gas cost.

Non-Regulated Hedging Activities

At the close of business on June 30, 2002, we had outstanding contracts
representing 1.0 Bcf of net notional volumes with average contract maturities of
less than two years. These contracts were marked to market. Contracts
representing 59 percent of the fair value of these contracts are scheduled to
mature within one year. Contracts representing 39 percent of the remaining fair
value are scheduled to mature within three years.

Effective April 1, 2001, natural gas sales from our natural gas trading
operations have been netted against purchased gas costs and shown as gas trading
margin on the condensed consolidated statements of income. For the three months
ended June 30, 2002, our gas trading margin consisted of a $2.8 million realized
trading gain and a $9.5 million unrealized trading gain. For the nine months
ended June 30, 2002, our gas trading margin consisted of a $37.1 million
realized trading gain and a $8.1 million unrealized trading loss.

We acquired a 45 percent interest in Woodward Marketing, L.L.C. in 1997 as a
result of the merger of Atmos and United Cities Gas Company, which had acquired
that interest in 1995. On April 1, 2001, we acquired the 55 percent interest
that we did not own from J.D. Woodward and others for 1,423,193 restricted
shares of our common stock. Immediately following the acquisition, Mr. Woodward
was elected as a Senior Vice President of Atmos in charge of all non-regulated
business activities, a position he has held since April 1, 2001. Prior to that
time, Mr. Woodward had not been an officer or employee of Atmos.

The principal business of Atmos Energy Marketing, including the activities of
Woodward Marketing and Trans Louisiana Industrial Gas Company, Inc., is the
overall management of natural gas requirements for municipalities, local gas
utility companies and industrial customers located primarily in the southwestern
and midwestern United States. This business involves the sale of natural gas by
Woodward Marketing to its customers and the management of storage and
transportation contracts for its customers under contracts generally having one
to two-year terms. At June 30, 2002, Woodward Marketing had a total of 102
municipal and local gas utility customers and 324 industrial customers. Woodward
Marketing also sells natural gas to certain of its industrial customers on a
delivered burner tip basis under contract terms from 30 days to two years. In
addition, Woodward Marketing supplies our regulated operations with a portion of
our natural gas requirements on a competitive bid basis. Any mark-to-market
gains or losses on these affiliate contracts are eliminated.


                                       16
<PAGE>

In the management of natural gas requirements for municipal and other local
utilities, Woodward Marketing sells physical natural gas to those customers for
future delivery and manages the associated price risk through the use of gas
futures, including forwards, over-the-counter and exchange-traded options and
swap contracts with counterparties. These financial contracts are
marked-to-market daily at the close of business. Woodward Marketing links gas
futures to physical delivery of natural gas and balances its futures positions
at the end of each trading day. Over-the-counter swap agreements require
Woodward Marketing to receive or make payments based on the difference between a
fixed price and the market price of natural gas on the settlement date. Woodward
Marketing uses these futures and swaps to manage margins on offsetting
fixed-price purchase or sale commitments for physical quantities of natural gas,
which are also carried on a mark-to-market basis. Options held to manage price
risk provide the right, but not the requirement, to buy or sell energy
commodities at a fixed price. Woodward Marketing uses options to manage margins
and to limit overall price risk exposure. At any point in time, Woodward
Marketing may not have completely offset its price risk on these activities.

Energy related services provided by Woodward Marketing include the sale of
natural gas to its various customer classes and management of transportation and
storage assets and inventories. More specifically, energy services include
contract negotiation and administration, load forecasting, storage acquisition,
natural gas purchase and delivery and capacity utilization strategies. In
providing these services, Woodward Marketing generates income from its utility,
municipal and industrial customers through negotiated prices based on the volume
of gas supplied to the customer. Woodward Marketing also generates income by
taking advantage of the difference between near-term gas prices and prices for
future delivery as well as the daily movement of gas prices by utilizing storage
and transportation capacity that it controls.

Prior to May 2002, Woodward Marketing engaged in financial trading for
speculative purposes. Financial trading involves utilizing financial instruments
(futures, options, swaps, etc.) to hedge natural gas prices or to take a
position in the market based on anticipated price movement. In some prior years,
Woodward Marketing experienced losses in its financial speculative trading
business. Effective in May 2002, Woodward Marketing's financial trading for
speculative purposes was discontinued. Woodward Marketing will continue its
financial trading for hedging (risk management purposes) related to its physical
trading positions. With regard to its physical trading business, Woodward
Marketing does engage in limited speculative natural gas trading for its own
account primarily related to its storage activity, subject to a risk management
policy established by us which limits the level of trading loss to a maximum of
$8.9 million in fiscal 2002. Physical trading involves utilizing physical assets
(storage and transportation) to sell and deliver gas to customers or to take a
position in the market based on anticipated price movement. Compliance with such
risk management policy is monitored on a daily basis. In addition, Woodward
Marketing's bank credit facility limits trading positions that are not closed at
the end of the day (open positions) to 5.0 Bcf of natural gas. At June 30, 2002,
Woodward Marketing's net open positions in its trading operations totaled 1.0
Bcf. In its speculative trading, Woodward Marketing's open trading positions are
monitored on a daily basis but are not required to be closed if they remain
within the limits set by the bank loan agreement. In addition to the price risk
of any net open position at the end of each trading day, the financial exposure
that results from the daily fluctuations of gas


                                       17
<PAGE>

prices and the potential for daily price movements constitutes a risk of loss
since the price of natural gas purchased or sold for future delivery at the
beginning of the day may not be hedged until later in the day.

Financial instruments, which subject Woodward Marketing to counterparty risk,
consist primarily of financial instruments arising from trading and risk
management activities and overnight repurchase agreements that are not insured.
Counterparty risk is the risk of loss from nonperformance by financial
counterparties to a contract. Exchange-traded future and option contracts are
generally guaranteed by the exchanges.

Woodward Marketing's operations are concentrated in the natural gas industry,
and its customers and suppliers may be subject to economic risks affecting that
industry.

6. Segment Information

Our determination of reportable segments considers, in part, the strategic
operating units under which we manage sales of various products and services to
customers in differing regulatory environments. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies included in Note 1 of notes to consolidated financial
statements in our Annual Report on Form 10-K for the year ended September 30,
2001. All intersegment sales prices are market based. We evaluate performance
based on net income or loss of the respective operating units.

In accordance with Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information", we have
identified the Utility and Non-regulated segments. For an expanded description
of these segments, refer to Note 1 of notes to consolidated financial statements
in our Annual Report on Form 10-K for the year ended September 30, 2001. We
consider each business unit within our utility segment to be a reporting unit of
the utility segment and not a reportable segment. Our chief executive officer
makes decisions about allocating resources to the utility segment as a whole and
not to individual reporting units. The individual operations that comprise the
non-regulated segment are not currently material to our consolidated financial
position or results of operations and therefore do not require separate
reporting. Prior to April 1, 2001, we owned a 45 percent interest in Woodward
Marketing and accounted for that ownership using the equity method of accounting
for investments. Beginning April 1, 2001, we own 100 percent of Woodward
Marketing and have accounted for that ownership on a consolidated basis.



                                       18
<PAGE>
Summarized financial information concerning our reportable segments for the
three months and nine months ended June 30, 2002 and 2001 are shown in the
following tables:

<Table>
<Caption>
                                                                 Non-
                                              Utility          Regulated           Total
                                            -----------        ---------        -----------
                                                            (In thousands)
<S>                                         <C>                <C>              <C>
For the three months ended
June 30, 2002:
--------------
Operating revenues for reportable
    segments                                $   159,493        $    4,058       $   163,551
Elimination of intersegment
    revenues                                       (271)           (1,480)           (1,751)
                                            -----------        ----------       -----------
      Total operating revenues                  159,222             2,578           161,800

Net income (loss)                                (1,954)            5,208             3,254

June 30, 2001:
--------------
Operating revenues for reportable
    segments                                $   155,868       $     9,519       $   165,387
Elimination of intersegment
    revenues                                       (316)             (811)           (1,127)
                                            -----------        ----------       -----------
      Total operating revenues                  155,552             8,708           164,260

Net loss                                           (123)           (3,277)           (3,400)
</Table>


<Table>
<Caption>
                                                                 Non-
                                              Utility          Regulated           Total
                                            -----------        ---------        -----------
                                                            (In thousands)
<S>                                         <C>                 <C>             <C>
As of and for the nine months ended
June 30, 2002:
--------------
Operating revenues for reportable
    segments                                $   801,460         $  21,357       $   822,817
Elimination of intersegment
    revenues                                     (1,219)           (8,975)          (10,194)
                                            -----------        ----------       -----------
      Total operating revenues                  800,241            12,382           812,623

Net income                                       51,567            13,698            65,265

Total assets                                  1,748,231           310,675         2,058,906

June 30, 2001:
--------------
Operating revenues for reportable
    segments                                $ 1,231,622        $   54,431       $ 1,286,053
Elimination of intersegment
    revenues                                     (1,434)           (2,456)           (3,890)
                                            -----------        ----------       -----------
      Total operating revenues                1,230,188            51,975         1,282,163

Net income                                       58,656             4,990            63,646

Total assets                                  1,655,305           288,894         1,944,199
</Table>



                                       19
<PAGE>

A reconciliation of total assets for the reportable segments to total
consolidated assets for June 30, 2002 and 2001 is presented below:

<Table>
<Caption>
                                                         June 30
                                              -------------------------------
                                                 2002                 2001
                                              ----------           ----------
                                                     (In thousands)

<S>                                           <C>                  <C>
Total assets for reportable segments          $2,058,906           $1,944,199
Elimination of intercompany accounts            (137,934)             (71,394)
                                              ----------           ----------
    Total consolidated assets                 $1,920,972           $1,872,805
                                              ==========           ==========
</Table>



                                       20
<PAGE>


7. Supplemental Disclosures

The following supplemental condensed financial statements show Atmos Energy
Corporation, consisting of Atmos' regulated natural gas divisions; Atmos Energy
Holdings Inc., consisting of Atmos' non-regulated subsidiaries; and the
elimination of material intercompany transactions. The following supplemental
condensed balance sheet is as of June 30, 2002.

<Table>
<Caption>
                                           Atmos Energy   Atmos Energy
                                            Corporation   Holdings, Inc.   Eliminations   Consolidated
                                           ------------   --------------   ------------   ------------
                                                               (In thousands)
<S>                                         <C>             <C>            <C>             <C>
ASSETS
Property, plant and equipment, net         $ 1,310,901      $  73,688      $         -     $1,384,589
Investment in subsidiaries                     120,024         (5,290)        (114,734)             -
Current assets
  Cash and cash equivalents                     (3,142)        10,145                -          7,003
  Cash held on deposit in margin
   account                                           -         10,376                -         10,376
  Accounts receivable, net                      61,261        117,145          (19,482)       158,924
  Inventories                                    4,628            267                -          4,895
  Gas stored underground                        25,004         30,610                -         55,614
  Assets from risk management
   activities                                        -         30,896           (3,718)        27,178
  Other current assets and prepayments           3,717          4,473                -          8,190
  Intercompany receivables                      57,707        (57,707)               -              -
                                           -----------      ---------      -----------     ----------
    Total current assets                       149,175        146,205          (23,200)       272,180
Intangible assets                                    -         11,071                -         11,071
Goodwill                                        37,489         29,897                -         67,386
Noncurrent assets from risk
 management activities                               -          7,359                -          7,359
Deferred charges and other assets              130,642         47,745                -        178,387
                                           -----------      ---------      -----------     ----------
                                            $1,748,231      $ 310,675      $  (137,934)    $1,920,972
                                           ===========      =========      ===========     ==========

SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity                       $   626,377      $ 120,024      $  (120,024)    $  626,377
Long-term debt                                 672,546          3,210                -        675,756
                                           -----------      ---------      -----------     ----------
    Total capitalization                     1,298,923        123,234         (120,024)     1,302,133
Current liabilities
  Current maturities of long-term debt          19,307          1,106                -         20,413
  Short-term debt                               45,492              -                -         45,492
  Liabilities from risk management
   activities                                      423         19,706                -         20,129
  Deferred gas cost                             13,963          5,256                -         19,219
  Other current liabilities                    126,046        137,772          (17,910)       245,908
                                           -----------      ---------      -----------     ----------
    Total current liabilities                  205,231        163,840          (17,910)       351,161
Deferred income taxes                          144,602         12,886                -        157,488
Noncurrent liabilities from risk
 management activities                              -          2,767                 -          2,767
Deferred credits and other liabilities          99,475         7,948                 -        107,423
                                           -----------      ---------      -----------     ----------
                                           $ 1,748,231      $ 310,675      $  (137,934)    $1,920,972
                                           ===========      =========      ===========     ==========
</Table>




                                       21
<PAGE>

The following supplemental condensed statement of income is for the three months
ended June 30, 2002.

<Table>
<Caption>
                                          Atmos Energy    Atmos Energy
                                           Corporation    Holdings, Inc.   Eliminations     Consolidated
                                          ------------    --------------   ------------     ------------
<S>                                         <C>              <C>            <C>              <C>
  Operating revenues                        $159,493         $272,426       $(270,119)       $  161,800
  Purchased gas cost                          89,088          270,596        (271,717)           87,967
                                            --------         --------       ---------        ----------
      Gross profit                            70,405            1,830           1,598            73,833
  Gas trading margin                               -           13,084            (825)           12,259
  Operating expenses                          60,932            5,982               -            66,914
                                            --------         --------       ---------        ----------
  Operating income                             9,473            8,932             773            19,178
  Miscellaneous income (expense)               1,098              (37)         (1,243)             (182)
  Interest charges, net                      (14,040)          (1,026)          1,243           (13,823)
                                            --------         --------       ---------        ----------
  Income (loss) before income taxes           (3,469)           7,869             773             5,173
  Provision (benefit) for income taxes        (1,515)           3,126             308             1,919
                                            --------         --------       ---------        ----------
          Net income (loss)                 $ (1,954)        $  4,743       $     465        $    3,254
                                            ========         ========       =========        ==========
</Table>

The following supplemental condensed statement of income is for the nine months
ended June 30, 2002.

<Table>
<Caption>
                                          Atmos Energy    Atmos Energy
                                           Corporation    Holdings, Inc.   Eliminations   Consolidated
                                          ------------    --------------   ------------   ------------
<S>                                         <C>              <C>            <C>              <C>
  Operating revenues                        $801,460         $820,374       $(809,211)       $812,623
  Purchased gas cost                         480,693          772,116        (773,267)        479,542
                                            --------         --------       ---------        --------
      Gross profit                           320,767           48,258         (35,944)        333,081
  Gas trading margin                               -         (10,905)          39,931          29,026
  Operating expenses                         195,460           17,691              (1)        213,150
                                            --------         --------       ---------        --------
  Operating income                           125,307           19,662           3,988         148,957
  Miscellaneous income (expense)                 253            2,577          (3,723)           (893)
  Interest charges, net                      (44,429)          (3,598)          3,723         (44,304)
                                            --------         --------       ---------        --------
  Income before income taxes                  81,131           18,641           3,988         103,760
  Provision for income taxes                  29,564            7,360           1,571          38,495
                                            --------         --------       ---------        --------
          Net income                        $ 51,567         $ 11,281       $   2,417        $ 65,265
                                            ========         ========       =========        ========
</Table>

Organization - Atmos Energy Corporation distributes natural gas in 11 states
through its operating divisions - Atmos Energy Louisiana, Energas Company,
Greeley Gas Company, United Cities Gas Company and Western Kentucky Gas Company.
Our nonutility operations are organized under Atmos Energy Holdings, Inc., which
includes Atmos Energy Marketing, LLC, Atmos Pipeline and Storage, Inc., Atmos
Power Systems, Inc. and an indirect equity interest in Heritage Propane
Partners, L.P. Atmos Energy Marketing includes the operations of Woodward
Marketing.

Consolidating Financial Statements - The column headed "Atmos Energy
Corporation" includes operations of Atmos' five operating divisions.



                                       22
<PAGE>

The column headed "Atmos Energy Holdings, Inc." comprises our nonutility
operations. Operating revenues and purchased gas costs from our natural gas
marketing operations are shown on a gross basis in the Atmos Energy Holdings,
Inc. column. Such natural gas marketing activities are reclassified in the
elimination column as gas trading margin.

Current and noncurrent assets and liabilities from risk management activities on
the supplemental condensed consolidated balance sheet consist of the fair value,
inclusive of future servicing costs and valuation adjustments, of our storage,
transportation and requirements contracts, forwards, over-the-counter and
exchange traded options, futures and swap contracts.

The gas trading margin on the supplemental condensed consolidated statement of
income consists primarily of the difference between revenue arising from Atmos
Energy Holdings' sale of physical natural gas to its customers less the cost to
purchase natural gas and current period changes in assets and liabilities from
risk management activities.

Risk management assets and liabilities, Atmos Energy Holdings, Inc. - We use
storage, transportation and requirements contracts, forwards, over-the-counter
and exchange-traded options, futures and swap contracts to conduct our risk
management activities. We use the mark-to-market method to account for these
activities in accordance with Emerging Issues Task Force Issue No. 98-10,
"Accounting for Energy Trading and Risk Management Activities" and EITF 00-17,
"Measuring the Fair Value of Energy-Related Contracts in Applying Issue No.
98-10." Under this method, the aforementioned contracts are reflected at fair
value, inclusive of future servicing costs and valuation adjustments, with
resulting unrealized gains and losses recorded as assets or liabilities from
risk management activities on the condensed consolidated balance sheet. Current
period changes in the assets and liabilities from risk management activities are
recognized as gas trading margins on the condensed consolidated statement of
income. Changes in the mark-to-market valuation of assets and liabilities from
risk management activities result primarily from changes in the valuation of the
portfolio of contracts, maturity and settlement of contracts and newly
originated transactions. Market prices and models used to value these
transactions reflect our best estimate considering various factors including
closing exchange and over-the-counter quotations, time value and volatility
factors underlying the contracts. Values are adjusted to reflect the potential
impact of liquidating our positions in an orderly manner over a reasonable
period of time under present market conditions. Changes in market prices
directly affect our estimate of the fair value of these transactions.

Related Party - Included in purchased gas cost in the Atmos Energy Corporation
column are natural gas purchases from Woodward Marketing. These purchases were
made in a competitive open bidding process and reflect market prices. In
addition, we have entered into contracts with Woodward Marketing to manage a
significant portion of our underground storage facilities. Woodward Marketing
has acted as agent in placing financial instruments for the various business
units that protect us and our customers from unusually large winter period gas
price increases.



                                       23
<PAGE>

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

The Board of Directors
Atmos Energy Corporation

We have reviewed the accompanying condensed consolidated balance sheet of Atmos
Energy Corporation as of June 30, 2002 and the related condensed consolidated
statements of income for the three-month periods and nine-month periods ended
June 30, 2002 and 2001 and the condensed consolidated statements of cash flows
for the nine-month periods ended June 30, 2002 and 2001. These financial
statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with accounting principles generally
accepted in the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Atmos Energy
Corporation as of September 30, 2001, and the related consolidated statements of
income, shareholders' equity and cash flows for the year then ended, not
presented herein, and in our report dated November 2, 2001, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of September 30, 2001 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.


                                                               ERNST & YOUNG LLP


Dallas, Texas
August 9, 2002



                                       24
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

Introduction

The following discussion should be read in conjunction with the condensed
consolidated financial statements contained in this Quarterly Report on Form
10-Q and Management's Discussion and Analysis contained in our Annual Report on
Form 10-K for the year ended September 30, 2001.

We distribute and sell natural gas to approximately 1.4 million residential,
commercial, industrial, agricultural and other customers. We operate through
five divisions in service areas located in Colorado, Georgia, Illinois, Iowa,
Kansas, Kentucky, Louisiana, Missouri, Tennessee, Texas and Virginia. Such
business is subject to regulation by state and/or local authorities in each of
the states in which we operate. In addition, our business is affected by
seasonal weather patterns, competitive factors within the energy industry and
economic conditions in the areas that we serve. We also transport natural gas
for others through our distribution system.

We provide natural gas storage services and own or hold an interest in natural
gas storage fields in Kansas, Kentucky and Louisiana to supplement natural gas
used by customers in Kansas, Kentucky, Tennessee, Louisiana and other states. We
also provide energy management and gas marketing services to industrial
customers, municipalities and other local distribution companies. We also
provide electrical power generation to meet peak load demands for a municipality
regulated by the Tennessee Valley Authority. In addition, we market natural gas
to industrial and agricultural customers primarily in West Texas and to
industrial customers in Louisiana.

Cautionary Statement for the Purposes of the Safe Harbor under the Private
Securities Litigation Reform Act of 1995

The statements contained in this Quarterly Report on Form 10-Q may contain
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical fact
included in this Report are forward-looking statements made in good faith by the
Company and are intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of 1995. When used
in this Report, or any other of the Company's documents or oral presentations,
the words "anticipate," "expect," "estimate," "plans," "believes," "objective,"
"forecast," "goal" or similar words are intended to identify forward-looking
statements. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in the statements relating to the Company's strategy,
operations, markets, services, rates, recovery of costs, availability of gas
supply and other factors. These risks and uncertainties include the following:
adverse weather conditions such as warmer than normal weather in the Company's
service territories; national, regional and local



                                       25
<PAGE>

economic conditions, including competition from other energy suppliers as well
as alternative forms of energy; recent national events; regulatory approvals,
including the impact of rate proceedings before various state regulatory
commissions; successful completion and integration of pending acquisition;
inflation and increased gas costs, including their effect on commodity prices
for natural gas; increased competition; further deregulation or "unbundling" of
the natural gas distribution industry; hedging and market risk activities and
other uncertainties, all of which are difficult to predict and many of which are
beyond the control of the Company. A discussion of these risks and uncertainties
may be found in the Company's Form 10-K for the year ended September 30, 2001.
Accordingly, while the Company believes these forward-looking statements to be
reasonable, there can be no assurance that they will approximate actual
experience or that the expectations derived from them will be realized. Further,
the Company undertakes no obligation to update or revise any of its
forward-looking statements whether as a result of new information, future events
or otherwise.

Weather and Seasonality

Our natural gas distribution business and irrigation sales business is seasonal
and dependent upon weather conditions in our service areas. Natural gas sales to
residential, commercial and public authority customers are affected by winter
heating season requirements. This generally results in higher operating revenues
and net income during the period from October through March of each year and
lower operating revenues and either net losses or lower net income during the
period from April through September of each year. Sales to industrial customers
are much less weather sensitive. Sales to agricultural customers, who typically
use natural gas to power irrigation pumps during the period from March through
September, are affected by rainfall amounts and the price of natural gas.
Weather, adjusted for service areas with weather normalized operations, for the
nine months ended June 30, 2002 was 5 percent warmer than normal and 18 percent
warmer than weather in the corresponding period of the prior year.

The effects of temperatures that are above or below normal are partially offset
in the Tennessee and Georgia jurisdictions served by the United Cities Gas
Division and in the Kentucky jurisdiction served by the Western Kentucky Gas
Division through weather normalization adjustments. The Georgia Public Service
Commission, the Tennessee Regulatory Authority and the Kentucky Public Service
Commission have approved weather normalization adjustments. The weather
normalization adjustments, effective October through May each year in Georgia,
and November through April each year in Tennessee and Kentucky, allow the United
Cities Gas Division and Western Kentucky Gas Division to increase the base rate
portion of customers' bills when weather is warmer than normal and decrease the
base rate when weather is colder than normal. The net effect of the weather
normalization adjustments was an increase in revenues of approximately $6.0
million for the nine months ended June 30, 2002, as compared with a decrease of
approximately $3.3 million for the nine months ended June 30, 2001.
Approximately 373,000 or 27 percent of our meters in service are located in
Georgia, Tennessee and Kentucky. We did not have weather normalization
adjustments in our other service areas during the nine months ended June 30,
2002.


                                       26
<PAGE>

In July 2000, we entered into an agreement to purchase weather hedges for our
Texas and Louisiana operations effective for the 2000-2001 heating season. The
hedges were designed to help mitigate the effects of weather that was at least
seven percent warmer than normal in both Texas and Louisiana while preserving
any upside. The cost of the weather hedges was approximately $4.9 million which
was amortized over the 2000-2001 heating season. The cost of the weather hedges
was more than offset by the positive effects of colder weather on our gross
profit.

In June 2001, we purchased a three year weather insurance policy with an option
to cancel in the third year if we obtain weather protection in our rate
structures. The policy is for our Texas and Louisiana operations and covers the
entire heating season of October to March beginning with the 2001-2002 heating
season. The cost of the three year policy was approximately $13.2 million which
was prepaid and is being amortized over the appropriate heating seasons based on
degree days. The insurance is designed to protect against weather that is at
least seven percent warmer than normal for the entire heating season. During the
2001-2002 heating season, weather was not at least seven percent warmer than
normal resulting in no claim having been filed under the insurance policy. Only
the amortization of $4.4 million of premiums was recognized during the heating
season.

Historically we have effectively hedged 20 percent of the gas supply required
during our annual October through March heating season by utilizing our
underground storage assets. For the 2001-2002 heating season, we covered
approximately 64 percent of our anticipated flowing gas requirements through
storage and futures and fixed forward contracts.

Status of Pending Acquisition

In September 2001, we entered into a definitive agreement to acquire Mississippi
Valley Gas Company, a privately held natural gas utility, for $150.0 million,
consisting of $75.0 million cash and $75.0 million of Atmos common stock. In
addition, we will repay outstanding debt of Mississippi Valley Gas, net of
working capital, of approximately $45.0 million. Mississippi Valley Gas provides
natural gas distribution service to more than 261,500 residential, commercial,
industrial and other customers located primarily in the northern and central
regions of Mississippi. The acquisition is subject to state and federal
regulatory approval. It is anticipated that the acquisition will be completed in
2002.

Critical Accounting Policies and Estimates

General - Our condensed consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States.
Preparation of these financial statements required us to make estimates and
judgments that affected the reported amounts of assets, liabilities, revenues
and expenses, and the related disclosures of contingent assets and liabilities.
We based our estimates on historical experience and



                                       27
<PAGE>

various other assumptions that we believed to be reasonable under the
circumstances. On an on-going basis, we evaluate our estimates, including those
related to risk management and trading activities, allowance for doubtful
accounts, deferred income tax assets, intangible assets and goodwill. Actual
results may differ from estimates.

Regulation - Our utility operations are subject to regulation with respect to
rates, service, maintenance of accounting records and various other matters by
the respective regulatory authorities in the states in which we operate. Our
accounting policies recognize the financial effects of the ratemaking and
accounting practices and policies of the various regulatory commissions.
Regulated utility operations are accounted for in accordance with Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation." This statement requires cost-based rate regulated entities
that meet certain criteria to reflect the authorized recovery of costs due to
regulatory decisions in their financial statements. As a result, certain costs
are permitted to be capitalized rather than expensed because they can be
recovered through rates.

Risk Management and Trading Activities - We use storage, transportation and
requirements contracts, forwards, over-the-counter and exchange-traded options,
futures and swap contracts to conduct our risk management and trading
activities. Changes in the assets and liabilities from risk management
activities result primarily from changes in the valuation of the portfolio of
contracts, maturity and settlement of contracts, and newly originated
transactions. The market prices and models used to value these transactions
reflect management's best estimate considering various factors including closing
exchange and over-the-counter quotations, the time value of money and volatility
factors underlying the contracts. We adjust the values to reflect the potential
impact of liquidating our positions in an orderly manner over a reasonable
period of time under present market conditions. Changes in market prices
directly affect management's estimate of the fair value of these transactions.
Assumptions different from those used would impact these carrying values.

Allowance for Doubtful Accounts - For the majority of our receivables, we
establish an allowance for doubtful accounts based on an aging of those
receivable balances. We apply percentages to each aging category based on our
collections experience. On certain other receivables where we are aware of a
specific customer's inability or reluctance to pay its receivable balance, we
record an allowance for doubtful accounts against amounts due to reduce the net
receivable balance to the amount we reasonably expect to collect. We believe our
allowance for doubtful accounts is adequate. However, if circumstances change,
our estimate of the recoverability of accounts receivable could be different.

Deferred Income Tax Assets - We have deferred income tax assets consisting of
employee and retiree benefit liabilities not currently deductible, credit
carryforwards and other items treated as expenses for book purposes but not
currently deductible for tax purposes. We have not recorded any valuation
allowance for these deferred income tax assets because we believe that it is
more likely than not that our deferred income tax assets will be realized.
Realization of these assets is based on estimates of future taxable income.
Those estimates were prepared using the same assumptions used to prepare


                                       28
<PAGE>

internal forecasts. We estimate that the credit carryforwards will be utilized
before they expire. If our estimates of taxable income are reduced in the
future, a valuation allowance could be required.

Intangible Assets - We acquired intangible assets valued at approximately $12.0
million in fiscal year 2001. Those intangible assets relate to the value
assigned to relationships with certain of our industrial customers and are being
amortized over 10 years. If our assumptions of the useful lives of those assets
change, the amount of amortization expense would be impacted.

Goodwill - At June 30, 2002, we had $67.4 million of goodwill, $37.5 million of
which was attributable to our utility segment and $29.9 million was attributable
to our non-regulated segment. We evaluate our goodwill balances for impairment
each year during our second fiscal quarter. Our evaluation during the quarter
ended March 31, 2002 resulted in no impairment. If our projections of estimated
future cash flows change, those changes could result in a reduction in the
carrying value of our goodwill.

FINANCIAL CONDITION

For the nine months ended June 30, 2002, net cash provided by operating
activities in the statement of cash flows totaled $301.7 million compared with
$145.5 million for the nine months ended June 30, 2001. The increase in net cash
provided by operating activities was primarily the result of a decrease in other
current assets and prepayments compared to the previous period, a decrease in
cash held on deposit in margin accounts and an increase in accounts payable and
accrued liabilities and a smaller increase in deferred charges and other assets
compared to the previous period. This increase was partially offset by an
increase in accounts receivable compared to the previous period and a smaller
increase in other current liabilities compared to the previous period A slight
increase in net income also added to the increase in net cash provided by
operating activities. The increase in net income was primarily due to increases
in gross profit and income from our gas marketing activities partially offset by
higher operating expenses and interest expense.

For the nine months ended June 30, 2002, net cash used in investing activities
totaled $114.3 million compared with $56.0 million for the nine months ended
June 30, 2001. Major cash flows used in investing activities for the nine months
ended June 30, 2002 included capital expenditures of $89.8 million compared with
$70.3 million for the nine months ended June 30, 2001. Capital expenditures for
fiscal 2002, excluding acquisitions, are expected to be in the range of $125.0
million to $130.0 million as compared with capital expenditures of $113.1
million for fiscal 2001. Capital projects for fiscal 2002 include expenditures
for additional mains, services, meters and equipment. In 2002, we plan to
complete the Mississippi Valley Gas Company acquisition for $75.0 million cash,
$75.0 million of Atmos common stock and the repayment of approximately $45.0
million of long-term debt. Capital expenditures and acquisitions for fiscal 2002
are planned to be financed from internally generated funds and financing
activities as discussed below. For the nine months ended June 30, 2002,
investing activities included



                                       29
<PAGE>

$15.7 million, in our non-regulated operations, for the acquisition of
Kentucky-based market area storage and associated pipeline facility assets,
certain gas marketing assets and the common stock of Southern Resources, Inc.
For the nine months ended June 30, 2002, we had expenditures for the acquisition
of assets to be leased of $6.9 million compared to $4.9 million for the nine
months ended June 30, 2001. In connection with our acquisition of Woodward
Marketing in April 2001, we received $13.1 million in cash for the nine months
ended June 30, 2001. We also received net proceeds of $6.6 million in connection
with the sale of certain utility assets for the nine months ended June 30, 2001.

For the nine months ended June 30, 2002, net cash used by financing activities
totaled $195.6 million compared with net cash provided by financing activities
of $327.5 million for the nine months ended June 30, 2001. For the nine-month
period ended June 30, 2002, short-term debt decreased $155.8 million compared
with a decrease of $125.8 million for the nine months ended June 30, 2001. The
decrease for the nine months ended June 30, 2002 was due primarily to more
effective collection experience of customer accounts receivable balances which
increased the amount of cash available to repay short-term debt. The decrease
for the nine months ended June 30, 2001 was due to the net proceeds of
approximately $142.0 million from the equity offering in December 2000 being
used to reduce the amount of short-term debt outstanding. Repayments of
long-term debt totaled $16.9 million for the nine months ended June 30, 2002
compared with $13.8 million for the nine months ended June 30, 2001. We received
$347.1 million in net proceeds during the nine months ended June 30, 2001 from
our $350.0 million debt offering. The net proceeds were used to help finance the
completion of the Louisiana Gas Service Company acquisition in July 2001. We
paid $36.4 million in cash dividends during the nine months ended June 30, 2002
compared with dividends paid of $32.3 million during the nine months ended June
30, 2001. This reflects increases in the quarterly dividend rate and in the
number of shares outstanding. During the nine months ended June 30, 2002, we
issued 654,084 shares of common stock.

The following table presents the number of shares issued for the nine-month
periods ended June 30, 2002 and 2001:

<Table>
<Caption>
                                                        Nine months ended
                                                             June 30
                                                    --------------------------
                                                     2002               2001
                                                    -------          ---------
<S>                                                 <C>                <C>
Shares issued:
  Employee Stock Ownership Plan                     232,191            149,243
  Direct Stock Purchase Plan                        369,596            300,970
  Outside Directors Stock-for-Fee Plan                1,832              1,642
  United Cities Long-Term Stock Plan                      -             11,300
  Long-Term Incentive Plan                           50,465             16,838
  Acquisition of Woodward Marketing, L.L.C.               -          1,423,193
  Equity Offering                                         -          6,741,500
                                                    -------          ---------
    Total shares issued                             654,084          8,644,686
                                                    =======          =========
</Table>



                                       30
<PAGE>

We believe that internally generated funds, our credit facilities, commercial
paper program and access to the public debt and equity capital markets will
provide necessary working capital and liquidity for capital expenditures and
other cash needs for the remainder of fiscal 2002.

We have short-term committed credit facilities totaling $318.0 million. One
short-term unsecured credit facility is for $300.0 million and serves as a
backup liquidity facility for our commercial paper program. Effective July 31,
2002, this credit facility was renegotiated for $300.0 million. Our commercial
paper is rated A-2 by Standard and Poor's, P-2 by Moody's and F-2 by Fitch. At
June 30, 2002, $30.0 million of commercial paper was outstanding. We have a
second credit facility in place for $18.0 million. At June 30, 2002, $15.5
million was outstanding under this credit facility. These credit facilities are
negotiated at least annually and are used for working capital purposes.

Our Woodward Marketing subsidiary has an uncommitted demand credit facility for
$125.0 million which is used for its non-regulated business. Atmos Energy
Marketing, LLC, our wholly-owned subsidiary, is the sole guarantor of all
amounts outstanding under this facility. At June 30, 2002, no amount was
outstanding under this credit facility. Related letters of credit totaling $55.6
million reduced the amount available under this facility. This facility is used
for working capital purposes. Effective July 1, 2002, this facility was
renegotiated to increase the amount available to $210.0 million and change the
sole guarantor to Atmos Energy Holdings, Inc., also our wholly-owned subsidiary
and parent company of Atmos Energy Marketing, LLC.

We also have an unsecured short-term uncommitted credit line for $20.0 million.
No amounts were outstanding under this credit facility at June 30, 2002. This
uncommitted line is renewed or renegotiated at least annually with varying terms
and we pay no fee for the availability of the line. Borrowings under this line
are made on a when- and as-available basis at the discretion of the bank. This
facility is also used for working capital purposes.

In addition, Woodward Marketing has up to $100.0 million of credit available
from Atmos Energy Marketing LLC for its non-regulated business. At June 30,
2002, $8.0 million was outstanding. Effective July 1, 2002, Atmos Energy
Holdings, Inc. replaced Atmos Energy Marketing, LLC as the provider of such
credit to Woodward Marketing. This intercompany facility is subordinated in
terms of repayment to the $210.0 million uncommitted demand credit facility
described above.

In December 2001, we filed a shelf registration statement with the Securities
and Exchange Commission to issue, from time to time, up to $600.0 million in new
common stock and/or debt. In connection with this filing, we filed applications
for approval to issue securities with five state utility commissions and have
received approval from all five commissions. The registration statement was
declared effective by the Securities and Exchange Commission on January 30,
2002. The proceeds from any issuance of securities under the registration
statement are planned to be used for general corporate purposes, including
acquisitions, debt repayment and other business-related matters.



                                       31
<PAGE>


The following tables provide information about contractual obligations and
commercial commitments at June 30, 2002.

<Table>
<Caption>
                                                           Payments Due by Period
                                       -------------------------------------------------------------------
                                                     Less than                                    After 5
                                        Total          1 year        1-3 years      4-5 years      years
                                       --------      ---------       ---------      ---------     --------
                                                               (In thousands)
<S>                                    <C>             <C>            <C>            <C>          <C>
CONTRACTUAL OBLIGATIONS

Long Term Debt                         $696,169        $20,413        $34,522        $29,768      $611,466
Capital Lease Obligations                 5,973            219          1,752          1,276         2,726
Operating Leases                         59,529          2,312         16,713         15,624        24,880
                                       --------      ---------       --------        -------      --------
    Total Contractual
      Obligations                      $761,671        $22,944        $52,987        $46,668      $639,072
                                       ========      =========        =======        =======      ========
</Table>


<Table>
<Caption>
                                                           Payments Due by Period
                                     ---------------------------------------------------------------------
                                                    Less than                                    After 5
                                      Total          1 year        1-3 years      4-5 years       years
                                     -------        ---------     -----------     ---------     ----------
                                                               (In thousands)
<S>                                  <C>            <C>             <C>             <C>            <C>
OTHER COMMERCIAL COMMITMENTS
Lines of Credit                      $45,492        $45,492         $   -           $    -         $   -
</Table>

Risk Management and Trading Activities

We conduct our risk management activities through both our utility and
non-regulated segments. See Note 5 to the condensed consolidated financial
statements for a description of our risk management activities. The following
table shows our risk management assets and liabilities by segment at June 30,
2002.

<Table>
<Caption>
                                                       Utility          Non-Regulated            Total
                                                       -------          -------------            -----
                                                                        (In thousands)
<S>                                                   <C>                <C>                <C>
Assets from risk management
    activities, current                                $    -            $   27,178          $   27,178
Assets from risk management
    activities, noncurrent                                  -                 7,359               7,359
Liabilities from risk management
    activities, current                                  (423)              (19,706)            (20,129)
Liabilities from risk management
    activities, noncurrent                                  -                (2,767)             (2,767)
                                                  -----------            ----------          ----------
Net assets (liabilities)                               $ (423)           $   12,064          $   11,641
                                                  ===========            ==========          ==========
</Table>

In accordance with Financial Accounting Standards No. 71 "Accounting for the
Effects of Certain Types of Regulation", current period changes in the assets
and liabilities from risk management activities related to our utility segment
are recorded as deferred gas costs on the condensed consolidated balance sheet
as these costs will ultimately be



                                       32
<PAGE>

recovered from ratepayers. Accordingly, there is no earnings impact as a result
of the use of these financial instruments. Upon maturity, the contracts are
recognized in purchased gas cost.

To conduct our risk management and trading activities, Atmos Energy Marketing, a
unit of our non-regulated segment, uses natural gas storage, transportation and
requirements contracts, forwards, over-the-counter and exchange-traded options,
futures and swap contracts. Prior to May 2002, Woodward Marketing engaged in
financial trading for speculative purposes. Effective in May 2002, Woodward
Marketing's financial trading for speculative purposes was discontinued. The
mark-to-market method is used to account for these activities, as prescribed in
EITF Issue No. 98-10 and EITF Issue 00-17. Under these methods, the
aforementioned contracts are reflected at fair value, inclusive of future
servicing costs and valuation adjustments, with resulting unrealized gains and
losses recorded as "Assets from risk management activities" and "Liabilities
from risk management activities" on the balance sheet. Current period changes in
the assets and liabilities from risk management activities are recognized as net
gains or losses on the condensed consolidated statement of income as gas trading
margin. Changes in assets and liabilities from risk management activities result
primarily from changes in valuation of the portfolio of contracts, maturity and
settlement of contracts, and newly originated transactions.

Market prices are primarily used to value these transactions. In addition, a
market price based model is used for valuing certain storage and transportation
contracts. These values reflect management's best estimate considering various
factors, including closing exchange and over-the-counter quotations, time value,
and volatility factors underlying the contracts. The values are adjusted to
reflect the potential impact of liquidating our position in an orderly manner
over a reasonable time frame under present market conditions. Changes in market
prices directly affect management's estimate of the fair value of these
transactions.

The following table reflects the components of the change in fair value of our
non-regulated energy trading contract activities for the three months ending
June 30, 2002 (in thousands).

<Table>
<S>                                                   <C>
      Fair value of contracts at March 31, 2002       $   6,090
          Contracts realized/settled                    (1,628)
          Fair value of new contracts                     4,917
          Other changes in value                          2,685
                                                      ---------
      Fair value of contracts at June 30, 2002        $  12,064
                                                      =========
</Table>


                                       33
<PAGE>

The following table reflects the components of the change in fair value of our
non-regulated energy trading contract activities for the nine months ending
June 30, 2002 (in thousands).

<Table>
<S>                                                      <C>
      Fair value of contracts at September 30, 2001      $  28,349
          Contracts realized/settled                       (14,831)
          Fair value of new contracts                           37
          Other changes in value                            (1,491)
                                                         ---------
      Fair value of contracts at June 30, 2002           $  12,064
                                                         =========
</Table>

The fair value of our non-regulated energy trading contracts at June 30, 2002,
is segregated below, by time period and fair value source.

<Table>
<Caption>
                                                  Fair Value of Contracts at June 30, 2002
                                 ---------------------------------------------------------------------------
                                    Maturity                                      Maturity
                                    Less than       Maturity       Maturity       excess of     Total Fair
                                     1 year         1-3 years      4-5 years       5 years        Value
                                   ----------       ---------      ---------      ---------     ----------
                                                               (In thousands)
<S>                                <C>              <C>            <C>              <C>         <C>
SOURCE OF FAIR VALUE

Prices actively quoted             $ (10,078)       $   934        $     -        $    -         $ (9,144)
Prices provided by
    other external sources            15,598          1,951            159             7           17,715
Prices based on models
    and other valuation
    methods                            1,617          1,876              -             -            3,493
                                   ---------        -------        -------        ------         --------
Total Fair Value                   $   7,137        $ 4,761        $   159        $    7         $ 12,064
                                   =========        =======        =======        ======         ========
</Table>

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002, Compared with Three Months Ended June 30, 2001

Operating revenues decreased by 2 percent to $161.8 million for the three months
ended June 30, 2002 from $164.3 million for the three months ended June 30,
2001. The most significant factor contributing to the decrease in operating
revenues was a 23 percent decrease in average sales price due to the decreased
cost of gas. However, the decrease in operating revenues was offset by an 11
percent increase in sales volumes, excluding the additional sales volumes
attributable to the Louisiana Gas Service operations acquired in July 2001, due
to weather that was colder than in the corresponding quarter of the prior year.
In addition, increased revenues resulting from the Louisiana Gas Service
acquisition in July 2001 helped to offset the decrease in operating revenues.
The average sales price per Mcf sold decreased $2.01 or 23 percent to $6.72
primarily due to a decrease in the average cost of gas. The average cost of gas
per Mcf sold decreased 31 percent to $3.99 for the three months ended June 30,
2002 from $5.79 for the three months ended June 30, 2001. During the quarter
ended June 30, 2002, temperatures were 8 percent colder than in the
corresponding quarter of the prior year and were 4 percent warmer than the
30-year normal for the quarter, adjusted for service areas with weather



                                       34
<PAGE>

normalized operations. The total volume of gas sold, excluding the Louisiana Gas
Service volumes, for the three months ended June 30, 2002 was 19.7 billion cubic
feet compared with 17.7 billion cubic feet for the three months ended June 30,
2001. The addition of the Louisiana Gas Service operations added 2.7 billion
cubic feet of sales volumes for the quarter ended June 30, 2002.

Gross profit increased to $73.8 million for the three months ended June 30, 2002
from $61.3 million for the three months ended June 30, 2001. The increase in
gross profit was primarily due to the additional gross profit resulting from the
Louisiana Gas Service acquisition in July 2001 and the increase in volumes sold
to weather sensitive customers. Changes in the cost of gas do not directly
affect gross profit because the fluctuations in gas prices are passed through to
the customer.

On April 1, 2001, we completed our acquisition of the remaining 55 percent
interest in Woodward Marketing, L.L.C. that we did not already own. As a result
of this acquisition, the revenues and expenses of Woodward Marketing are now
shown on a consolidated basis. For the three months ended June 30, 2002, Atmos
Energy Marketing, which includes the operations of Woodward Marketing, had
income of $12.3 million in gas trading margin compared with a loss of $3.2
million in gas trading margin for the three months ended June 30, 2001. The
$15.5 million change in gas trading margin was primarily due to gains on
inventory sales and favorable pricing under natural gas sales contracts.

Operating expenses increased to $66.9 million for the three months ended June
30, 2002 from $54.9 million for the three months ended June 30, 2001. Operation
and maintenance expense increased primarily due to the addition of $6.3 million
relating to the Louisiana Gas Service acquisition in July 2001 and an increase
of $0.9 million in pension costs. A decrease in the provision for doubtful
accounts of $2.2 million partially offset this increase. The decrease in the
provision for doubtful accounts was attributable to the lower gas commodity
prices during the third quarter of fiscal 2002 as well as our effective recovery
of customer receivable balances. Depreciation and amortization increased $4.2
million due to the addition of the assets from the Louisiana Gas Service
acquisition in July 2001.

Operating income increased for the three months ended June 30, 2002 to $19.2
million from $3.2 million for the three months ended June 30, 2001. The increase
in operating income resulted primarily from the increase in gross profit and the
income from our gas trading margin described above partially offset by the
increase in operating expenses.

Interest expense increased $4.6 million, or 50 percent, for the three months
ended June 30, 2002 compared with the three months ended June 30, 2001 due
primarily to the interest expense on the $350.0 million debt offering in May
2001.


                                       35
<PAGE>

Net income increased for the three months ended June 30, 2002 by $6.7 million to
$3.3 million from a loss of $3.4 million for the three months ended June 30,
2001. This increase in net income resulted primarily from the increase in
operating income partially offset by the increase in interest expense discussed
above.

Nine Months Ended June 30, 2002, Compared with Nine Months Ended June 30, 2001

Operating revenues decreased by 37 percent to $812.6 million for the nine months
ended June 30, 2002 from $1.3 billion for the nine months ended June 30, 2001.
The most significant factors contributing to the decrease in operating revenues
were a 35 percent decrease in average sales price due to the decreased cost of
gas and a 15 percent decrease in sales volumes due to warmer weather, excluding
the additional sales volumes attributable to the Louisiana Gas Service
operations acquired in July 2001. During the nine-month period ended June 2002,
temperatures were 18 percent warmer than in the corresponding period of the
prior year and were 5 percent warmer than the 30-year normal, adjusted for
service areas with weather normalized operations. The total volume of gas sold,
excluding the Louisiana Gas Service volumes, for the nine months ended June 30,
2002 was 111.9 billion cubic feet compared with 132.2 billion cubic feet for the
nine months ended June 30, 2001. However, the decrease in sales volumes was
partially offset by the additional sales volumes of 14.9 billion cubic feet
attributable to the Louisiana Gas Service operations acquired in July 2001. The
average sales price per Mcf sold decreased $3.25 or 35 percent to $6.10
primarily due to a decrease in the average cost of gas. The average cost of gas
per Mcf sold decreased 48 percent to $3.79 for the nine months ended June 30,
2002 from $7.27 for the nine months ended June 30, 2001. However, the decrease
in operating revenues was partially offset by increased revenues resulting from
the Louisiana Gas Service acquisition in July 2001.

Gross profit increased to $333.1 million for the nine months ended June 30, 2002
from $309.6 million for the nine months ended June 30, 2001. The increase in
gross profit was primarily due to the additional gross profit resulting from the
Louisiana Gas Service acquisition in July 2001 partially offset by a decrease in
volumes sold to weather sensitive customers. Changes in the cost of gas do not
directly affect gross profit because the fluctuations in gas prices are passed
through to the customer.

On April 1, 2001, we completed our acquisition of the remaining 55 percent
interest in Woodward Marketing, L.L.C. that we did not already own. As a result
of this acquisition, the revenues and expenses of Woodward Marketing are now
shown on a consolidated basis. For the nine months ended June 30, 2002, Atmos
Energy Marketing, which includes the operations of Woodward Marketing, had
income of $29.0 million in gas trading margin. For the nine months ended June
30, 2001, Atmos Energy Marketing had a loss of $3.2 million in gas trading
margin and an equity in earnings of Woodward Marketing of $8.1 million. The
increase for the nine months ended June 30, 2002 compared to the nine months
ended June 30, 2001 was primarily due to gains on inventory sales and favorable
pricing under natural gas sales contracts as well as our full consolidation of
Woodward Marketing beginning April 2001.



                                       36
<PAGE>

Operating expenses increased to $213.2 million for the nine months ended June
30, 2002 from $180.4 million for the nine months ended June 30, 2001. Operation
and maintenance expense increased due primarily to the addition of $21.5 million
relating to the Louisiana Gas Service acquisition in July 2001 and an increase
of $7.1 million in pension costs. In addition, operation and maintenance expense
increased due to the full consolidation of Woodward Marketing's operations
beginning April 1, 2001. A decrease in the provision for doubtful accounts of
$13.2 million partially offset this increase. The decrease in the provision for
doubtful accounts was attributable to the lower gas commodity prices during the
first nine months of fiscal 2002 as well as our effective recovery of customer
receivable balances. Depreciation and amortization increased $13.1 million due
to the addition of the assets from the Louisiana Gas Service acquisition in July
2001.

Operating income increased 18 percent for the nine months ended June 30, 2002 to
$149.0 million from $126.0 million for the nine months ended June 30, 2001. The
increase in operating income resulted primarily from the increase in gross
profit and the income from our gas trading margin described above partially
offset by an increase in operating expenses.

Miscellaneous expense decreased $0.5 million to $0.9 million for the nine months
ended June 30, 2002 compared to $1.4 million for the nine months ended June 30,
2001. The primary reason for the decrease was due to an increase of $0.5 million
in net recoveries related to our performance based-ratemaking mechanisms and the
recognition of $0.5 million related to a large industrial contract we received
during 2002 partially offset by a reduction in our equity earnings of Heritage
Propane Partners, LLC.

Interest expense increased $13.0 million, or 42 percent, for the nine months
ended June 30, 2002 compared with the nine months ended June 30, 2001 due
primarily to the interest expense on the $350.0 million debt offering in May
2001.

Net income increased for the nine months ended June 30, 2002 by $1.7 million to
$65.3 million from $63.6 million for the nine months ended June 30, 2001. This
increase in net income resulted primarily from the increase in operating income
partially offset by the increase in interest expense discussed above.

Quantitative and Qualitative Disclosures about Market Risk

For a summary of our risk management and trading activities, see "Risk
Management and Trading Activities" under "Financial Condition". There have been
no significant changes in our other market risks since September 30, 2001.


                                       37
<PAGE>

UTILITY AND NON-REGULATED OPERATING DATA

Our utility business is composed of our five regulated utility divisions: Atmos
Energy Louisiana Gas Division, Energas Division, Greeley Gas Division, United
Cities Gas Division, Western Kentucky Gas Division and Shared Services.
Beginning October 1, 2002, we will use the name Atmos Energy Corporation to
identify all of our utility divisions. The non-regulated business includes gas
marketing and energy management services, operation of natural gas storage
fields, construction and operation of electrical power generating plants and
associated facilities and non-regulated industrial sales. The following tables
of operating statistics summarizes data of the utility and non-regulated
segments for the three-month and nine month periods ended June 30, 2002 and
2001. Heating degree days are presented as adjusted for weather-normalized
operations. Prior periods have been adjusted to reflect current period
presentation. For further information regarding operating results of the
segments, see Note 6 of notes to condensed consolidated financial statements.



                                       38
<PAGE>

                            ATMOS ENERGY CORPORATION
                        CONSOLIDATED OPERATING STATISTICS

<Table>
<Caption>
                                                           Three months ended
                                                                June 30
                                                        -------------------------
                                                           2002            2001
                                                        ---------       ---------
<S>                                                           <C>             <C>
HEATING DEGREE DAYS
    Actual, adjusted for WNA (weighted average)               258             240
    Percent of normal                                          96%             90%

SALES VOLUMES - MMcf (1)
    Residential                                             9,344           7,535
    Commercial                                              4,956           4,047
    Public authority and other                                727             732
    Industrial (including agricultural)                     7,327           5,399
                                                        ---------       ---------
      Total                                                22,354          17,713
Transportation volumes - MMcf (1)                          14,309          13,936
                                                        ---------       ---------
Total throughput - MMcf (1)                                36,663          31,649
                                                        =========       =========
OPERATING REVENUES (000's)
Gas sales revenues
    Residential                                         $  80,029       $  80,348
    Commercial                                             33,956          37,091
    Public authority and other                              4,223           5,890
    Industrial (including agricultural)                    31,997          31,331
                                                        ---------       ---------
      Total gas sales revenues                            150,205         154,660
Transportation revenues                                     8,538           5,099
Other revenues                                              3,057           4,501
                                                        ---------       ---------
Total operating revenues                                $ 161,800       $ 164,260
                                                        =========       =========
Cost of gas (excluding non-regulated)                   $  89,088       $ 102,503
                                                        =========       =========

Average gas sales revenues per Mcf                      $    6.72        $   8.73
Average transportation revenue per Mcf                  $     .60        $    .37
Average cost of gas per Mcf sold                        $    3.99        $   5.79
</Table>

(1) Volumes are reported as metered in million cubic feet (MMcf).



                                       39
<PAGE>
                            ATMOS ENERGY CORPORATION
                        CONSOLIDATED OPERATING STATISTICS

<Table>
<Caption>
                                                           Nine months ended
                                                                June 30
                                                        -------------------------
                                                           2002            2001
                                                        ---------       ---------
<S>                                                           <C>             <C>
METERS IN SERVICE, end of period
    Residential                                         1,246,111         972,982
    Commercial                                            122,414         105,163
    Public authority and other                              7,342           7,444
    Industrial (including agricultural)                    12,949          13,317
                                                       ----------      ----------
      Total meters                                      1,388,816       1,098,906
                                                       ==========      ==========
HEATING DEGREE DAYS
    Actual, adjusted for WNA (weighted average)             3,351           4,090
    Percent of normal                                          95%            115%

SALES VOLUMES - MMcf (1)
    Residential                                            71,634          72,835
    Commercial                                             31,696          32,565
    Public authority and other                              5,372           6,352
    Industrial (including agricultural)                    18,062          20,488
                                                       ----------      ----------
      Total                                               126,764         132,240
Transportation volumes - MMcf (1)                          49,560          46,837
                                                       ----------      ----------
Total throughput - MMcf (1)                               176,324         179,077
                                                       ==========      ==========
OPERATING REVENUES (000's)
Gas sales revenues
    Residential                                        $  476,019      $  724,452
    Commercial                                            192,297         309,365
    Public authority and other                             28,585          54,760
    Industrial (including agricultural)                    76,851         147,541
                                                       ----------      ----------
      Total gas sales revenues                            773,752       1,236,118
Transportation revenues                                    28,631          20,215
Other revenues                                             10,240          25,830
                                                       ----------      ----------
Total operating revenues                               $  812,623      $1,282,163
                                                       ==========      ==========
Cost of gas (excluding non-regulated)                  $  480,693      $  961,887
                                                       ==========      ==========

Average gas sales revenues per Mcf                     $     6.10      $     9.35
Average transportation revenue per Mcf                 $      .58      $      .43
Average cost of gas per Mcf sold                       $     3.79      $     7.27
</Table>

(1) Volumes are reported as metered in million cubic feet (MMcf).


                                       40
<PAGE>



Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes from the information provided in Item 7A of
our Annual Report on Form 10-K for the year ended September 30, 2001.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

See Note 2 of notes to condensed consolidated financial statements herein for a
description of legal proceedings.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

         A list of exhibits required by Item 601 of Regulation S-K and filed as
         part of this report is set forth in the Exhibits Index, which
         immediately precedes such exhibits.

         The certifications pursuant to 18 U.S.C. Section 1350 by the Company's
         Chief Executive Officer and Chief Financial Officer, furnished as
         Exhibits 99.1 and 99.2, respectively, to this Quarterly Report on Form
         10-Q, will not be deemed to be filed with the Commission or
         incorporated by reference into any filing by the Company under the
         Securities Act of 1933 or the Securities Exchange Act of 1934, except
         to the extent that the Company specifically incorporates such
         certifications by reference.

         (b) Reports on Form 8-K

         None.



                                       41
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                 ATMOS ENERGY CORPORATION
                                                       (Registrant)



Date:  August 14, 2002                          By: /s/ F.E. MEISENHEIMER
                                                    ---------------------
                                                    F.E. Meisenheimer
                                              Vice President and Controller
                                                (Chief Accounting Officer
                                              and duly authorized signatory)



                                       42
<PAGE>

                                 EXHIBITS INDEX
                                    Item 6(a)
<Table>
<Caption>
     EXHIBIT                                                                  PAGE
     NUMBER                       DESCRIPTION                                NUMBER
     -------                      -----------                                ------
<S>             <C>                                                           <C>
      10.1      Uncommitted Amended and Restated Credit Agreement,
                dated to be effective July 1, 2002, among Woodward
                Marketing, L.L.C., Fortis Capital Corp., BNP Paribas and
                the other financial institutions which may become
                parties hereto

      10.2      364-Day Revolving Credit Agreement, dated as of
                July 31, 2002, among Atmos Energy Corporation, Bank
                One, NA, Wachovia Bank, National Association,
                Suntrust Bank, CoBank ACB and Societe Generale,
                New York Branch

       12       Computation of ratio of earnings to fixed charges

       15       Letter regarding unaudited interim financial information

      99.1      Certification Pursuant to 18 U.S.C. Section 1350 as
                Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 by the Company's Chief
                Executive Officer*

      99.2      Certification Pursuant to 18 U.S.C. Section 1350 as
                Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 by the Company's Chief
                Financial Officer*
</Table>


----------
*    These certifications pursuant to 18 U.S.C. Section 1350 by the Company's
     Chief Executive Officer and Chief Financial Officer, furnished as Exhibits
     99.1 and 99.2, respectively, to this Quarterly Report on Form 10-Q, will
     not be deemed to be filed with the Commission or incorporated by reference
     into any filing by the Company under the Securities Act of 1933 or the
     Securities Exchange Act of 1934, except to the extent that the Company
     specifically incorporates such certifications by reference.


                                       43

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>d99023exv10w1.txt
<DESCRIPTION>UNCOMMITTED AMENDED/RESTATED CREDIT AGREEMENT
<TEXT>
<PAGE>


                                                                    EXHIBIT 10.1


                                                                  EXECUTION COPY


                UNCOMMITTED AMENDED AND RESTATED CREDIT AGREEMENT

                    DATED TO BE EFFECTIVE AS OF JULY 1, 2002

                                      AMONG

                           WOODWARD MARKETING, L.L.C.,
                                  AS BORROWER,

                              FORTIS CAPITAL CORP.,
     AS ADMINISTRATIVE AGENT, COLLATERAL AGENT, AN ISSUING BANK, AND A BANK,

                                  BNP PARIBAS,
               AS DOCUMENTATION AGENT, AN ISSUING BANK, AND A BANK

                                       AND

                     THE OTHER FINANCIAL INSTITUTIONS WHICH
                            MAY BECOME PARTIES HERETO

                         THIS AGREEMENT PROVIDES FOR AN
                   UNCOMMITTED FACILITY WITH A DEMAND FEATURE.
                 ALL ADVANCES AND ISSUANCES OF LETTERS OF CREDIT
                   ARE DISCRETIONARY ON THE PART OF THE BANKS
                     IN THEIR SOLE AND ABSOLUTE DISCRETION.
                THE BANKS MAY MAKE DEMAND FOR PAYMENT AT ANY TIME
                     IN THEIR SOLE AND ABSOLUTE DISCRETION.


<PAGE>

                UNCOMMITTED AMENDED AND RESTATED CREDIT AGREEMENT

          This UNCOMMITTED AMENDED AND RESTATED CREDIT AGREEMENT (the
"Agreement") is entered into effective as of July 1, 2002, among WOODWARD
MARKETING, L.L.C., a Delaware limited liability company (the "Borrower"), FORTIS
CAPITAL CORP., a Connecticut corporation ("Fortis"), as a Bank, as an Issuing
Bank, and as Administrative Agent for the Banks (in such capacity, the
"Administrative Agent"), and as Collateral Agent, BNP PARIBAS, a bank organized
under the laws of France ("BNP Paribas"), as a Bank, as an Issuing Bank, and as
Documentation Agent (together with the Administrative Agent, the "Agents"), and
each other financial institution which may become a party hereto (collectively
the "Banks").

          WHEREAS, the Borrower, the Agents, the Issuing Banks and the Banks
entered into that certain Credit Agreement dated as of December 1, 2001 (the
"Original Credit Agreement") with respect to an uncommitted facility of up to
$125,000,000, including an uncommitted letter of credit facility.

          WHEREAS, the Borrower, the Agents, the Issuing Banks and the Banks
desire to amend and restate the Original Credit Agreement so that, from time to
time, the Banks, on an uncommitted and fully discretionary basis, continue to
make loans to the Borrower and continue to issue Letters of Credit for the
account of the Borrower in order to provide working capital to the Borrower, to
facilitate the Borrower's purchases of natural gas in the ordinary course of
business, to secure swap counterparties for out-of-the-money swap obligations,
and for such other purposes set forth herein. The Banks have indicated their
willingness to consider to continue to lend such amounts and to consider to
continue to issue and participate in such Letters of Credit on the terms and
conditions of this Agreement.

          NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

          1.01 Certain Defined Terms. The following terms have the following
meanings:

          "Account" has the meaning stated in the New York Uniform Commercial
Code.

          "Account Debtor" means a Person who is obligated to the Borrower under
an Account of the Borrower.

          "Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a Subsidiary);
provided, however, that the relevant Borrower or the Subsidiary is the surviving
entity.


                                       2

<PAGE>

          "Activation Period" means the period which commences within a
reasonable period of time not to exceed two Business Days after receipt by Bank
of America, N.A. of a written notice from Fortis in the form of Exhibit B to the
Three Party Agreement Relating to Lockbox Services (With Activation) dated as of
April 15, 2002 among the Borrower, Fortis and Bank of America, N.A.

          "Adjusted Pro Rata Share" means, as to any Bank at any particular
time, the percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of (a) an amount equal to such Bank's Uncommitted
Line Portion plus, in the case of BNP Paribas, the amount of advances made in
excess of the Borrowing Base Advance Cap to fund Obligations of the Borrower
under Swap Contracts, divided by (b) the combined total of the Uncommitted Line
Portion of all the Banks plus, in the case of BNP Paribas, the amount of
advances made in excess of the Borrowing Base Advance Cap to fund Obligations of
the Borrower under Swap Contracts.

          "Administrative Agent" means Fortis in its capacity as administrative
agent for the Banks hereunder, and any successor agent arising under Section
10.09.

          "Administrative Agent's Payment Office" means the address for payments
set forth on Schedule 11.02 hereto in relation to the Administrative Agent, or
such other address as the Administrative Agent may from time to time specify.

          "Advance Maturity Date" means the maturity date of advances made
hereunder which for Base Rate Loans will be the earliest to occur of (a) written
demand by any Agent, or (b) 60 days from the date of the Borrowing, and for
Offshore Rate Loans will be the earliest to occur of (i) written demand by any
Agent, or (ii) 60 days from the date of the Borrowing, or (iii) the end of the
Interest Period for such Offshore Rate Loan.

          "Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.

          "Agents" means the Administrative Agent, the Collateral Agent and the
Documentation Agent.

          "Agent-Related Persons" means the Administrative Agent, the Collateral
Agent and the Documentation Agent, together with their respective Affiliates and
the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.

          "Agreement" means this Credit Agreement.

          "Applicable Margin" means:


                                       3

<PAGE>

          (a)  with respect to Base Rate Loans, one-half percent (0.50%);
               and

          (b)  with respect to Offshore Rate Loans, two and one-half
               percent (2.50%).

          "Approving Banks" has the meaning set forth in Section 2.14.

          "Assets from Risk Management Activities" means unrealized gains
resulting from Mark-to-Market valuation of storage, transportation, and
requirements contracts, over-the-counter and exchange-traded options, and
forwards, futures, and swap contracts.

          "Assignee" has the meaning specified in Subsection 11.08(a).

          "Atmos Support Agreement" means an agreement of Atmos Energy
Corporation to provide certain support for Borrower and its operations and to
remit insurance proceeds to the Agents as provided therein, such agreement to be
in form and substance acceptable to Agents.

          "Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.

          "Bank Blocked Account" means the Collateral Agent's account no.
323373461 maintained with Chase into which collections and available balances
from the Lock Box will be deposited pursuant to Section 7.14.

          "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978, as
amended (11 U.S.C.ss.101, et seq.).

          "Banks" shall initially mean Fortis, BNP Paribas, Societe Generale,
Natexis Banques Populaires, New York Branch, and RZB Finance, LLC. At such time
as additional lending institutions are added to this Agreement, either through
an amendment to this Agreement or through an Assignment and Acceptance in
accordance with Subsection 11.08(a) hereof, the term "Bank" shall mean Fortis,
BNP Paribas, Societe Generale, Natexis Banques Populaires, New York Branch, RZB
Finance, LLC, and each such additional lending institution. References to the
"Banks" shall include Fortis and BNP Paribas, including each in its capacity as
an Issuing Bank; for purposes of clarification only, to the extent that Fortis
or BNP Paribas may have any rights or obligations in addition to those of the
Banks due to their status as an Issuing Bank and as Agents, Fortis' and BNP
Paribas' status as such will be specifically referenced.

          "Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; or (b) the per annum rate of interest
established by Chase from time to time at its principal office in New York City
as its "prime rate" or "base rate" for U.S. dollar loans (with any change in
such prime rate or base rate to become effective as and when such prime rate or
base rate changes). (The "prime rate" or "base rate" is a rate set by Chase
based upon various factors including Chase's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such announced rate.)

          "Base Rate Loan" means any Loan bearing interest based upon the Base
Rate.


                                       4

<PAGE>


          "BNP Paribas" means BNP Paribas, a bank organized under the laws of
France.

          "Borrower" means Woodward Marketing, L.L.C., a Delaware limited
liability company.

          "Borrowing" means a borrowing hereunder consisting of Revolving Loans
made to the Borrower on the same day by the Banks under Article II.

          "Borrowing Base Advance Cap" means at any time an amount equal to the
least of:

          (a)  $250,000,000.00;

          (b)  the Total Subscribed Line Portions;

          (c)  the Borrowing Base Sub-Cap; or

          (d)  the sum of:

          (i)    the amount of Cash Collateral and other liquid investments
     which are acceptable to the Banks in their sole discretion and which are
     subject to a first perfected security interest in favor of Administrative
     Agent, as collateral agent for the Banks, and which have not been used in
     determining availability for any other advance (other than advances made
     under the Borrowing Base Line) or Letter of Credit Issuance; plus

          (ii)   90% of Borrower's equity in Eligible Broker accounts from and
     after the date that a tri-party agreement with respect to such accounts is
     entered into, to the extent such equity is not being used in determining
     availability for any other advance (other than advances made under the
     Borrowing Base Line) or Letter of Credit Issuance; plus

          (iii)  90% of the amount of Tier I Accounts which are not being used
     in determining availability for any other advance (other than advances made
     under the Borrowing Base Line) or Letter of Credit Issuance, net of
     deductions, offsets and counterclaims; plus

          (iv)   85% of the amount of Tier II Accounts which are not being used
     in determining availability for any other advance (other than advances made
     under the Borrowing Base Line) or Letter of Credit Issuance, net of
     deductions, offsets and counterclaims; plus

          (v)    85% of the amount of Tier I Unbilled Accounts which are not
     being used in determining availability for any other advance (other than
     advances made under the Borrowing Base Line) or Letter of Credit Issuance;
     plus

          (vi)   80% of the amount of Tier II Unbilled Accounts which are not
     being used in determining availability for any other advance (other than
     advances made under the Borrowing Base Line) or Letter of Credit Issuance;
     plus


                                       5

<PAGE>


          (vii)  80% of the amount of Eligible Inventory which are not being
     used in determining availability for any other advance (other than advances
     made under the Borrowing Base Line) or Letter of Credit Issuance; plus

          (viii) 80% of the amount of Eligible Exchange Receivables which are
     not being used in determining availability for any other advance (other
     than advances made under the Borrowing Base Line) or Letter of Credit
     Issuance; plus

          (ix)   80% of the amount of Undelivered Product Value; plus

          (x)    70% of Realizable Unrealized Profits, up to a maximum amount of
     $50,000,000, less

          (xi)   the amounts which would be subject to a so-called "First
     Purchaser Lien" as defined in Texas Bus. & Com. Code Section 9.343,
     comparable laws of the states of Louisiana, Oklahoma, Kansas, Wyoming or
     New Mexico, or any other comparable law, unless a Letter of Credit secures
     payment of all amounts subject to such First Purchaser Lien; less

          (xii)  125% of the mark to market amounts owed to BNP Paribas and/or
     its Affiliates and Societe Generale and/or its Affiliates under Swap
     Contracts; and less

          (xiii) 100% of Borrower's Unrealized Mark-to-Market Losses as of the
     date of determination of the Borrowing Base Advance Cap.

          In no event shall any amounts described in (d)(i) through (d)(x) above
which may fall into more than one of such categories be counted more than once
when making the calculation under this definition.

          "Borrowing Base Collateral Position Report" means a report detailing
all Collateral which has been or is being used in determining availability for
an advance or letter of credit issuance under the Borrowing Base Line, such
report to be in the form attached hereto as Exhibit E.

          "Borrowing Base Line" means the uncommitted line of credit for the
purpose of (a) providing working capital and to fund payments to suppliers of
Product; (b) to provide for Letters of Credit to secure suppliers of Product;
and (c) to fund payments due to a Swap Bank under any Swap Contract.

          "Borrowing Base Sub-Cap" means (a) from the date of this Agreement
until the date the first election is made by the Borrower pursuant to clause (b)
of this definition, $125,000,000, and (b) thereafter, at any time, the amount
set forth in the table below under the heading "Borrowing Base Sub-Cap" elected
by the Borrower from time to time by written notice to the Agents, provided
that, at the time of any such election of any such amount as the Borrowing Base
Sub-Cap, but not for any other purpose herein, each of the Borrower's Net
Working Capital, Tangible Net Worth and ratio of Total Liabilities to Tangible
Net Worth at such time of election, and the maximum cumulative loss for the
period commencing on the Closing Date and ending on the date of such election
(determined as a single accounting period),


                                       6

<PAGE>


each as determined by the most recent monthly financial statements received
pursuant to Section 7.01(c), are within the requirements set forth opposite such
amount in the table below. For purposes of testing whether such requirements
have been met, the highest amount elected by the Borrower for the month being
tested shall be used, where during the same month being tested the Borrower
elected to either increase or decrease the availability by selecting a different
amount under the column entitled "Borrowing Base Sub-Cap".

<TABLE>
<CAPTION>
                                                                                      Maximum Cumulative
                                                                Maximum Ratio at       Cumulative Loss
  Borrowing Base           Minimum Net     Minimum Tangible   Total Liabilities to   from Closing Date to
     Sub-Cap             Working Capital       Net Worth       Tangible Net Worth      time of election
  --------------         ---------------   ----------------   --------------------   --------------------
   <S>                     <C>                <C>                   <C>                   <C>
   $100,000,000            $20,000,000        $21,000,000           5.00 to 1             $ 4,000,000
   $125,000,000            $25,000,000        $26,000,000           5.00 to 1             $ 5,000,000
   $150,000,000            $30,000,000        $31,000,000           5.00 to 1             $ 6,000,000
   $175,000,000            $35,000,000        $36,000,000           5.00 to 1             $ 7,000,000
   $200,000,000            $40,000,000        $41,000,000           5.00 to 1             $ 8,000,000
   $225,000,000            $45,000,000        $46,000,000           5.00 to 1             $ 9,000,000
   $250,000,000            $50,000,000        $51,000,000           5.00 to 1             $10,000,000
</TABLE>

          "Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.

          "Business Day" (a) with respect to all matters other than those
related to Offshore Rate Loans, means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York, are authorized, or
required, by law to close and (b) means, for purposes of determining business
days in connection with Offshore Rate Loans, any day on which transactions are
made in the applicable offshore dollar interbank market other than a Saturday,
Sunday or other day on which commercial banks in New York, New York, are
authorized or required, by law to close.

          "Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any Bank or of any corporation controlling a Bank.

          "Capital Stock" means capital stock, membership interest, equity
interest or other obligations or securities of, or any interest in, any Person.

          "Cash Collateral" means currency issued by the United States and
Marketable Securities which have been Cash Collateralized for the benefit of the
Banks.

          "Cash Collateralize" means to pledge and deposit with or deliver to
the Collateral Agent, for the benefit of the Collateral Agent, the Issuing Banks
and the Banks, Cash Collateral as collateral for the Obligations pursuant to
documentation in form and substance satisfactory to Agents (which documents are
hereby consented to by the Banks). The Borrower hereby grants to the Collateral
Agent, for the benefit of the Collateral Agent, the Issuing Banks and the Banks,
a security interest in all such Cash Collateral. Cash Collateral shall be
maintained in the Bank Blocked Account.


                                       7

<PAGE>


          "Change of Control" means, at any time:

          (a)  Atmos Energy Corporation shall cease to own and control legally
and beneficially, either directly or indirectly, Voting Interests in Atmos
Energy Holdings, Inc. representing 100% of the combined voting power of all of
the Voting Interests in Atmos Energy Holdings, Inc. (on a fully diluted basis);
or

          (b)  Atmos Energy Holdings, Inc. shall cease to own and control
directly or indirectly, beneficial interest in Equity Interests representing
100% of the economic equity interest in the Borrower.

          "Chase" means JP Morgan Chase Bank (or any successor).

          "Closing Date" means the date on which all conditions precedent set
forth in Section 5.01 are satisfied or waived by all Banks.

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

          "Collateral" means all assets of the Borrower including, without
limitation, all accounts, equipment, chattel paper, inventory, natural gas in
transit, instruments, contract rights, the Bank Blocked Account, stock,
partnership interests, and general intangibles, whether presently existing or
hereafter acquired or created and the proceeds thereof.

          "Collateral Agent" means Fortis Capital Corp.

          "Collateral Position" means the total availability under the Borrowing
Base Advance Cap.

          "Compliance Certificate" means a certificate, in form attached hereto
as Exhibit C, whereby the Borrower certifies that it is in compliance with this
Agreement.

          "Consolidated" means the consolidation of accounts in accordance with
GAAP.

          "Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (which
obligations and Person are referred to herein as the "primary obligation" and
the "primary obligor," respectively), including any obligation of that Person
(i) to purchase, repurchase or otherwise acquire such primary obligations or any
security therefor, (ii) to advance or provide funds for the payment or discharge
of any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such


                                       8

<PAGE>


primary obligation, or (iv) otherwise to assure or hold harmless the holder of
any such primary obligation against loss in respect thereof (each, a "Guaranty
Obligation"); (b) with respect to any Surety Instrument (other than any Letter
of Credit) issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered; or (d) in respect of any swap contract.

          "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.

          "Conversion/Continuation Date" means any date on which, under Section
2.04, the Borrower (a) converts Loans of one Type to another Type, or (b)
continues such Loans as Loans of the same Type, but with a new Interest Period.

          "Conversion to Reduced Funding Banks Date" has the meaning specified
in Section 2.14.

          "Credit Extension" means and includes (a) the making of any Loans
hereunder, and (b) the Issuance of any Letters of Credit hereunder.

          "Current Assets" means, with respect to any Person on any date of
determination, all assets of such Person and its Subsidiaries that, in
accordance with GAAP, would be classified as current assets on the balance sheet
of a Person conducting a business the same as or similar to that of such Person,
after deducting appropriate and adequate reserves therefrom in accordance with
GAAP, determined on a Consolidated basis, and excluding any accounts receivable
owed by any Affiliate of the Borrower to the extent such accounts receivable
arose in transactions conducted other than on an arms-length basis.

          "Current Liabilities" means, with respect to any Person on any date of
determination, all liabilities of such Person and its Subsidiaries that, in
accordance with GAAP, would be classified as current liabilities on the balance
sheet of a Person conducting a business the same as or similar to that of such
Person, as determined on a Consolidated basis, but excluding to the extent
otherwise included therein any current portion of the Subordinated Debt.

          "Declining Bank" has the meaning specified in Section 2.14.

          "Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would constitute an Event of Default.

          "Default Rate" has the meaning specified in Subsection 2.08(a).

          "Documentation Agent" means BNP Paribas in its capacity as
documentation agent for the Banks hereunder.


                                       9

<PAGE>


                  "Dollar Advance Cap" means a cap upon Revolving Loans under
the Borrowing Base Line with the following limits:

          (a)  $50,000,000.00 at such times as the Borrowing Base Sub-Cap is
$100,000,000.00;

          (b)  $60,000,000.00 at such times as the Borrowing Base Sub-Cap is
$125,000,000.00;

          (c)  $70,000,000.00 at such times as the Borrowing Base Sub-Cap is
$150,000,000.00; and

          (d)  $80,000,000.00 at such times as the Borrowing Base Sub-Cap is
$175,000,000.00; and

          (e)  $90,000,000.00 at such times as the Borrowing Base Sub-Cap is
$200,000,000.00; and

          (f)  $100,000,000.00 at such times as the Borrowing Base Sub-Cap is
$225,000,000.00; and

          (g)  $100,000,000.00 at such times as the Borrowing Base Sub-Cap is
$250,000,000.00.

          "Dollars," and "$" each mean lawful money of the United States.

          "Effective Amount" means (a) with respect to any Loans on any date,
the aggregate outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of Loans occurring on such date; and
(b) with respect to any outstanding L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including changes as a result of
expiration or cancellation, any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.

          "Eligible Accounts" means, at the time of any determination thereof,
each of the Borrower's Accounts as to which the following requirements have been
fulfilled to the satisfaction of the Banks:

          (a)  Such Account (if for an amount in excess of $750,000.00) is
acceptable to each of the Banks in their sole discretion and either (i) is the
result of a sale to a Tier I or Tier II Account Party, or (ii) is secured by
letters of credit in form acceptable to the Banks in their sole discretion and
issued by banks approved by the Banks in their sole discretion;

          (b)  Borrower has lawful and absolute title to such Account;


                                       10

<PAGE>


          (c)  Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account for goods actually delivered or to be
delivered to such Account Debtor in the ordinary course of the Borrower's
business;

          (d)  Such Account shall have excluded therefrom any portion that is
subject to any dispute, offset, counterclaim or other claim or defense on the
part of the Account Debtor or to any claim on the part of the Account Debtor
denying liability under such Account; provided, however, that in the event that
the portion that is subject to any such dispute, counterclaim or other claim or
defense is secured with a Letter of Credit, such portion secured by the Letter
of Credit shall not be excluded;

          (e)  Such Account is not evidenced by any chattel paper, promissory
note or other instrument;

          (f)  Such Account is subject to a fully perfected first priority
security interest (or properly filed and acknowledged assignment, in the case of
U.S. government contracts, if any) in favor of the Administrative Agent pursuant
to the Loan Documents, prior to the rights of, and enforceable as such against,
any other Person, and such Account is not subject to any security interest or
Lien in favor of any Person other than the Liens of the Banks pursuant to the
Loan Documents;

          (g)  Such Account shall have excluded therefrom any portion which is
not payable in Dollars in the U.S.;

          (h)  Such Account has been due and payable for 15 days or less (or 30
days or less, if the Account Debtor is a Governmental Authority) from the date
of the invoice and no extension or indulgence has been granted extending the due
date beyond a 15 day period (or 30 days, as the case may be), except if such
Account by its terms provides for a 15 day payment period, then such Account
shall be eligible for up to 30 days from the date of invoice, or as otherwise
approved by Banks in writing; and

          (i)  No Account Debtor in respect of such Account is (i) an Affiliate
of the Borrower, or (ii) incorporated in or primarily conducting business in any
jurisdiction outside of the U.S., unless such Account Debtor and the Account is
approved in writing by the Banks; provided, however, that as long as Atmos
Energy Corporation maintains an S&P rating of BBB+ or a Moody's rating of Baa1
or better, and such Accounts would otherwise qualify as Eligible Accounts,
Accounts of Atmos Energy Corporation (and its Subsidiaries and Affiliates that
have been approved by Agents as Tier I Account Parties) may be included as Tier
I Accounts to the extent that such Accounts do not exceed 50% of Borrower's
total Accounts.

          (j)  The balance of such Account shall be the net of, in each case (i)
any accounts payable owing to the Account Debtor by the Borrower on such Account
and (ii) after application thereof to any Eligible Exchange Receivables,
Unbilled Eligible Accounts, and Realizable Unrealized Profits with such Account
Debtor, other offsets against amounts owed to such Account Debtor, whether in
respect of unbilled purchases, out-of-the-money positions or unperformed
contracts for purchase.


                                       11

<PAGE>


          "Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000.00; (b) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000.00,
provided, however, that such bank is acting through a branch or agency located
in the United States; and (c) a Person that is primarily engaged in the business
of commercial lending and that is (i) a Subsidiary of a Bank (or bank referred
to in the preceding clauses (a) or (b)), (ii) a Subsidiary of a Person of which
a Bank (or bank referred to in the preceding clauses (a) or (b)) is a
Subsidiary, or (iii) a Person of which a Bank (or bank referred to in the
preceding clauses (a) or (b)) is a Subsidiary.

          "Eligible Broker" means BNP Paribas, FIMAT USA, Inc. or any Affiliate
of BNP Paribas or FIMAT USA, Inc., or any broker approved in writing by the
Agents and the Banks.

          "Eligible Commodity Futures Accounts" means an account or accounts
with an Eligible Broker, in which the Collateral Agent is granted a first and
prior security interest as Collateral Agent for the Banks pursuant to Hedging
Assignments which security interest is subject only to the rights of the
Eligible Broker under such accounts.

          "Eligible Exchange Receivables" means all enforceable rights of the
Borrower to receive Product in exchange for the sale or trade of Product
previously delivered to the exchange debtor by the Borrower valued at an
independent posting and which (a) are evidenced by a written agreement
enforceable against the exchange debtor thereof, (b) are current pursuant to the
terms of the contract or invoice, (c) are subject to a perfected, first Lien in
favor of the Administrative Agent for the benefit of the Banks subject only to
Permitted Liens, and no other Lien, charge, offset or claim, (d) are not the
subject of a dispute between the exchange debtor and the Borrower, (e) are
valued at Platt's spot market price or an independent posting acceptable to the
Banks in their sole discretion, (f) if arising pursuant to contracts involving
an amount in excess of $750,000, are contracts by exchangers pre-approved by the
Banks in their sole discretion, or contracts secured by letters of credit in
form acceptable to the Banks in their sole discretion and issued by banks
approved by the Banks in their sole discretion, (g) have not been otherwise
determined by the Banks in their sole discretion to be unacceptable to them, and
(h) are the net of, in each case (i) any payables owing to such exchange debtor
by the Borrower and (ii) after application thereof to any Eligible Accounts,
Unbilled Eligible Accounts, and Realizable Unrealized Profits with such Account
Debtor, other offsets against amounts owed to such exchange debtor, whether in
respect of unbilled purchases, out-of-the-money positions or unperformed
contracts for purchase. The Product and Account relating to or creating any
Eligible Exchange Receivable shall not be simultaneously included in any other
availability calculation, including, without limitation, Undelivered Product
Value, Eligible Inventory or Eligible Accounts.

          "Eligible Inventory" means, at the time of determination thereof, all
of the Borrower's inventory stored in terminals (and provided the terminal
owners are subject to approval by the Banks in their sole discretion) valued at
the lower of cost or current market price (as referenced by a published source
acceptable to Banks in their sole discretion), and in all instances as to which
the following requirements have been fulfilled to the satisfaction of the Banks:


                                       12

<PAGE>


          (a)  The inventory is owned by the Borrower free and clear of all
Liens in favor of third parties, except Liens in favor of the Banks under the
Loan Documents and except for Permitted Liens;

          (b)  The inventory has not been identified to deliveries with the
result that a buyer would have rights to the inventory that would be superior to
the Administrative Agent's security interest for the benefit of the Banks, nor
shall such inventory have become the subject of a customer's ownership or Lien;

          (c)  The inventory is in transit in the U.S. under the control and
ownership of the Borrower or is in a pipeline or a bill of lading has been
issued to the Administrative Agent if such inventory is in the hands of a third
party carrier or is located in the U.S. at the locations described on Schedule
7.03(f), or at such other place as has been specifically agreed to in writing by
the Banks and the Borrower; and

          (d)  The inventory is subject to a fully perfected first priority
security interest in favor of the Administrative Agent for the benefit of the
Banks pursuant to the Loan Documents.

          "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

          "Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters.

          "Equity Interests": means, with respect to any Person, all of the
shares of capital stock of (or other ownership, beneficial or profit interests
in) such Person, all of the warrants, options or other rights for the purchase
or other acquisition from such Person of shares of capital stock of (or other
ownership, beneficial or profit interests in) such Person, all of the securities
convertible into or exchangeable for shares of capital stock of (or other
ownership, beneficial or profit interests in) such Person or warrants, rights or
options for the purchase or other acquisition from such Person of such shares
(or such other interests), and all of the other ownership, beneficial or profit
interests in such Person (including, without limitation, partnership, member or
trust interests therein), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are authorized or otherwise
existing on any date of determination.

          "ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.


                                       13

<PAGE>


          "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

          "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.

          "Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities").

          "Event of Default" means any of the events or circumstances specified
in Section 9.01.

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

          "Existing Letters of Credit" means all letters of credit issued by
Fortis and BNP Paribas for the account of the Borrower which are outstanding as
of the date hereof under the Original Credit Agreement and shall not include any
Letter of Credit which is not described on Schedule 3.10 hereto.

          "Expiration Date" means the earliest to occur of:

          (a)  December 31, 2002; or

          (b)  the date demand for payment is made by the Administrative Agent;
or

          (c)  the date an Event of Default occurs.

          "FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.


                                       14

<PAGE>


          "Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal Funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal Funds
transactions in New York City selected by the Administrative Agent.

          "Fortis" means Fortis Capital Corp., a Connecticut corporation.

          "FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.

          "Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholding or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amount payable or paid pursuant to Section 4.01.

          "GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

          "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

          "Guarantors" means Atmos Energy Holdings, Inc. and Atmos Energy
Marketing LLC.

          "Guaranty" means a Guaranty Agreement, in form and substance
acceptable to the Banks in their sole discretion, which has been executed by a
Guarantor and delivered to the Administrative Agent for the benefit of the
Banks.

          "Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."

          "Hedging Assignment" means a security agreement among Borrower, the
Administrative Agent and an Eligible Broker relating to the collateral
assignment to the Administrative Agent, as collateral agent for the Banks, of
all sums owing from time to time to Borrower with respect to an Eligible
Commodities Futures Account, such agreement to be in form and substance
acceptable to the Banks in their sole discretion.


                                       15

<PAGE>


          "Honor Date" has the meaning specified in Subsection 3.03(b).

          "Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to capital leases; (g)
all obligations with respect to swap contracts; (h) all indebtedness referred to
in clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (g) above.

          "Indemnified Liabilities" has the meaning specified in Section 11.05.

          "Indemnified Person" has the meaning specified in Section 11.05.

          "Independent Auditor" has the meaning specified in Subsection 7.01(a).

          "Insolvency Proceeding" means, with respect to any Person (a) any
case, action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.

          "Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the fifth Business Day of each month.

          "Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date selected by the Borrower as the ending date thereof, not
to exceed a period of 60 days, in its Notice of Borrowing or Notice of
Conversion/Continuation;

          provided, however, that:

          (a)  if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following Business
Day unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the preceding Business Day;


                                       16

<PAGE>


          (b)  any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and

          (c)  no Interest Period shall extend beyond the Expiration Date.

          "IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.

          "Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.

          "Issuing Banks" initially means Fortis and BNP Paribas, and in the
future means any Bank which Issues Letters of Credit hereunder, in such Bank's
capacity as an issuer of one or more Letters of Credit hereunder, together with
any replacement letter of credit issuer arising under Section 2.14.

          "L/C Advance" means each Bank's participation in any L/C Borrowing or
Reducing L/C Borrowing in accordance with (i) its Pro Rata Share with respect to
Letters of Credit Issued prior to the Conversion to Reduced Funding Banks Date
and (ii) its proportionate share, if any, as an Approving Bank with respect to
all Letters of Credit Issued thereafter.

          "L/C Amendment Application" means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at any Issuing Bank, as such Issuing Bank shall request.

          "L/C Application" means an application form for Issuances of standby
or commercial documentary letters of credit as shall at any time be in use at
any Issuing Bank, as such Issuing Bank shall request.

          "L/C Borrowing" means an extension of credit resulting from either a
drawing under any Letter of Credit or a Reducing L/C Borrowing, which extension
of credit shall not have been reimbursed on the date when made nor converted
into a Borrowing of Revolving Loans under Subsection 3.03(c).

          "L/C Cap" means the maximum availability for Issuance of Letters of
Credit under the Borrowing Base Line which shall be an amount equal to the total
Effective Amount of L/C Obligations plus the Effective Amount of then
outstanding Loans not to exceed the Borrowing Base Advance Cap.

          "L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit, including all outstanding
L/C Borrowings.


                                       17

<PAGE>


          "L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications, the Continuing Agreement for
Letters of Credit dated December 1, 2001, and any other document relating to any
Letter of Credit, including, but not limited to, any Issuing Bank's standard
form documents for letter of credit issuances.

          "Lending Office" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" on Schedule 11.02, or such other office
or offices as such Bank may from time to time notify the Borrower and the
Administrative Agent.

          "Letter of Credit Facility" means, at any time, the uncommitted
undertaking to provide Letters of Credit in an amount equal to the lesser of (a)
the amount of the aggregate Uncommitted Line Portions at such time and (b)
$250,000,000, as such amount may be reduced at or prior to such time pursuant to
this Agreement.

          "Letters of Credit" means (a) any letters of credit (whether standby
letters of credit or commercial documentary letters of credit) Issued by an
Issuing Bank pursuant to Article III, (b) any Reducing Letters of Credit, and
(c) any of the Existing Letters of Credit.

          "Liabilities from Risk Management Activities" means unrealized losses
resulting from Mark-to-Market valuation of storage, transportation, and
requirements contracts, over-the-counter and exchange-traded options, and
forwards, futures, and swap contracts.

          "LIBOR" means the rate of interest per annum determined by the
Administrative Agent as the rate at which dollar deposits in the approximate
amount of Fortis' Offshore Rate Loan for such Interest Period would be offered
by Fortis' London branch as stated on Telerate News Service Page 3750 as of
11:00 a.m. (London time) two (2) Business Days prior to the Borrowing Date. If
such interest rates shall cease to be available from Telerate News Service, the
LIBOR Rate shall be determined from such financial reporting service or other
information as shall be mutually acceptable to the Administrative Agent and the
Borrower.

          "Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge, encumbrance, or lien, statutory or other in
respect of any property, including those created by, arising under or evidenced
by any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as debtor,
under the Uniform Commercial Code or any comparable law.

          "Line" means the Borrowing Base Line.

          "Loan" means any extension of credit by a Bank to the Borrower under
Article II or Article III in the form of a Revolving Loan or an L/C Advance. All
Loans are demand in nature and Borrower hereby acknowledges and agrees the
Banks' right to demand payment at any time and for any reason or for no reason,
and such right is absolute and unconditional.

          "Loan Documents" means this Agreement, the Notes, the Guaranty, the
Security Agreement, the L/C-Related Documents, Swap Contracts, the Three Party
Agreement, the Atmos Support Agreement, and all other documents delivered to the
Administrative Agent or any Bank in connection herewith.


                                       18

<PAGE>


          "Lock Box" has the meaning specified in Section 7.14.

          "Long Position" means the aggregate number of MMBTUS of Product,
including that of the Prompt Month, which are either held in inventory by the
Borrower or which the Borrower has contracted to purchase (whether by purchase
of a contract on a commodities exchange or otherwise), or which the Borrower
will receive on exchange or the notional quantity under a swap contract
including, without limitation, all option contracts representing the obligation
of the Borrower to purchase Product at the option of a third party, and in each
case, for which a fixed purchase price has been set. Long Positions will be
expressed as a positive number.

          "Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.

          "Mark-to-Market" means, the method of accounting used to account for
derivative commodity instruments entered into for trading purposes, in
accordance with EITF 98-10, "Accounting for Energy Trading and Risk Management
Activities" and any future open obligation.

          "Marketable Securities" means (a) certificates of deposit issued by
any bank with a Fitch rating of A or better, (b) commercial paper rated P-1, A-1
or F-1, (c) bankers acceptances rated prime, or (d) U.S. Government obligations
with tenors of 90 days or less.

          "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole, (b) a material impairment of the ability of the
Borrower to perform under any Loan Document and to avoid any Event of Default,
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower or any of its Subsidiaries.

          "Maturity Date" means March 31, 2003.

          "Multiemployer Plan" means a "multiemployer plan," within the meaning
of Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three (3) calendar years, has made, or been obligated to make, contributions.

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

          "Net Position Report" means a report in form attached hereto as
Exhibit F.

          "Net Working Capital" means, as to the Borrower and the Subsidiaries,
the excess of Current Assets (minus all amounts due from employees, owners,
Subsidiaries and Affiliates other than Accounts of Atmos Energy Corporation and
its Subsidiaries and Affiliates permitted


                                       19

<PAGE>


to be included as Eligible Accounts in the calculation of the Borrowing Base
Advance Cap) over Current Liabilities (excluding the current portion of the
Subordinated Debt), less investments in Capital Stock.

          "Notes" means the promissory notes executed by the Borrower in favor
of a Bank pursuant to Subsection 2.02(b), in form approved by the Banks. A Note
will be issued by the Borrower to each entity that becomes a Bank hereunder from
time to time, but will not be issued to Participants of a Bank.

          "Notice of Borrowing" means the applicable notice in substantially the
form of Exhibit A.

          "Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit B.

          "Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by the Borrower to
any Bank, or any affiliate of any Bank, Agents, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising, including,
without limitation, all obligations of the Borrower under Revolving Loans,
Letters of Credit, and any Swap Contracts.

          "Offshore Effective Amount" means the product of the principal amount
of an Offshore Rate Loan or requested Offshore Rate Loan and the number of days
in the applicable Interest Period for such Offshore Rate Loan.

          "Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) determined by Agents as
follows:

                                              LIBOR
          Offshore Rate =         -----------------------------
                           1.00 - Eurodollar Reserve Percentage

          The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.

          "Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.

          "Organization Documents" means (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, and (b) for any partnership, the partnership agreement, and all
other documents or filings as may be required by the Secretary of State (or
other applicable governmental agency) in the state of such partnership's
formation.


                                       20

<PAGE>


          "Original Credit Agreement" means that certain Credit Agreement, dated
as of December 1, 2001, between the Borrower, the banks party thereto from time
to time, and Fortis Capital Corp., as agent for the banks, as heretofore
amended.

          "Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.

          "Participant" has the meaning specified in Subsection 11.08(d).

          "PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.

          "Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan
years.

          "Permitted Liens" has the meaning specified in Section 8.01.

          "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
Governmental Authority.

          "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower sponsors or maintains or to which the Borrower makes,
is making, or is obligated to make contributions and includes any Pension Plan.

          "Product" means natural gas.

          "Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Uncommitted Line Portion divided by the combined total of
the Uncommitted Line of all the Banks.

          "Prompt Month" means, as of any Reporting Effective Date, the month
following the month such reporting occurs.

          "Realizable Unrealized Profits" means at any time, the sum of the
Borrower's net unrealized cash market profits realizable within six months from
such time, from Accounts of the Borrower which are Eligible Accounts (other than
the requirement of subparagraph (h) in the definition of "Eligible Accounts")
and which are for Product which has been contracted to be delivered to an
Account Debtor, net of, in each case (i) any accounts payable owing to the
Account Debtor from the Borrower on such Account and (ii) after application
thereof to any Eligible Accounts, Eligible Exchange Receivables, and Unbilled
Eligible Accounts with such Account Debtor, other offsets against amounts owed
to such Account Debtor, whether in respect of unbilled purchases,
out-of-the-money positions or unperformed contracts for purchase.


                                       21

<PAGE>


          "Reducing Letters of Credit" means any letters of credit (whether
standby letters of credit or commercial documentary letters of credit) that
(a) are Issued by an Issuing Bank pursuant to Article III, and (b) specifically
provide that the amount available for drawing under such letters of credit will
be reduced, automatically and without any further amendment or endorsement to
such letters of credit, by the amount of any payment or payments made to the
beneficiary of such Letter of Credit by the Borrower if such payment or payments
(i) are made through a bank and (ii) reference such letters of credit by the
letter of credit numbers thereof, notwithstanding the fact that such payment or
payments are not made pursuant to conforming and proper draws under such letters
of credit.

          "Reducing L/C Borrowing" means any extension of credit by the Banks to
the Borrower for the purpose of funding any payment or payments made to the
beneficiary of a Reducing Letter of Credit by the Borrower if such payment or
payments (a) are made through the Issuing Bank of such Reducing Letter of
Credit, (b) reference the Reducing Letter of Credit by the letter of credit
number thereof, and (c) are not made pursuant to a conforming and proper draws
under such Reducing Letter of Credit.

          "Replacement Bank" has the meaning specified in Section 4.08.

          "Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.

          "Reporting Effective Date" means the effective date of any report
required to be made hereunder.

          "Required Banks" means, at any time, Banks holding at least two-thirds
of all of the Uncommitted Line Portions.

          "Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

          "Responsible Officer" means any of the following: J.D. Woodward III,
Ronald W. Bahr or Randy W. Randel.

          "Revolving Loan" has the meaning specified in Section 2.01.

          "Security Agreements" means a security agreement, in form and
substance acceptable to the Collateral Agent and the Banks, duly executed by the
Borrower and delivered to the Collateral Agent for the benefit of the Banks
granting to the Collateral Agent, as collateral agent for the Banks, a first and
prior security interest in and Lien upon the Collateral, and all Hedging
Assignments.

          "Short Position" means the aggregate number of MMBTUS of Product,
including that of the Prompt Month, which the Borrower has contracted to sell
(whether by sale of a contract on a commodities exchange or otherwise) or
deliver on exchange or under a swap


                                       22

<PAGE>


contract, including, without limitation, all option contracts representing the
obligation of the Borrower to sell Product 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.

          "Subordinated Debt" means Indebtedness of the Borrower which has been
reported to the Banks and which has been subordinated to the Obligations
pursuant to a Subordination Agreement substantially in the form attached hereto
as Exhibit G.

          "Subsidiary" of a Person means any corporation, association,
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower.

          "Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.

          "Swap Bank" means BNP Paribas or Societe Generale, or any Affiliate of
BNP Paribas or Societe Generale, or any other Bank approved by the Agents.

          "Swap Contract" means any agreement entered into with a Swap Bank,
whether or not in writing, relating to any single transaction that is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap or option, bond, note or bill option, interest rate
option, forward foreign exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, currency option or any other similar
transaction (including any option to enter into any of the foregoing) or any
combination of the foregoing and, unless the context clearly requires, any
master agreement relating to or governing any or all of the foregoing.

          "Swap-Related Standby Letter of Credit" means any Letter of Credit
issued under the Letter of Credit Facility to support obligations of the
Borrower under a Swap Contract.

          "Tangible Net Worth" means (a) the sum of the Borrower's assets, as
determined in accordance with GAAP, less (b) the sum of the Borrower's
liabilities excluding Subordinated Debt, as determined in accordance with GAAP,
less (c) all amounts due from employees, owners, Subsidiaries and Affiliates
other than Accounts permitted to be included as Eligible Accounts in the
calculation of the Borrowing Base Advance Cap, less (d) investments in Capital
Stock, less (e) the intangible assets of the Borrower, as determined in
accordance with GAAP.

          "Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings, or similar
charges, and all liabilities with respect thereto, excluding, in the case of
each Bank and the Administrative Agent, taxes imposed on or measured by each
Bank's net income or capital (with respect to franchise taxes or similar taxes)
by the jurisdiction (or any political subdivision thereof) under the laws of
which such Bank or the Administrative Agent, as the case may be, is organized or
maintains a lending office.


                                       23

<PAGE>


          "Three Party Agreement" means the Three Party Agreement Relating to
Lockbox Services (With Activation) dated April 15, 2002, among the Borrower,
Fortis Capital Corp. and Bank of America, N.A.

          "Tier I Account" means an Eligible Account with a Tier I Account
Party.

          "Tier I Account Party" means an Account Debtor which is approved by
the Banks in their sole discretion as a Tier I Account Party.

          "Tier I Unbilled Account" means Unbilled Eligible Accounts with a Tier
I Account Party.

          "Tier II Account" means Eligible Accounts with a Tier II Account
Party.

          "Tier II Account Party" means any Account Debtor approved by the Banks
in their sole discretion as a Tier II Account Party.

          "Tier II Unbilled Account" means Unbilled Eligible Accounts with a
Tier II Account Party.

          "Total Liabilities" means, with respect to any Person on any date of
determination, all liabilities of such Person and its Subsidiaries that, in
accordance with GAAP, would be classified as liabilities on the balance sheet of
a Person conducting a business the same as or similar to that of such Person, as
determined on a Consolidated basis, but excluding to the extent otherwise
included therein any portion of the Subordinated Debt.

          "Total Subscribed Line Portions" means the Dollar amount shown in
Schedule 2.01 across from the phrase "Total Subscribed Line Portions".

          "Type" means either a Base Rate Loan or an Offshore Rate Loan.

          "Unbilled Eligible Accounts" means Accounts of the Borrower for
Product which has been delivered to an Account Debtor and which would be
Eligible Accounts but for the fact that such Accounts have not actually been
invoiced at such time, net of, in each case (i) any accounts payable owing to
the Account Debtor from the Borrower on such Account and (ii) after application
thereof to any Eligible Accounts, Eligible Exchange Receivables, and Realizable
Unrealized Profits with such Account Debtor, other offsets against amounts owed
to such Account Debtor, whether in respect of unbilled purchases,
out-of-the-money positions or unperformed contracts for purchase.

          "Uncommitted Line" means the aggregate Line limits of all the Banks as
is set forth on Schedule 2.01.

          "Uncommitted Line Portion" means for each Bank the portion of each of
the Line limits assigned to such Bank as set forth on Schedule 2.01.

          "Undelivered Product Value" means the lesser of the (a) cost or (b)
current market value of Product purchased by the Borrower under the Letters of
Credit but which has not been physically delivered to the Borrower. Undelivered
Product Value cannot simultaneously be included in an Eligible Exchange
Receivable.


                                       24

<PAGE>


          "Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.

          "United States" and "U.S." each means the United States of America.

          "Unrealized Mark-to-Market Losses" means Borrower's unrealized
Mark-to-Market losses as of the day of determination of Borrower's Borrowing
Base to be reported on a Borrowing Base Collateral Position Report. Such losses,
if any, to be calculated by subtracting (a) the sum of the current Liabilities
from Risk Management Activities and noncurrent Liabilities from Risk Management
Activities from (b) the sum of current Assets from Risk Management Activities
and noncurrent Assets from Risk Management Activities on the day of
determination of the Borrower's Borrowing Base. If this amount is less than
zero, the Unrealized Mark-to-Market Loss is the absolute value of the
difference. If this amount is greater than zero, the Unrealized Mark-to-Market
Loss is zero.

          "Voting Interests" means shares of capital stock issued by a
corporation, or equivalent Equity Interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right to so vote has been suspended by the happening of such a
contingency.

          1.02 Other Interpretive Provisions.

          (a)  The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

          (b)  The words "hereof," "herein," "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

          (c)  (i)   The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.

               (ii)  The term "including" is not limiting and means "including
without limitation."

               (iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means "to
and including."

          (d)  Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments


                                       25

<PAGE>


and other modifications are not prohibited by the terms of any Loan Document,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.

          (e)  The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.

          (f)  This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

          (g)  This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Banks,
the Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or Agents merely
because of Agents' or Banks' involvement in their preparation.

          1.03 Accounting Principles.

          (a)  Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made in accordance with
GAAP, consistently applied.

          (b)  References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower.


                                   ARTICLE II

                                   THE CREDITS

          2.01 Amounts and Terms of Uncommitted Line.

          (a)  Each Bank severally agrees, on an UNCOMMITTED AND ABSOLUTELY
DISCRETIONARY basis, and on the terms and conditions set forth herein, to
consider making Loans, from time to time, to the Borrower under the Borrowing
Base Line (each such loan, a "Revolving Loan") on any Business Day during the
period from the Closing Date to the Expiration Date, in an aggregate amount not
to exceed at any time outstanding (i) such Bank's Uncommitted Line Portion for
the Borrowing Base Line; or (ii) the Dollar Advance Cap; provided, however,
that, after giving effect to any Borrowing of Revolving Loans, the Effective
Amount of all outstanding Revolving Loans, plus the Effective Amount of all L/C
Obligations, shall not exceed the Borrowing Base Advance Cap. At no time shall
the Dollar Advance Cap be exceeded.

          (b)  Advances Related to the Swap Contracts. In addition to advances
requested from time to time by the Borrower, in the event that either (i) any
amounts owing to BNP Paribas


                                       26

<PAGE>


or any of its Affiliates under any Swap Contract are not paid within two (2)
Business Days after such obligation arises, then BNP Paribas shall notify the
Administrative Agent of such failure to pay and the Administrative Agent
(without the necessity of any instructions or request from the Borrower) shall
make a Revolving Loan in accordance with the provisions of Section 2.03 of this
Agreement under the Borrowing Base Line for any amounts due by the Borrower to
BNP Paribas or any of its Affiliates under any Swap Contract, and then apply the
proceeds of such advance to pay to BNP Paribas or any of its Affiliates all
amounts owed to such Person under such Swap Contract. Upon making any such
Revolving Loan, the Administrative Agent shall send notice of such Revolving
Loan to the Borrower and the Banks. Any such advance shall initially be a Base
Rate Loan. In the event that any such advance made to fund BNP Paribas or any of
its Affiliates results in an advance in excess of the Borrowing Base Advance
Cap, the Banks shall have no duty to fund their pro rata share of any excess
resulting from such advance made to repay amounts owing to BNP Paribas or any of
its Affiliates under any Swap Contract, but BNP Paribas' or any of its
Affiliates' outstandings hereunder shall be deemed to be increased by the amount
of such excess. In the event any advance described above does exceed the
Borrowing Base Advance Cap, the Borrower shall pay to the Administrative Agent,
for the benefit of BNP Paribas or any of its Affiliates, the amount of such
excess, together with interest thereon, within one (1) Business Day after the
date of such advance and, notwithstanding anything to the contrary herein, the
Banks shall not share in such payment.

          THE BORROWER ACKNOWLEDGES AND AGREES THAT THE BANKS HAVE ABSOLUTELY NO
DUTY TO FUND ANY REVOLVING LOAN REQUESTED BY THE BORROWER BUT WILL EVALUATE EACH
LOAN REQUEST AND IN EACH BANK'S ABSOLUTE AND SOLE DISCRETION WILL DECIDE WHETHER
TO FUND SUCH LOAN REQUEST. THE BORROWER FURTHER ACKNOWLEDGES AND AGREES THAT BNP
PARIBAS HAS ABSOLUTELY NO DUTY TO ENTER INTO ANY SWAP CONTRACT, AND THE ENTERING
INTO OF ANY SWAP CONTRACT SHALL BE AT BNP PARIBAS' ABSOLUTE AND SOLE DISCRETION.

          2.02 Loan Accounts.

          (a)  The Loans made by each Bank and the Letters of Credit Issued by
an Issuing Bank shall be evidenced by one or more accounts or records maintained
by the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent shall be conclusive absent
manifest error of the amount of the Loans made by the Banks to the Borrower and
the Letters of Credit Issued for the account of the Borrower hereunder, and the
interest and payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the Obligation of the Borrower
hereunder to pay any amount owing with respect to the Loans or any Letter of
Credit.

          (b)  Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of loan accounts. Each such Bank may endorse on the schedules annexed to
its Note(s) the date, amount and maturity of each Loan made by it and the amount
of each payment of principal made by the Borrower with respect thereto. Each
such Bank is irrevocably authorized by the Borrower to endorse its Note(s) and
each Bank's record shall be conclusive absent manifest error; provided,


                                       27

<PAGE>


however, that the failure of a Bank to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or otherwise affect the
Obligations of the Borrower hereunder or under any such Note to such Bank.

          2.03 Procedure for Borrowing.

          (a)  Each Borrowing of Revolving Loans consisting only of Base Rate
Loans, if approved by the Banks in their sole discretion, shall be made upon the
Borrower's irrevocable written notice delivered to the Administrative Agent and
the Banks in the form of a Notice of Borrowing (Revolving Loan), which notice
must be received by the Administrative Agent and the Banks by no later than
12:00 p.m. noon (New York City time) on the Borrowing Date specifying the amount
of the Borrowing. Each such Notice of Borrowing shall be by electronic transfer
or facsimile, confirmed immediately in an original writing. Each Borrowing of
Revolving Loans that includes any Offshore Rate Loans, if approved by the Banks
in their sole discretion, shall be made upon the Borrower's irrevocable written
notice delivered to the Administrative Agent and the Banks in the form of a
Notice of Borrowing (which notice must be received by the Administrative Agent
by no later than 12:00 p.m. noon (New York City time) four (4) Business Days
prior to the requested Borrowing Date), specifying the amount of the Borrowing.
Each such Notice of Borrowing shall be by electronic transfer or facsimile,
confirmed immediately in an original writing. Each requested Offshore Rate Loan
must have an Offshore Effective Amount of at least $15,000,000.

          (b)  The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Borrowing.

          (c)  Unless a Bank has provided the Administrative Agent with, and the
Administrative Agent has actually received, a written notice in the form
attached hereto as Exhibit H prior to 5:00 p.m. (New York City time) one
Business Day immediately prior to the proposed Borrowing Date that such Bank
does not approve further Borrowings and/or Issuances of Letters of Credit, if
the Administrative Agent elects in its sole discretion to advance a Loan
pursuant to a Notice of Borrowing, each Bank will be deemed to have approved
such Borrowing and will make the amount of its Pro Rata Share of such Borrowing
available to the Administrative Agent for the account of the Borrower at the
Administrative Agent's payment office by 3:00 p.m. (New York City time) on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. The proceeds of all such Loans will then be made available
to the Borrower by the Administrative Agent at such office by crediting the Lock
Box with the aggregate of the amounts made available to the Administrative Agent
by the Banks and in like funds as received by the Administrative Agent. If any
Bank in a timely manner provides the Administrative Agent with such a written
notice of its disapproval of further Borrowings and/or Issuances of Letters of
Credit, then the Administrative Agent shall notify the Borrower that one or more
of the Banks have elected not to fund further Borrowings and/or participate in
further Issuances of Letters of Credit and whether a Bank (or Banks) has (have)
elected to become the Approving Bank(s) thereby triggering the Conversion to
Reduced Funding Banks Date.


                                       28

<PAGE>


          2.04 Conversion and Continuation Elections.

          (a)  Borrower may, upon irrevocable written notice to the
Administrative Agent in accordance with Subsection 2.04(b):

               (i)   elect, as of any Business Day, in the case of Base Rate
     Loans, or as of the last day of the applicable Interest Period, in the case
     of any Offshore Rate Loan, to convert any such Loans into Loans of any
     other Type (provided, however, that the Offshore Effective Amount of each
     Offshore Rate Loan must be at least $15,000,000); or

               (ii)  elect, as of the last day of the applicable Interest
     Period, to continue any Revolving Loans having Interest Periods expiring on
     such day (provided, however, that the Offshore Effective Amount of each
     Offshore Rate Loan must be at least $15,000,000);

provided, however, that if at any time the aggregate amount of Offshore Rate
Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof, to have an Offshore Effective Amount of less than
$15,000,000, such Offshore Rate Loans shall automatically convert into Base Rate
Loans, and on and after such date the right of the Borrower to continue such
Loans as, and convert such Loans into, Offshore Rate Loans shall terminate.

          (b)  Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Administrative Agent not later than 12:00 p.m. noon (New York
City time) on the Conversion/Continuation Date if the Loans are to be converted
into Base Rate Loans; and four (4) Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans, specifying:

               (i)   the proposed Conversion/Continuation Date;

               (ii)  the aggregate amount of Loans to be converted or continued;

               (iii) the Type of Loans resulting from the proposed conversion or
     continuation; and

               (iv)  other than in the case of conversions into Base Rate Loans,
     the duration of the requested Interest Period.

          (c)  If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Borrower has failed to timely select a new Interest
Period to be applicable to its Offshore Rate Loans, or if any Default or Event
of Default then exists, the Borrower shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.

          (d)  The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Borrower, the Administrative Agent will promptly notify each
Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans, with respect to which the notice was given, held
by each Bank.


                                       29

<PAGE>


          (e)  Unless the Required Banks otherwise agree, during the existence
of a Default or Event of Default, the Borrower may not elect to have a Loan
converted into or continued as an Offshore Rate Loan.

          (f)  After giving effect to any Borrowing, conversion or continuation
of Loans, there may not be more than five (5) Interest Periods in effect.

          (g)  The Administrative Agent will promptly notify, in writing, each
Bank of the amount of such Bank's Pro Rata Share of that Borrowing.

          (h)  If any Bank has provided the Administrative Agent with, and the
Administrative Agent has actually received, a written notice in the form of
Exhibit H by 5:00 p.m. (New York City time) one Business Day immediately prior
to the requested Conversion/Continuation Date, then the Administrative Agent
shall notify the Borrower and the other Banks by no later than 6:00 p.m. (New
York City time) that one or more of the Banks has (have) elected not to
convert/continue such Loan and whether Bank(s) has (have) elected to become the
Approving Bank(s) thereby triggering the Conversion to Reduced Funding Banks
Date.

          2.05 Optional Prepayments The Borrower may, at any time or from time
to time, upon the Borrower's irrevocable written notice to the Administrative
Agent received prior to 1:00 p.m. (New York City time) on the date of
prepayment, prepay Loans in whole or in part without premium except any amounts
due by Borrower pursuant to Article IV. The Administrative Agent will promptly
notify each Bank of its receipt of any such prepayment, and of such Bank's Pro
Rata Share of such prepayment.

          2.06 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
If on any date the Effective Amount of L/C Obligations exceeds the L/C Cap, the
Borrower shall Cash Collateralize on such date the outstanding Letters of Credit
in an amount equal to the excess above any such cap. If on any date after giving
effect to any Cash Collateralization made on such date pursuant to the preceding
sentence, the Effective Amount of all Revolving Loans then outstanding plus the
Effective Amount of all L/C Obligations exceeds the lesser of (a) the Collateral
Position or (b) the total Uncommitted Line, or if the Effective Amount of all
Revolving Loans under the Borrowing Base Line then outstanding, plus the
Effective Amount of all L/C Obligations under such Line exceed the Borrowing
Base Advance Cap, the Borrower shall immediately, and without notice or demand,
prepay the outstanding principal amount of the Revolving Loans and L/C Advances
by an amount equal to the applicable excess.

          2.07 Repayment. The Borrower shall repay the principal amount of each
Revolving Loan to the Administrative Agent on behalf of the Banks, on the
Advance Maturity Date for such Loan. All amounts owing a Swap Bank under any
Swap Contract, to the extent such amounts have not been repaid from the proceeds
of a Revolving Loan, shall be paid on demand, or if no demand is made, on the
first (1st) Business Day after the Borrower receives notice that such amount was
advanced by or becomes owing to a Swap Bank.


                                       30

<PAGE>


          2.08 Interest.

          (a)  Each Revolving Loan (except for a Revolving Loan made as a result
of a drawing under a Letter of Credit or a Reducing L/C Borrowing) shall bear
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a floating rate per annum equal to the Base Rate plus the
Applicable Margin at all times such Loan is a Base Rate Loan or at the Offshore
Rate plus the Applicable Margin at all times such Loan is an Offshore Rate Loan.
Each Revolving Loan made as a result of a drawing under a Letter of Credit or a
Reducing L/C Borrowing, all amounts owing to BNP Paribas with respect to any
Swap Contract shall bear interest on the outstanding principal amount thereof
from the date funded at a floating rate per annum equal to the Base Rate plus
the Applicable Margin until such Loan has been outstanding for more than two (2)
Business Days and, thereafter, shall bear interest on the outstanding principal
amount thereof at a floating rate per annum equal to the Base Rate, plus three
percent (3.0%) per annum (the "Default Rate").

          (b)  Interest on each Revolving Loan shall be paid upon demand, or if
no demand is made, shall be paid in arrears on each Interest Payment Date.

          (c)  Notwithstanding subsection (a) of this Section, if any amount of
principal of or interest on any Loan, or any other amount payable hereunder or
under any other Loan Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Borrower agrees to pay
interest on such unpaid principal or other amount, from the date such amount
becomes due until the date such amount is paid in full, and after as well as
before any entry of judgment thereon to the extent permitted by law, payable on
demand, at a fluctuating rate per annum equal to the Default Rate.

          (d)  Anything herein to the contrary notwithstanding, the Obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Borrower shall pay such Bank interest at the highest rate permitted by
applicable law.

          (e)  Regardless of any provision contained in any Note or in any of
the Loan Documents, none of the Banks shall ever be deemed to have contracted
for or be entitled to receive, collect or apply as interest under any such Note
or any Loan Document, or otherwise, any amount in excess of the maximum rate of
interest permitted to be charged by applicable law, and, in the event that any
of the Banks ever receive, collect or apply as interest any such excess, such
amount which would be excessive interest shall be applied to the reduction of
the unpaid principal balance of the Note, and, if the principal balance of such
Note is paid in full, any remaining excess shall forthwith be paid to the
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the highest lawful rate, the Borrower and such Bank
shall, to the maximum extent permitted under applicable law, (i) characterize
any non-principal payment as an expense, fee, or premium, rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
spread the total amount of interest throughout the entire contemplated term of
such Note so that the interest rate is uniform throughout such term; provided,
however, that if all Obligations under the Note and all Loan Documents are
performed in full prior to the end of the full contemplated term thereof,


                                       31

<PAGE>


and if the interest received for the actual term thereof exceeds the maximum
lawful rate, such Bank shall refund to the Borrower the amount of such excess,
or credit the amount of such excess against the aggregate unpaid principal
balance of such Bank's Note at the time in question.

          2.09 Fees. In addition to certain fees described in Section 3.08, the
Borrower shall pay to the Administrative Agent, for the account of each Bank,
fees in accordance with a separate letter agreement between the Agents, the
Banks and the Borrower. The Borrower shall also pay to the Agents, for their own
accounts, fees in accordance with a separate letter agreement between the Agents
and the Borrower.

          2.10 Computation of Fees and Interest.

          (a)  All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof through the last day thereof.

          (b)  Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Borrower and the Banks in the
absence of manifest error.

          2.11 Payments by the Borrower.

          (a)  All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Administrative Agent
for the account of the Banks at the Administrative Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 1:00
p.m. (New York City time) on the date specified herein. The Administrative Agent
will promptly distribute to each Bank its Pro Rata Share or Adjusted Pro Rata
Share, as the case may be, of such payment in like funds as received. Any
payment received by the Administrative Agent later than 1:00 p.m. (New York City
time) shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.

          (b)  Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.

          (c)  Unless the Administrative Agent receives notice from the Borrower
prior to the date on which any payment is due to the Banks that the Borrower
will not make such payment in full as and when required, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Borrower has not made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.


                                       32

<PAGE>


          2.12 Payments by the Banks to the Administrative Agent. If and to the
extent any Bank shall not have made its full amount available to the
Administrative Agent in immediately available funds and the Administrative Agent
in such circumstances has made available to the Borrower such amount, that Bank
shall on the Business Day following such Borrowing Date make such amount
available to the Administrative Agent, together with interest at the Federal
Funds Rate for each day during such period. A notice of the Administrative Agent
submitted to any Bank with respect to amounts owing under this Section 2.12
shall be conclusive, absent manifest error. If such amount is so made available,
such payment to the Administrative Agent shall constitute such Bank's Loan on
the date of Borrowing for all purposes of this Agreement. If such amount is not
made available to the Administrative Agent on the Business Day following the
Borrowing Date, the Administrative Agent will notify the Borrower of such
failure to fund and, upon demand by the Administrative Agent, the Borrower shall
pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.

          2.13 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share or Adjusted Pro Rata
Share, as the case may be at such time (other than payments to BNP Paribas with
respect to advances made in excess of the Borrowing Base Advance Cap as a result
of payment under a Swap Contract), such Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment pro rata with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 11.09) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. the Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.

          2.14 The Election of Approving Banks to Continue Funding. If one or
more Banks (the "Declining Bank" or "Declining Banks") provides the
Administrative Agent with, and the Administrative Agent has actually received, a
written notice in the form of Exhibit H for reasons other than a Default and the
other Bank or Banks do approve further Revolving Loans (including the conversion
and extension of such Revolving Loans) or the further issuances of,


                                       33

<PAGE>


extensions of, the automatic renewal of or amendments to Letters of Credit, the
Administrative Agent shall notify the Banks by 6:00 p.m. (New York City time)
that same day. If the Bank or Banks which are not the Declining Banks desire,
they may (on a pro rata basis among the Banks that have elected to continue
funding) make the full or partial amount of such requested Revolving Loan or
issue or amend the requested Letter of Credit irrespective of the Declining
Banks' disapproval (in such case, the Banks that elect to continue funding shall
be referred to as the "Approving Banks"). In such event, from such date (the
"Conversion to Reduced Funding Banks Date") forward (a) all subsequent Revolving
Loans and Issuances of Letters of Credit or Amendments to Letters of Credit that
increase the face amount of a Letter of Credit or extend the term of a Letter of
Credit shall be made unilaterally by the Approving Banks and no Letter of Credit
thereafter Issued shall be participated in by the Declining Banks, (b) all
Banks' interests in the Collateral and loan management decisions shall be
pro-rata based on each Bank's total Effective Amount of Revolving Loans, plus
the Effective Amounts of such Bank's L/C Obligations from time to time, and (c)
the Approving Banks' Pro Rata Share of the Uncommitted Line Portion shall be
increased on the basis of each such advance and Issuance of a Letter of Credit
made by such approving Bank.

          Notwithstanding the foregoing, however, for purposes of allocating
repayments prior to the occurrence of a Default hereunder, the Adjusted Pro Rata
Share of the Uncommitted Line of each Bank shall remain fixed at the percentage
held by such Bank the day before the Conversion to Reduced Funding Banks Date,
without respect to any changes which may subsequently occur in such Bank's Pro
Rata Share of the Uncommitted Line except that in the event that Obligations
become owing to BNP Paribas and its Affiliates after such date pursuant to Swap
Contracts as a result of contracts or transactions existing on the Conversion to
Reduced Funding Banks Date, the Adjusted Pro Rata Share of each Bank shall be
recalculated to account for the increase in Obligations that have become owing
to BNP Paribas or its Affiliates until such time, if any, that all Declining
Banks are fully repaid. Upon the occurrence of a Default and thereafter,
repayments shall be allocated according to the Adjusted Pro Rata Share of the
outstanding balances held by the Banks on the date of Default except that in the
event that Obligations become owing to BNP Paribas or its Affiliates after such
date pursuant to Swap Contracts as a result of contracts or transactions
existing on the date of such Default, the Adjusted Pro Rata Share of each Bank
shall be recalculated to account for the increase in Obligations owing to BNP
Paribas or its Affiliates.

          2.15 Payments from Guarantors and Liquidation of Collateral.
Notwithstanding anything to the contrary contained herein, in the event
repayment is made to the Banks by Guarantors or pursuant to a liquidation of
Collateral, such repayment shall be shared by the Banks on the basis of each
Bank's then existing Adjusted Pro Rata Share rather than each Bank's Pro Rata
Share.


                                       34

<PAGE>

                                   ARTICLE III

                              THE LETTERS OF CREDIT

          3.01 The Letter of Credit Lines.

          (a)  On an uncommitted basis and on the terms and conditions set forth
herein and unless a Bank has provided the Administrative Agent with, and the
Administrative Agent has actually received, a written notice in the form
attached hereto as Exhibit H prior to 5:00 p.m. (New York City time) one
Business Day immediately prior to the proposed date of Issuance of a Letter of
Credit that such Bank does not approve further Borrowings and/or Issuances of
Letters of Credit, (i) each Issuing Bank agrees, (A) from time to time on any
Business Day during the period from the Closing Date to the Expiration Date, to
consider the Issuance of Letters of Credit for the account of the Borrower under
the Borrowing Base Line and to consider whether to amend or renew Letters of
Credit previously Issued by it, in accordance with Subsections 3.02(b), 3.02(c),
and 3.02(d) and (B) to honor drafts under the Letters of Credit; and (ii) each
of the Banks will be deemed to have approved such Issuance, amendment or
renewal, and shall participate in Letters of Credit Issued for the account of
the Borrower. If any Bank gives the Administrative Agent timely notice of its
disapproval of further Borrowings and/or Issuances of Letters of Credit, then
the Administrative Agent shall notify the Borrower that one or more of the Banks
have elected not to fund further Borrowings or participate in the further
Issuances of Letters of Credit, and whether a Bank (or Banks) has (have) elected
to become the Approving Bank(s) thereby triggering the Conversion to Reduced
Funding Banks Date. No Declining Bank shall have any obligation to or shall be
deemed to have participated in any Letters of Credit which are Issued on or
after the Conversion to Reduced Funding Banks Date. No Swap-Related Standby
Letter of Credit shall be Issued if, after giving effect to such Issuance, the
outstanding amounts of all Swap-Related Standby Letters of Credit plus the
Mark-to-Market value of amounts owed to Swap Banks by the Borrower under Swap
Contracts would exceed $50,000,000. Within the foregoing limits, and subject to
the other terms and conditions hereof including, without limitation, the
approval of all Banks (or after the Conversion to Reduced Funding Banks, all
Approving Banks) in their sole discretion, the Borrower's ability to request
that an Issuing Bank Issue Letters of Credit shall be fully revolving, and,
accordingly, the Borrower may, during the foregoing period, request that an
Issuing Bank Issue Letters of Credit to replace Letters of Credit which have
expired or which have been drawn upon and reimbursed. Borrower acknowledges and
agrees that the Existing Letters of Credit are an Obligation under this
Agreement.

          (b)  Each Issuing Bank is under no obligation to consider the Issuance
of or to Issue any Letter of Credit unless all Banks shall have consented
(deemed or explicit) to the Issuance of such Letter of Credit in their sole
discretion. An Issuing Bank is under no obligation to Issue any Letter of Credit
if:

               (i)    any order, judgment or decree of any Governmental
     Authority or arbitrator shall by its terms purport to enjoin or restrain
     such Issuing Bank from Issuing such Letter of Credit, or any Requirement of
     Law applicable to such Issuing Bank or any request or directive (whether or
     not having the force of law) from any Governmental Authority with
     jurisdiction over such Issuing Bank shall prohibit, or request that such
     Issuing Bank refrain from, the issuance of letters of credit generally or
     such Letter of Credit in particular or shall impose upon such Issuing Bank
     with respect to such Letter of Credit any restriction, reserve or capital
     requirement (for which such Issuing Bank is not otherwise compensated
     hereunder) not in effect on the Closing Date, or shall impose upon such
     Issuing Bank any unreimbursed loss, cost or expense which was not
     applicable on the Closing Date and which such Issuing Bank in good faith
     deems material to it;


                                       35

<PAGE>


               (ii)   such Issuing Bank has received written notice from any
     Bank, any other Issuing Bank, the Administrative Agent or the Borrower, on
     or prior to the Business Day prior to the requested date of Issuance of
     such Letter of Credit, that one or more of the applicable conditions
     contained in Article V is not then satisfied;

               (iii)  the expiry date of any requested Letter of Credit is after
     the earlier to occur of (A) 90 days after the date of Issuance of such
     Letter of Credit or (B) the Maturity Date, unless all the Banks have
     approved such expiry date in writing, but any Swap-Related Standby Letter
     of Credit may by its terms be renewable for successive 90-day periods
     unless a notice that the applicable Issuing Bank declines to renew such
     Letter of Credit is given to the applicable Issuing Bank and the
     Administrative Agent on or prior to any date for notice of non-renewal to
     the beneficiary set forth in such Swap-Related Standby Letter of Credit,
     but in any event at least five Business Days prior to the date of the
     notice of non-renewal of such Swap-Related Standby Letter of Credit, any
     such automatic renewal of a Letter of Credit being subject to the
     fulfillment of the applicable conditions set forth in Article V; provided
     that the terms of each of the Swap-Related Standby Letters of Credit that
     is automatically renewable (1) shall require the applicable Issuing Bank to
     give the beneficiary of such Swap-Related Standby Letter of Credit notice
     of any non-renewal prior to the expiry date, (2) shall permit such
     beneficiary, upon receipt of such notice, to draw under such Swap-Related
     Standby Letter of Credit prior to the expiry date of the Swap-Related
     Standby Letter of Credit, and (3) shall not permit the expiry date (after
     giving effect to any renewal) of such Swap-Related Standby Letter of Credit
     in any event to be extended to a date that is later than the Maturity Date.
     If a notice of non-renewal is given by the applicable Issuing Bank pursuant
     to the immediately preceding sentence, the related Swap-Related Standby
     Letter of Credit shall expire on its expiry date;

               (iv)   the expiry date of any such requested Letter of Credit is
     prior to the maturity date of any financial obligation to be supported by
     the requested Letter of Credit;

               (v)    such requested Letter of Credit is not in form and
     substance acceptable to such Issuing Bank, or the Issuance of a Letter of
     Credit shall violate any applicable policies of such Issuing Bank;

               (vi)   such Letter of Credit is for the purpose of supporting the
     Issuance of any letter of credit by any other Person;

               (vii)  such Letter of Credit is denominated in a currency other
     than Dollars; or

               (viii) the amount of such requested Letter of Credit together
     with outstanding Letters of Credit and Revolving Loans exceeds the
     Borrowing Base Advance Cap.

          3.02 Issuance, Amendment and Renewal of Letters of Credit.

          (a)  Each Letter of Credit which is Issued hereunder shall be Issued
upon the irrevocable written request of the Borrower pursuant to a Notice of
Borrowing (Letter of Credit) in the applicable form attached hereto as Exhibit A
received by an Issuing Bank (with a copy


                                       36

<PAGE>


sent by the Borrower to the Administrative Agent) by no later than 12:00 p.m.
noon (New York City time) on the proposed date of Issuance. Each such request
for Issuance of a Letter of Credit shall be by electronic transfer or facsimile,
confirmed immediately in an original writing or by electronic transfer, in the
form of an L/C Application, and shall specify in form and detail satisfactory to
such Issuing Bank: (i) the proposed date of Issuance of the Letter of Credit
(which shall be a Business Day); (ii) whether the requested Letter of Credit
would be a commercial documentary letter of credit, Swap-Related Standby Letter
of Credit or other standby letter of credit; (iii) the face amount of the Letter
of Credit; (iv) the expiry date of the Letter of Credit; (v) the name and
address of the beneficiary thereof; (vi) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder; (vii) the
full text of any certificate to be presented by the beneficiary in case of any
drawing thereunder; and (viii) such other matters as such Issuing Bank may
require. Upon receipt of such request, the Administrative Agent will promptly
notify the Banks of the receipt by it of any L/C Application. No such Issuance
will be made if prior to 5:00 p.m. (New York City time) one Business Day
immediately prior to the proposed date of Issuance, a Bank has provided the
Administrative Agent with, and the Administrative Agent has actually received, a
written notice in the form of Exhibit H. If the Administrative Agent does timely
receive a written notice in the form of Exhibit H, the Administrative Agent
shall notify the Borrower, such Issuing Bank and the Banks by 6:00 p.m. (New
York City time) one Business Day immediately prior to the proposed date of
Issuance, and the proposed Letter of Credit will not be Issued, unless one or
more of the Banks have elected to become Approving Banks thereby triggering the
Conversion to Reduced Funding Banks Date.

          (b)  From time to time while a Letter of Credit is outstanding and
prior to the Expiration Date, an Issuing Bank will, upon the written request of
the Borrower received by such Issuing Bank (with a copy sent by the Borrower to
the Administrative Agent) by no later than 12:00 p.m. noon (New York City time)
on the proposed date of amendment, consider the amendment of any Letter of
Credit Issued by it. Each such request for amendment of a Letter of Credit shall
be made by electronic transfer or facsimile, confirmed immediately in an
original writing or by electronic transfer, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to such Issuing
Bank and the Administrative Agent: (i) the Letter of Credit to be amended; (ii)
the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as such Issuing Bank may require. Such Issuing Bank shall be under no
obligation to amend any Letter of Credit. No such amendment will be made if a
Bank has provided the Administrative Agent with, and the Administrative Agent
has actually received, a written notice in the form of Exhibit H by 5:00 p.m.
(New York City time) on the Business Day immediately preceding the proposed date
of amendment. If the Administrative Agent does timely receive a written notice
in the form of Exhibit H, the Administrative Agent shall notify the Borrower,
such Issuing Bank and the Banks by 6:00 p.m. (New York City time) one Business
Day immediately prior to the proposed date of amendment, and the Letter of
Credit will not be amended; provided, however, that one or more Banks may elect
to become the Approving Banks and amend such Letter of Credit, thereby
triggering the Conversion to Reduced Funding Banks Date.

          (c)  The Issuing Banks and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Expiration Date, at the option of the
Borrower and upon the written request of the Borrower received by an Issuing
Bank (with a copy sent to the Administrative


                                       37

<PAGE>


Agent and the other Issuing Banks) by no later than 12:00 p.m. noon (New York
City time) on the proposed date of renewal, the Issuing Bank may consider the
renewal of any Letter of Credit Issued by it. No such renewal will be made if
prior to 5:00 p.m. (New York City time) one Business Day immediately prior to
the proposed date of renewal, a Bank has provided the Administrative Agent with,
and the Administrative Agent has actually received, a written notice in the form
of Exhibit H. If the Administrative Agent does timely receive a written notice
in the form of Exhibit H, the Administrative Agent shall notify the Borrower,
such Issuing Bank and the Banks by 6:00 p.m. (New York City time) one Business
Day immediately prior to the proposed date of renewal, and the Letter of Credit
will not be renewed, unless one or more of the Banks have elected to become
Approving Banks. Each such request for renewal of a Letter of Credit made by the
Borrower shall be made by electronic transfer or facsimile, confirmed
immediately in an original writing or by electronic transfer, in the form of an
L/C Amendment Application, and shall specify in form and detail satisfactory to
such Issuing Bank and the Banks: (i) the Letter of Credit to be renewed; (ii)
the proposed date of renewal of the Letter of Credit (which shall be a Business
Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other
matters as such Issuing Bank may require. The Issuing Banks shall be under no
obligation to renew any Letter of Credit.

          (d)  If any outstanding Letter of Credit Issued by an Issuing Bank
shall provide that it shall be automatically renewed unless the beneficiary
thereof receives notice from such Issuing Bank that such Letter of Credit shall
not be renewed, and if at the time of renewal such Issuing Bank would be
entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this Subsection 3.02(d) upon the request of the Borrower, then
such Issuing Bank shall nonetheless be permitted to allow such Letter of Credit
to renew, and, provided that no Bank has elected to become a Declining Bank by
5:00 p.m. one Business Day immediately prior to the day that the beneficiary of
such Letter of Credit would receive notice from the Issuing Bank that such
Letter of Credit shall not be renewed, the Borrower and the Banks hereby
authorize such renewal, and, accordingly, such Issuing Bank shall be deemed to
have received an L/C Amendment Application from the Borrower requesting such
renewal. The Issuing Banks shall be under no obligation to allow the automatic
renewal of any Letter of Credit.

          (e)  Any Issuing Bank may, at its election, deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Expiration Date.

          (f)  This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).

          (g)  Each Issuing Bank will also deliver to the Administrative Agent a
true and complete copy of each Letter of Credit or amendment to or renewal of a
Letter of Credit Issued by it.


                                       38

<PAGE>


          3.03 Risk Participations, Drawings, Reducing Letters of Credit and
Reimbursements.

          (a)  Immediately upon the Issuance of each Letter of Credit by an
Issuing Bank which is Issued prior to the Conversion to Reduced Funding Banks
Date, each Bank shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from such Issuing Bank a participation in such Letter of
Credit and each drawing or Reducing Letter of Credit Borrowing thereunder in an
amount equal to the product of (i) the Pro Rata Share of such Bank, times (ii)
the maximum amount available to be drawn under such Letter of Credit and the
amount of such drawing or Reducing Letter of Credit Borrowing, respectively. All
Letters of Credit Issued after the Conversion to Reduced Funding Banks Date
shall be participated in only by the Approving Banks. For purposes of Section
2.01, each Issuance of a Letter of Credit shall be deemed to utilize the
Uncommitted Line Portion of each Bank by an amount equal to the amount of such
participation.

          (b)  In the event of any request for a drawing under a Letter of
Credit Issued by an Issuing Bank by the beneficiary or transferee thereof, such
Issuing Bank will promptly notify the Borrower. Any notice given by an Issuing
Bank or the Administrative Agent pursuant to this Subsection 3.03(b) may be oral
if immediately confirmed in writing (including by facsimile); provided, however,
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice. The Borrower shall reimburse an
Issuing Bank prior to 5:00 p.m. (New York City time), on each date that any
amount is paid by such Issuing Bank under any Letter of Credit or to the
beneficiary of a Reducing Letter of Credit in the form of a Reducing L/C
Borrowing (each such date, an "Honor Date"), in an amount equal to the amount so
paid by such Issuing Bank. In the event the Borrower fails to reimburse such
Issuing Bank for the full amount of any drawing under any Letter of Credit or of
any Reducing L/C Borrowing, as the case may be, by 5:00 p.m. (New York City
time) on the Honor Date, such Issuing Bank will promptly notify the
Administrative Agent and the Administrative Agent will promptly notify each Bank
thereof, and the Borrower shall be deemed to have requested that Revolving Loans
be made by the Banks to be disbursed to such Issuing Bank not later than one (1)
Business Day after the Honor Date under such Letter of Credit, subject to the
amount of the unutilized portion of the Borrowing Base Line.

          (c)  In the event of any request for a Reducing L/C Borrowing by the
Borrower in association with any Reducing Letter of Credit, the amount available
for drawing under such Reducing Letter of Credit will be reduced automatically,
and without any further amendment or endorsement to such Reducing Letter of
Credit, by the amount actually paid to such beneficiary, notwithstanding the
fact that the payment creating such Reducing L/C Borrowing is not made pursuant
to a conforming and proper draw under the corresponding Reducing Letter of
Credit; provided, however, that if any Bank has given the Issuing Banks, the
Administrative Agent, the Borrower and each of the other Banks written notice
that such Bank objects to further Reducing L/C Borrowings at least three (3)
Business Days prior to the date the Borrower requests the Reducing L/C
Borrowing, then the relevant Issuing Bank will not make such Reducing L/C
Borrowing unless all Banks consent thereto.

          (d)  Each Bank shall upon any notice pursuant to Subsection 3.03(b)
make available to the Administrative Agent for the account of any Issuing Bank
an amount in Dollars and in immediately available funds equal to its Pro Rata
Share of the amount of the drawing or of the Reducing L/C Borrowing, as the case
may be, whereupon the participating Banks shall (subject to Subsection 3.03(e))
each be deemed to have made a Revolving Loan to the Borrower


                                       39

<PAGE>


in that amount. If any Bank so notified fails to make available to the
Administrative Agent for the account of such Issuing Bank the amount of such
Bank's Pro Rata Share of the amount of the drawing or of the Reducing L/C
Borrowing, as the case may be, by no later than 3:00 p.m. (New York City time)
on the Business Day following the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Administrative Agent will
promptly give notice of the occurrence of the Honor Date, but failure of the
Administrative Agent to give any such notice on the Honor Date or in sufficient
time to enable any Bank to effect such payment on such date shall not relieve
such Bank from its obligations under this Section 3.03.

          (e)  With respect to any unreimbursed drawing or Reducing L/C
Borrowing, as the case may be, that is not converted into Revolving Loans in
whole or in part for any reason, the Borrower shall be deemed to have incurred
from the relevant Issuing Bank an L/C Borrowing in the amount of such drawing or
Reducing L/C Borrowing, as the case may be, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at a rate per
annum equal to the Default Rate, and each Bank's payment to such Issuing Bank
pursuant to Subsection 3.03(d) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Bank in satisfaction of its participation obligation under this Section
3.03.

          (f)  In the event that payment under any Letter of Credit Issued by an
Issuing Bank is drawn or purported to be drawn in a currency other than United
States Dollars, the amount of reimbursement to such Issuing Bank therefor shall
be calculated on the basis of such Issuing Bank's selling rate of exchange in
effect (for the date on which such Issuing Bank pays such draft or reimburses
any of its correspondents which paid such draft) for cable transfers to the
place where and in the currency in which such draft is payable. The Borrower
shall comply with any and all governmental exchange regulations now or hereafter
applicable to any foreign exchange, and shall indemnify and hold the Banks
harmless from any failure of the Borrower so to comply. If for any cause
whatsoever, there exists at the time in question no rate of exchange generally
current at such Issuing Bank for effective cable transfer of the sort above
provided for, the Borrower agrees to pay the Banks on demand an amount in United
States Dollars equivalent to the actual cost of settlement of such Issuing
Bank's obligation to the payor of the draft or acceptance or any holder thereof,
as the case may be, and however and whenever such settlement may be made by such
Issuing Bank.

          (g)  Each Bank's obligation in accordance with this Agreement to make
the Revolving Loans or L/C Advances, as contemplated by this Section 3.03, as a
result of a drawing under a Letter of Credit or Reducing L/C Borrowing, shall be
absolute and unconditional and without recourse to the relevant Issuing Bank and
shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against such Issuing Bank, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default
or a Material Adverse Effect; or (iii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.


                                       40

<PAGE>


          (h)  Notwithstanding the foregoing, each Revolving Loan and L/C
Advance made to fund payment of any Letter of Credit which was Issued or amended
on or after the Conversion to Reduced Funding Banks Date shall be made only by
the Approving Banks.

          3.04 Repayment of Participations.

          (a)  Upon (and only upon) receipt by the Administrative Agent for the
account of an Issuing Bank of immediately available funds from the Borrower (i)
in reimbursement of any payment made by such Issuing Bank under a Letter of
Credit or in connection with a Reducing L/C Borrowing with respect to which any
Bank has paid the Administrative Agent for the account of such Issuing Bank for
such Bank's participation in the Letter of Credit pursuant to Section 3.03 or
(ii) in payment of interest thereon, the Administrative Agent will pay to each
Bank, in the same funds as those received by the Administrative Agent for the
account of such Issuing Bank, the amount of such Bank's Pro Rata Share of such
funds, and such Issuing Bank shall receive the amount of the Pro Rata Share of
such funds of any Bank that did not so pay the Administrative Agent for the
account of such Issuing Bank.

          (b)  If the Administrative Agent or an Issuing Bank is required at any
time to return to the Borrower, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by the Borrower to the Administrative Agent for the account of
such Issuing Bank pursuant to Subsection 3.04(a) in reimbursement of a payment
made under a Letter of Credit or in connection with a Reducing L/C Borrowing or
interest or fee thereon, each Bank shall, on demand of such Issuing Bank,
forthwith return to the Administrative Agent or such Issuing Bank the amount of
its Pro Rata Share of any amounts so returned by the Administrative Agent or
such Issuing Bank plus interest thereon from the date such demand is made to the
date such amounts are returned by such Bank to the Administrative Agent or such
Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from
time to time.

          3.05 Role of the Issuing Banks.

          (a)  Each Bank and the Borrower agree that, in paying any drawing
under a Letter of Credit Issued by an Issuing Bank or funding any Reducing L/C
Borrowing, such Issuing Bank shall not have any responsibility to obtain any
document (other than any sight draft or certificates expressly required by such
Letter of Credit, but with respect to Reducing Letter of Credit Borrowings, no
document of any kind need be obtained) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.

          (b)  No Agent-Related Person nor any of the respective correspondents,
participants or assignees of any Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks; (ii) any action taken or omitted in the absence of
gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any L/C-Related Document.


                                       41

<PAGE>


          (c)  The Borrower hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Borrower pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of any Issuing Bank shall be liable or responsible for any of the
matters described in clauses (a) through (g) of Section 3.06; provided, however,
that anything in such clauses or elsewhere herein to the contrary
notwithstanding, that the Borrower may have a claim against an Issuing Bank, and
such Issuing Bank may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by such Issuing
Bank's willful misconduct or gross negligence or such Issuing Bank's willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing: (i) the Issuing Banks may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; and (ii) the Issuing
Banks shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.

          3.06 Obligations Absolute. The Obligations of the Borrower under this
Agreement and any L/C-Related Document to reimburse an Issuing Bank for a
drawing under a Letter of Credit or for a Reducing L/C Borrowing, and to repay
any L/C Borrowing and any drawing under a Letter of Credit or Reducing L/C
Borrowing converted into Revolving Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:

          (a)  any lack of validity or enforceability of this Agreement or any
L/C-Related Document;

          (b)  any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of any
Letter of Credit or any other amendment or waiver of or any consent to departure
from all or any of the L/C-Related Documents;

          (c)  the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), any Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;

          (d)  any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit;


                                       42

<PAGE>


          (e)  any payment by any Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by any Issuing Bank
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of any Letter of Credit, including any arising in connection
with any Insolvency Proceeding;

          (f)  any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the Obligations of the Borrower in respect of any
Letter of Credit; or

          (g)  any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower.

          Notwithstanding anything to the contrary in this Section 3.06 or in
the Continuing Agreement for Letters of Credit, the Issuing Banks shall not be
excused from liability to Borrower to the extent of any direct damages (as
opposed to consequential, indirect and punitive damages, claims in respect of
which are hereby waived by Borrower) suffered by Borrower that are caused by any
of the Issuing Bank's gross negligence or willful misconduct when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof, provided, however, that the parties hereto expressly
agree that:

               (i)   the Issuing Banks may accept documents that appear on their
     face to be in substantial compliance with the terms of a Letter of Credit
     without responsibility for further investigation, regardless of any notice
     or information to the contrary, and may make payment upon presentation of
     documents that appear on their face to be in substantial compliance with
     the terms of such Letter of Credit;

               (ii)  the Issuing Banks shall have the right, in their sole
     discretion, to decline to accept documents and to make such payment if such
     documents are not in strict compliance with the terms of such Letter of
     Credit; and

               (iii) this sentence shall establish the standard of care to be
     exercised by the Banks when determining whether drafts and other documents
     presented under a Letter of Credit comply with the terms thereof (and the
     parties hereto hereby waive, to the extent permitted by applicable law, any
     standard of care inconsistent with the foregoing).

          3.07 Cash Collateral Pledge. Upon the request of the Administrative
Agent, (i) if an Issuing Bank has honored any full or partial drawing request on
any Letter of Credit and such drawing has resulted in an L/C Borrowing
hereunder, or (ii) if, as of the Expiration Date, any Letters of Credit may for
any reason remain outstanding and partially or wholly undrawn, the Borrower
shall immediately Cash Collateralize the L/C Obligations in an amount equal to
such L/C Obligations. Upon the occurrence of the circumstances described in
Section 2.06 requiring the Borrower to Cash Collateralize Letters of Credit,
then, the Borrower shall immediately Cash Collateralize the L/C Obligations in
an amount equal to the applicable excess.


                                       43

<PAGE>


          3.08 Letter of Credit Fees.

          (a)  The Borrower shall pay to each Issuing Bank, for its own account,
such customary fees and charges in connection with the issuance, administration,
payment, negotiation and amendment of each Letter of Credit as the Borrower and
the Issuing Bank shall from time to time agree.

          (b)  The Borrower shall pay to the Administrative Agent for the
account of each of the Banks a letter of credit fee with respect to each of the
Letters of Credit Issued hereunder equal to the greater of (i) $700 or (ii)
1.50% per annum with respect to commercial documentary letters of credit and
standby letters of credit, or 2.00% per annum with respect to Swap-Related
Standby Letters of Credit, together with any related fees such as telecopy,
facsimile and courier fees, such letter of credit fees to be due and payable
monthly in arrears for the preceding month during which Letters of Credit are
outstanding, commencing on the first such monthly date to occur after the
Closing Date.

          3.09 Applicability of Uniform Customs and Practice and ISP98. Unless
otherwise expressly agreed by an Issuing Bank and the Borrower when a Letter of
Credit is Issued (including any such agreement applicable to an Existing Letter
of Credit), the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce
(the "ICC") at the time of Issuance (including the ICC decision published by the
Commission on Banking Technique and Practice on April 6, 1998 regarding the
European single currency (euro)) shall apply to each standby Letter of Credit
and documentary Letter of Credit. If Borrower desires to use the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of Issuance) for standby Letters of Credit, Borrower shall
request and note this explicitly on the standby Letter of Credit application.

          3.10 Existing Letters of Credit. Borrower hereby acknowledges and
agrees that the Existing Letters of Credit listed on Schedule 3.10 hereto shall
be deemed to be Letters of Credit Issued under this Agreement for all purposes.


                                   ARTICLE IV

                     TAXES, YIELD PROTECTION AND ILLEGALITY

          4.01 Taxes.

          (a)  Any and all payments by the Borrower to each Bank or either or
both of the Agents under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrower shall pay all Other Taxes.

          (b)  If the Borrower shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Administrative Agent, then:


                                       44

<PAGE>


               (i)   the sum payable shall be increased as necessary so that
     after making all required deductions and withholdings (including deductions
     and withholdings applicable to additional sums payable under this Section)
     such Bank or the Administrative Agent, as the case may be, receives and
     retains an amount equal to the sum it would have received and retained had
     no such deductions or withholdings been made;

               (ii)  the Borrower shall make such deductions and withholdings;

               (iii) the Borrower shall pay the full amount deducted or withheld
     to the relevant taxing authority or other authority in accordance with
     applicable law; and

               (iv)  the Borrower shall also pay to each Bank or the
     Administrative Agent for the account of such Bank, at the time interest is
     paid, Further Taxes in the amount that Bank specifies as necessary to
     preserve the after-tax yield the Bank would have received if such Taxes,
     Other Taxes or Further Taxes had not been imposed.

          (c)  The Borrower agrees to indemnify and hold harmless each Bank and
the Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the Administrative Agent or such Bank
specifies as necessary to preserve the after-tax yield the Administrative Agent
or such Bank would have received if such Taxes, Other Taxes or Further Taxes had
not been imposed, and any liability (including penalties, interest, additions to
tax and expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted,
provided, however, that the Borrower shall not be required to indemnify or hold
harmless any Bank to the extent (but only to the extent) of such Bank's gross
negligence or willful misconduct. Payment under this indemnification shall be
made within 30 days after the date the Bank or the Administrative Agent makes
written demand therefor.

          (d)  Within 30 days after the date of any payment by the Borrower of
Taxes, Other Taxes or Further Taxes, the Borrower shall furnish the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the Administrative
Agent.

          (e)  If the Borrower is required to pay any amount to the
Administrative Agent or any Bank pursuant to subsection (b) or (c) of this
Section, then such Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Bank is not otherwise
disadvantageous to such Bank.

          4.02 Illegality.

          (a)  If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its applicable Lending Office to make Offshore Rate Loans,
then, on notice thereof by such Bank to the Borrower through the Administrative
Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Administrative Agent and the Borrower that
the circumstances giving rise to such determination no longer exist.


                                       45

<PAGE>


          (b)  If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Borrower shall, upon receipt of notice of such fact and demand
from such Bank (with a copy to the Administrative Agent), prepay in full,
without premium or penalty, such Offshore Rate Loans of that Bank then
outstanding, together with interest accrued thereon either on the last day of
the Interest Period thereof, if the Bank may lawfully continue to maintain such
Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully
continue to maintain such Offshore Rate Loan. If the Borrower is required to so
prepay any Offshore Rate Loan, then concurrently with such prepayment, the
Borrower shall borrow from the affected Bank, in the amount of such repayment, a
Base Rate Loan.

          4.03 Increased Costs and Reduction of Return.

          (a)  If any Bank determines that, due to either (i) the introduction
of or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate or in
respect of the assessment rate payable by any Bank to the FDIC for insuring U.S.
deposits) in or in the interpretation of any law or regulation or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans or participating in Letters of
Credit, or, in the case of an Issuing Bank, any increase in the cost to such
Issuing Bank of agreeing to issue, issuing or maintaining any Letter of Credit
or of agreeing to make or making, funding or maintaining any unpaid drawing
under any Letter of Credit, then the Borrower shall be liable for, and shall
from time to time, within 30 days of demand (with a copy of such demand to be
sent to the Administrative Agent), pay to the Administrative Agent for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs, provided, however, that the Borrower shall not be
required to pay any such amount to the extent that such amount is reflected in
changes in the Base Rate, the Offshore Rate or other fees or charges of such
Bank.

          (b)  If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its loans, credits or obligations under this Agreement, then,
within 30 days of demand of such Bank to the Borrower through the Administrative
Agent, the Borrower shall pay to the Bank, from time to time as specified by the
Bank, additional amounts sufficient to compensate the Bank for such increase,
provided, however, that the Borrower shall not be required to pay any such
amount to the extent that such amount is reflected in changes in the Base Rate.


                                       46

<PAGE>


          4.04 Funding Losses. The Borrower shall reimburse each Bank and hold
each Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of:

          (a)  the failure of the Borrower to make on a timely basis any payment
of principal of any Offshore Rate Loan;

          (b)  the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or are deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;

          (c)  the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.06;

          (d)  the prepayment (including prepayments made pursuant to Article II
but excluding prepayments made pursuant to Section 4.02) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or

          (e) the automatic conversion under Section 2.04 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period except any such automatic conversion resulting from prepayments
required by Section 4.02;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Banks under this Section and
under Section 4.03, each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR used in determining the Offshore Rate for such
Offshore Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Offshore Rate Loan is in fact so funded.

          4.05 Inability to Determine Rates. If the Administrative Agent and the
Banks determine that for any reason adequate and reasonable means do not exist
for determining the Offshore Rate for any requested Interest Period with respect
to a proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant
to Subsection 2.08(a) for any requested Interest Period with respect to a
proposed Offshore Rate Loan does not adequately and fairly reflect the cost to
the Banks of funding such Loan, the Administrative Agent will promptly so notify
the Borrower and each Bank. Thereafter, the obligation of the Banks to make or
maintain Offshore Rate Loans, as the case may be, hereunder shall be suspended
until the Administrative Agent upon the instruction of the Banks revokes such
notice in writing. Upon receipt of such notice, the Borrower may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Borrower does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Offshore Rate Loans.


                                       47

<PAGE>


          4.06 Reserves on Offshore Rate Loans. The Borrower shall pay to each
Bank, as long as such Bank shall be required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
the Bank (as determined by the Bank in good faith, which determination shall be
conclusive), payable on each date on which interest is payable on such Loan,
provided, however, that the Borrower shall have received at least 15 days' prior
written notice (with a copy to the Administrative Agent) of such additional
interest from the Bank. If a Bank fails to give notice 15 days prior to the
relevant Interest Payment Date, such additional interest shall be payable 15
days from receipt of such notice.

          4.07 Certificates of Banks. Together with any demand by a Bank for
reimbursement or compensation pursuant to this Article IV, such Bank shall
provide to the Borrower (with a copy to the Administrative Agent) a certificate
signed by an authorized officer of the Bank (a) describing the event giving rise
to such demand, and (b) showing the method and detailed calculations (which may
include any reasonable averaging, attribution or allocation procedures) used by
the Bank to determine the amount demanded by the Bank. In calculating the amount
of costs, expenses, capital requirements or rate of reduction allocable to the
Borrower, such Bank shall use such reasonable methods as such Bank shall
determine. Such calculation and certification shall be conclusive and binding on
the Borrower in the absence of manifest error.

          4.08 Substitution of Banks. Upon the receipt by the Borrower from any
Bank (an "Affected Bank") of a claim for compensation under Section 4.03, the
Borrower may: (a) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or a ratable part of all of such Affected Bank's Loans
and Uncommitted Line Portion (a "Replacement Bank"); (b) request one or more of
the other Banks to acquire and assume all or part of such Affected Bank's Loans
and Uncommitted Line Portion; or (c) designate a Replacement Bank. Any such
designation of a Replacement Bank under clause (a) or (c) shall be subject to
the prior written consent of Agents (which consent shall not be unreasonably
withheld).

          4.09 Survival. The agreements and Obligations of the Borrower in this
Article IV shall survive the payment of all other Obligations.


                                    ARTICLE V

                                  CLOSING ITEMS

          5.01 Matters to be Satisfied Upon Execution of Agreement. At
the time the Banks execute this Agreement, unless otherwise waived by the Banks,
the Documentation Agent shall have received all of the following, in form and
substance satisfactory to the Documentation Agent, the Administrative Agent, and
each Bank, and in sufficient copies for each Bank:

          (a)  Loan Documents. This Agreement, the Notes, the Guaranty, a
Reaffirmation Agreement reaffirming the Security Agreements, the Atmos Support
Agreement, the Tri-party


                                       48

<PAGE>


Agreement among Borrower, the Administrative Agent and each Eligible Broker, the
Continuing Agreement for Letters of Credit and certain other documents executed
in connection with the Original Credit Agreement, and each other document or
certificate executed in connection with this Agreement, executed by each party
thereto;

          (b)  Subordination Agreement. A Subordination Agreement, duly executed
and delivered by Atmos Energy Holdings, Inc., in a form substantially similar to
Exhibit G;

          (c)  Payment of Existing Subordinated Indebtedness. Evidence of the
repayment in full by the Borrower of all amounts owed to Atmos Energy Marketing,
LLC for Indebtedness incurred, as subordinated pursuant to that certain
Subordination Agreement dated as of December 1, 2001 among the Borrower, Atmos
Energy Marketing, LLC, and the Administrative Agent.

          (d)  Resolutions; Incumbency. Copies of the resolutions of the members
of the Borrower authorizing the transactions contemplated hereby, certified as
of the Closing Date by the Secretary of the Borrower, and certifying the names
and true signatures of the officers of the Borrower authorized to execute,
deliver and perform, as applicable, this Agreement, and all other Loan Documents
to be delivered by the Borrower hereunder;

          (e)  Organization Documents; Existence; Good Standing. The articles or
certificate of formation and the regulations of the Borrower as in effect on the
Closing Date, all certified by the Secretary of the Borrower as of the Closing
Date, and the articles or certificate of formation and the Bylaws or regulations
of Atmos Energy Corporation and Atmos Energy Holdings, Inc. as in effect on the
Closing Date, all certified by the Secretary of Atmos Energy Corporation and
Guarantors as of the Closing Date together with certificates of existence and
good standing for the Borrower, Atmos Energy Corporation and Guarantors from the
Secretary of State (or similar, applicable Governmental Authority) of its state
of incorporation and each state where the general partner of the Borrower is
qualified to do business as a foreign corporation, certified as of, or
reasonably close to, the Closing Date;

          (f)  Legal Opinions. Legal opinion of counsel to the Borrower and
counsel to Guarantors each addressed to the Administrative Agent and the Banks,
in form and substance acceptable to the Administrative Agent and the Banks;

          (g)  Payment of Fees. Evidence of payment by the Borrower of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of Agents to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute the Agents' reasonable estimate of Attorney
Costs incurred or to be incurred by them through the closing proceedings
(provided, however, that such estimate shall not thereafter preclude final
settling of accounts between the Borrower and Agents); including any such costs,
fees and expenses arising under or referenced in Sections 2.09 and 11.04(a) and
all costs of the auditors and consultants retained by the Banks in connection
with the Obligations of the Borrower to Agents;

          (h)  Certificate. A certificate signed by a Responsible Officer of the
Borrower, dated as of the Closing Date, stating to the best of such officer's
knowledge that:


                                       49

<PAGE>


               (i)   The representations and warranties contained in Article VI
     are true and correct on and as of such date, as though made on and as of
     such date; and

               (ii)  No Default or Event of Default exists or would result from
     the Credit Extension.

               (iii) There has occurred since April 30, 2002, no event or
     circumstance that has resulted or could reasonably be expected to result in
     a Material Adverse Effect;

          (i)  Insurance. Evidence of insurance required to be maintained by the
Borrower hereunder;

          (j)  Filings. Evidence that all filings needed to perfect the security
interests granted by the Security Agreements have been completed or due
provision has been made therefor;

          (k)  Service of Process Form. An acknowledgement letter from
Corporation Service Company as contemplated by Subsection 11.16(b); and

          (l)  Other Documents. Such other approvals, opinions, documents or
materials as the Agents or any Bank may request.


                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Agents and each Bank that:

          6.01 Existence and Power. Each of the Borrower, its Subsidiaries and
Guarantors:

          (a)  is a limited liability company or corporation, as the case may
be, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization;

          (b)  has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on their
business and to execute, deliver, and perform their respective Obligations under
the Loan Documents;

          (c)  is duly qualified as a foreign limited liability company or
corporation, as the case may be, and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification or license; and to the
best knowledge of such Person, is in compliance with all Requirements of Law.

          6.02 Authorization; No Contravention. The execution, delivery and
performance by the Borrower and Guarantors of each Loan Document to which such
Person is party, have been duly authorized, and do not and will not:


                                       50
<PAGE>
                  (a) contravene the terms of the Organization Documents of such
Person;

                  (b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or

                  (c) to the best knowledge of the Borrower, violate any
Requirement of Law.

                  6.03 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower or
any of its Subsidiaries or Guarantors, as applicable, of any Loan Document.

                  6.04 Binding Effect. This Agreement and each other Loan
Document to which the Borrower or any of its Subsidiaries or Guarantors is a
party constitute the legal, valid and binding obligations of such Person to the
extent it is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by general principles of equity.

                  6.05 Litigation. Except as specifically disclosed in Schedule
6.05, there are no actions, suits or proceedings, pending, or to the knowledge
of the Borrower, or Guarantors threatened at law, in equity, in arbitration or
before any Governmental Authority, against the Borrower, or any of its
Subsidiaries or Guarantors or any of their respective properties which purport
to affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby; and no injunction, writ, temporary
restraining order or any order of any nature has been issued by any court or
other Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Loan Document, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.

                 6.06 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Borrower. As of the Closing
Date, neither the Borrower nor any of its Subsidiaries are in default under or
with respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect.

                  6.07 ERISA Compliance. Except as specifically disclosed in
Schedule 6.07:

         (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification.
The Borrower and each ERISA Affiliate have made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.

                                       51
<PAGE>

                  (b) There are no pending or, to the best knowledge of the
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which have resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.

                  (c) (i) To the Borrower's best knowledge, no ERISA Event has
occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or 4212(c) or
ERISA.

                  6.08 Use of Proceeds; Margin Regulations. The proceeds of the
Loans are to be used solely for the purposes set forth in and permitted by
Section 7.12. Neither the Borrower nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.

                  6.09 Title to Properties. The Borrower and each of its
Subsidiaries have good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of their respective businesses, except for such defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect. As
of the Closing Date, the property of the Borrower and its Subsidiaries is
subject to no Liens, other than Permitted Liens.

                  6.10 Taxes. The Borrower and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges shown thereon to be due and payable, and have paid all
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets as due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Borrower or any of its
Subsidiaries that would, if made, have a Material Adverse Effect.

                  6.11 Financial Condition.

                  (a) The unaudited balance sheet of the Borrower dated as of
April 30, 2002:

                  (i) fairly presents the financial condition of the Borrower as
          of the date thereof; and



                                       52
<PAGE>

                  (ii) shows all material indebtedness and other liabilities,
         direct or contingent, of the Borrower and as of the date thereof,
         including liabilities for taxes, material commitments and Contingent
         Obligations.

                  (b) Since April 30, 2002, there has been no Material Adverse
Effect.

                  6.12 Environmental Matters. The Borrower conducts in the
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on its business, operations and
properties, and as a result thereof the Borrower has reasonably concluded that,
except as previously specifically disclosed in Schedule 6.12, such Environmental
Laws and Environmental Claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

                  6.13 Regulated Entities. Neither the Borrower, nor any Person
controlling the Borrower, or any of its Subsidiaries, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. The Borrower is not
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.

                  6.14 No Burdensome Restrictions. Neither the Borrower nor any
of its Subsidiaries is a party to or bound by any Contractual Obligation, or
subject to any restriction in any Organization Document, or any Requirement of
Law, which could reasonably be expected to have a Material Adverse Effect.

                  6.15 Copyrights, Patents, Trademarks and Licenses, Etc. To the
Borrower's best knowledge, the Borrower or its Subsidiaries own or are licensed
or otherwise have the right to use all of the patents, trademarks, service
marks, trade names, copyrights, contractual franchises, authorizations and other
rights that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person. To the
knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person. Except as specifically disclosed in
Schedule 6.05, no claim or litigation regarding any of the foregoing is pending
or threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the knowledge
of the Borrower, proposed.

                  6.16 Subsidiaries. The Borrower has no Subsidiaries other than
those specifically disclosed in part (a) of Schedule 6.16 hereto and have no
equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 6.16.

                  6.17 Insurance. Except as specifically disclosed in Schedule
6.17, the properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Borrower, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or such Subsidiary operates.



                                       53
<PAGE>

                 6.18 Full Disclosure. To the Borrower's best knowledge, none of
the representations or warranties made by the Borrower or any of its
Subsidiaries in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Borrower or any of its Subsidiaries in connection with the Loan Documents
(including the offering and disclosure materials delivered by or on behalf of
the Borrower to the Banks prior to the Closing Date), contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.


                                   ARTICLE VII

                              AFFIRMATIVE COVENANTS

                  So long as any Bank shall be continuing to consider making
Revolving Loans or Issuing Letters of Credit hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding:

                  7.01 Financial Statements. The Borrower shall deliver to the
Banks, in form and detail satisfactory to the Banks:

                  (a) as soon as available, but not later than 120 days after
the end of each fiscal year, (i) a copy of the consolidated audited financial
statements to include a balance sheet as at the end of such year for each of (A)
Atmos Energy Corporation, (B) the Atmos Energy Holdings, Inc., and (C) the
Borrower, and (ii) a copy of the consolidating unaudited financial statements to
include a consolidating balance sheet as at the end of such year for Atmos
Energy Holdings, Inc. and the Borrower, and (iii) a copy of the consolidated
audited financial statements of the Borrower and its Subsidiaries, and the
related statements of income or operations, members' capital and cash flows for
such year for such entities, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm ("Independent Auditor")
which report shall state that such financial statements present fairly the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years. Such opinion shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the records of such entities;

                  (b) as soon as available, but not later than 60 days after the
end of each of the first three fiscal quarters of each fiscal year of Atmos
Energy Holdings, Inc. and Atmos Energy Corporation, (i) the unaudited
consolidated financial statements of Atmos Energy Corporation and Atmos Energy
Holdings, Inc., each to include a balance sheet as at the end of such fiscal
quarter, with the related statements of income and or operations, members'
capital and cash flows for such year for such entities, for the period
commencing at the end of the previous fiscal quarter and ending with the end of
such fiscal quarter and for the period commencing at the end of the previous
fiscal year and ending with the end of such fiscal quarter, setting forth in
comparative form, in the case of each such consolidated balance sheet, the
corresponding figures as of the last day of the corresponding period in the
immediately preceding fiscal year and, in the case


                                       54
<PAGE>

of each such consolidated statement of income and operations, members' capital
and cash flows, the corresponding figures for the corresponding period in the
immediately preceding fiscal year, and (ii) the unaudited consolidating
financial statement of Atmos Energy Holdings, Inc.; and

                  (c) as soon as available, but not later than 45 days after the
end of each month, the consolidated financial statements of the Borrower and its
subsidiaries in form acceptable to Banks.

                  7.02 Certificates; Other Information. The Borrower shall
furnish to the Agents and the Banks:

                 (a) concurrently with the delivery of the financial statements
referred to in Subsections 7.01(a), (b), and (c), a Compliance Certificate
executed by a Responsible Officer of the Borrower;

                  (b) a Borrowing Base Collateral Position Report executed by a
Responsible Officer of the Borrower as of 15th day of each month and as of the
last Business Day of each month, in each case delivered within ten (10) days of
such reporting date;

                  (c) on or before the tenth (10th) day of each month, a Net
Position Report as of the first (1st) day of said month, and on or before the
twenty-fifth (25th) day of each month, a Net Position Report as of the fifteenth
(15th) day of such month, in each case certified by a Responsible Officer of the
Borrower;

                  (d) promptly when available, such additional information
regarding the business, financial or corporate affairs of the Borrower or any
Subsidiary as the Agents, at the request of any Bank, may from time to time
reasonably request; and

                  (e) a quarterly report of inventory storage locations at each
quarter end.

                  7.03 Notices. The Borrower shall promptly notify the Agents
and each Bank:

                  (a) of the occurrence of any Default or Event of Default, and
of the occurrence or existence of any event or circumstance that could
reasonably be expected to become a Default or Event of Default;

                  (b) of the occurrence of any event which could reasonably be
expected to cause a material impairment of the Collateral Position;

                  (c) of the occurrence of any event which could reasonably be
expected to cause a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a material Contractual Obligation of
the Borrower or any Subsidiary; (ii) any material dispute, litigation,
investigation, proceeding or suspension between the Borrower or any Subsidiary
and any Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws;



                                       55
<PAGE>

                  (d) of the occurrence of any of the following events affecting
the Borrower or any ERISA Affiliate (but in no event more than 10 days after the
Borrower receives notice or becomes aware of such event), and deliver to the
Agents and each Bank a copy of any notice with respect to such event that is
filed with a Governmental Authority and any notice delivered by a Governmental
Authority to the Borrower or any ERISA Affiliate with respect to such event:

                  (i) an ERISA Event;

                  (ii) a material increase in the Unfunded Pension Liability of
         any Pension Plan;

                  (iii) the adoption of, or the commencement of contributions
         to, any Plan subject to Section 412 of the Code by the Borrower or any
         ERISA Affiliate; or

                  (iv) the adoption of any amendment to a Plan subject to
         Section 412 of the Code, if such amendment results in a material
         increase in contributions or Unfunded Pension Liability;

                  (e) of any material change in accounting policies or financial
reporting practices by the Borrower; and

                  (f) of any intended relocation of inventory or any intended
new location of inventory owned by the Borrower, at least ten (10) Business Days
prior to the date such inventory is to be stored at such location.

                  Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer of the Borrower setting forth details
of the occurrence referred to therein, and stating what action the Borrower or
any affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under Subsection 7.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that have
been (or reasonably could be expected to be) breached or violated as therein
provided.

                  7.04 Preservation of Corporate Existence, Etc. The Borrower
shall, and shall cause each of its Subsidiaries to:

                  (a) preserve and maintain in full force and effect its
existence and good standing under the laws of its state or jurisdiction of
organization;

                  (b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;

                  (c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and

                  (d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.



                                       56
<PAGE>

                  7.05 Maintenance of Property. The Borrower shall maintain, and
shall cause each of its Subsidiaries to maintain, and preserve all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted and make all necessary repairs thereto and
renewals and replacements thereof except in any case where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

                  7.06 Insurance. The Borrower shall maintain, and shall cause
each of its Subsidiaries to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons,
including, without limitation, marine cargo insurance, if appropriate.

                  7.07 Payment of Obligations. The Borrower shall, and shall
cause each of its Subsidiaries to, pay and discharge as the same shall become
due and payable, all their respective obligations and liabilities, including:

                  (a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary;

                  (b) all lawful claims which, if unpaid, would by law become a
Lien upon its property unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Borrower or Subsidiary, and provided that at such time the
claim becomes a Lien (other than a lis pendens notice), it shall be promptly
paid; and

                  (c) all indebtedness, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.

                 7.08 Compliance with Laws. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act).

                 7.09 Compliance with ERISA. The Borrower shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance with the
applicable provisions of ERISA, the Code and other federal or state law; (b)
cause each Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; and (c) make all required contributions to any Plan subject
to Section 412 of the Code.

                 7.10 Inspection of Property and Books and Records. The Borrower
shall maintain and shall cause each of its Subsidiaries to maintain proper books
of record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiary.
The Borrower shall permit, and shall cause each of its Subsidiaries to permit
representatives and independent contractors of either of the Agents or any Bank
to visit


                                       57
<PAGE>

and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of the Agent or Bank causing such inspection and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, that when an
Event of Default exists either of the Agents or any Bank may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.

                  7.11 Environmental Laws. The Borrower shall, and shall cause
each of its Subsidiaries to, conduct its operations and keep and maintain its
property in compliance in all material respects with all Environmental Laws.

                  7.12 Use of Proceeds. The Borrower shall use the proceeds of
the Loans for the uses described in this Agreement and not in contravention of
any Requirement of Law or of any Loan Document restrictions on use of loan
proceeds.

                  The Borrower shall not use the proceeds of the Loan or any
Letter of Credit to acquire, directly or indirectly, any Margin Stock.

                  7.13 Collateral Position Audit. At such times as Agents deem
advisable, the Borrower will allow Agents or an entity satisfactory to Agents to
conduct a thorough examination of the Collateral, and the Borrower will fully
cooperate in such examination. The Borrower will pay the costs and expenses of
one such examination each calendar year.

                  7.14 Lock Box. The Borrower shall (i) maintain a lock box with
Bank of America, N.A. (the "Lock Box") and shall notify in writing and otherwise
take such reasonable steps to ensure that all Account Debtors under any of its
Accounts forward payment in the form of cash, checks, drafts or other similar
items of payment directly to such Lock Box and shall provide Banks with
reasonable evidence of such notification, and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited all payments under such
Accounts to the Lock Box. In the event that any Account Debtor does make any
payment directly to the Borrower, the Borrower shall promptly deposit such
amounts into the Lock Box. The Borrower and each Bank acknowledge and agree that
prior to the Activation Period, the Borrower may operate and transact business
through the Lock Box account in its normal fashion, including making withdrawals
from the Lock Box account. The Borrower and each Bank further acknowledge and
agree that during the Activation Period, Bank of America, N.A. shall transfer
all collected and available balances in the Lock Box to the Bank Blocked Account
pursuant to the Three Party Agreement. The Borrower and each Bank acknowledge
and agree that the Bank Blocked Account is owned by the Collateral Agent for the
benefit of the Agents, the Issuing Banks and the Banks and the Lock Box is under
the dominion and control of the Collateral Agent. The Collateral Agent at any
time may apply amounts contained in the Bank Blocked Account toward satisfaction
of the Obligations.



                                       58
<PAGE>

                  7.15 Financial Covenants. The Borrower will, at all times,
observe the following financial covenants:

                  (a) minimum Net Working Capital as follows:

                  (i) $20,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $100,000,000.00 or less;

                  (ii) $25,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $125,000,000.00 or less but greater than $100,000,000.00;

                  (iii) $30,000,000.00 at such time as the elected Borrowing
Base Sup-Cap is $150,000,000.00 or less but greater than $125,000,000.00;

                  (iv) $35,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $175,000,000.00 or less but greater than $150,000,000.00;

                  (v) $40,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $200,000,000.00 or less but greater than $175,000,000.00;

                  (vi) $45,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $225,000,000.00 or less but greater than $200,000,000.00; and

                  (vii) $50,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $250,000,000.00 or less but greater than $225,000,000.00.

                  (b) minimum Tangible Net Worth as follows:

                  (i) $21,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $100,000,000.00 or less;

                  (ii) $26,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $125,000,000.00 or less but greater than $100,000,000.00;

                  (iii) $31,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $150,000,000.00 or less but greater than $125,000,000.00;

                  (iv) $36,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $175,000,000.00 or less but greater than $150,000,000.00;

                  (v) $41,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $200,000,000.00 or less but greater than $175,000,000.00;

                  (vi) $46,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $225,000,000.00 or less but greater than $200,000,000.00; and

                  (vii) $51,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $250,000,000.00 or less but greater than  $225,000,000.00.

                  (c) at all times, a ratio of Total Liabilities (excluding the
amount of Subordinated Debt that is included in the calculation of Tangible Net
Worth) to Tangible Net Worth not to exceed 5.0:1.0.




                                       59
<PAGE>

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

                  So long as any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the Banks
waive compliance in writing:

                 8.01 Limitation on Liens. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"):

                  (a) any Lien existing on property of the Borrower or any of
its Subsidiaries on the Closing Date and set forth in Schedule 8.01 securing
Indebtedness outstanding on such date;

                  (b) any Lien created under any Loan Document;

                  (c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.07, provided, however,
that no notice of lien has been filed or recorded under the Code;

                  (d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty and, with
respect to any such warehousemen's or landlord's lien, such liens only secure
accrued rental charges;

                  (e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;

                  (f) Liens on the property of the Borrower or its Subsidiaries
securing (i) the non-delinquent performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business; provided,
however, that all such Liens in the aggregate would not (even if enforced) cause
a Material Adverse Effect;

                  (g) Liens consisting of judgment or judicial attachment liens;
provided, however, that the enforcement of such Liens is effectively stayed and
all such unstayed liens in the aggregate at any time outstanding for the
Borrower and its Subsidiaries do not exceed $250,000.00;

                  (h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries;



                                       60
<PAGE>

                  (i) purchase money security interests (other than capital
leases) on any property acquired or held by the Borrower or its Subsidiaries in
the ordinary course of business, securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such property;
provided, however, that (i) any such Lien attaches to such property concurrently
with or within 20 days after the acquisition thereof, (ii) such Lien attaches
solely to the property so acquired in such transaction, (iii) the principal
amount of the debt secured thereby does not exceed 100% of the cost of such
property, and (iv) the principal amount of the Indebtedness secured by any and
all such purchase money security interests shall not at any time exceed
$250,000.00;

                  (j) Liens of interest owners, including without limitation,
Liens arising as would be defined in Texas Bus. & Com. Code Section 9.343,
comparable laws of the states of Oklahoma, Kansas, Wyoming or New Mexico, or
other comparable law; and

                  (k) Liens not permitted by clause 8.01 (a), (b), (c), (d),
(e), (f), (g), (h) or (i), in an aggregate amount not to exceed $250,000.

                  (l) Liens securing contractual obligations permitted by
section 8.06.

                  8.02 Consolidations and Mergers. The Borrower shall not, nor
shall it suffer or permit any of its Subsidiaries to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person.

                  8.03 Limitation on Indebtedness. The Borrower shall not suffer
or permit any of its Subsidiaries to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

                  (a) Indebtedness incurred pursuant to or in accordance with,
this Agreement;

                  (b) Indebtedness consisting of trade payables in the ordinary
course of business;

                  (c) Indebtedness existing on the Closing Date, and described
on Schedule 8.01;

                  (d) Indebtedness in respect of purchase money security
interests permitted by Section 8.01 hereof;

                  (e) Indebtedness in respect of Contingent Obligations
permitted by Section 8.06 hereof; and

                  (f) Subordinated Debt.

                  8.04 Transactions with Affiliates. The Borrower shall not, and
shall not suffer or permit any of its Subsidiaries to, enter into any
transaction with any Affiliate of the Borrower, except upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary. Without limiting the foregoing, all sales of
Product by Borrower to, and purchases of Product by Borrower from, any Affiliate
of Borrower shall be at the market price on the day of sale, except for
transactions made in connection with Borrower's Index Sales Strategies which
strategies shall have been approved by the Banks prior to any such transactions.



                                       61
<PAGE>

                  8.05 Use of Proceeds. The Borrower shall not suffer or permit
any of its Subsidiaries to, use any portion of the Loan proceeds or any Letter
of Credit, directly or indirectly, (a) to purchase or carry Margin Stock, (b) to
repay or otherwise refinance indebtedness of the Borrower or others incurred to
purchase or carry Margin Stock, (c) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (d) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.

                  8.06 Contingent Obligations. The Borrower shall not suffer or
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Contingent Obligations except:

                  (a) endorsements for collection or deposit in the ordinary
course of business;

                  (b) swap contracts entered into in the ordinary course of
business as bona fide hedging transactions; and

                  (c) Contingent Obligations of the Borrower and its
Subsidiaries existing as of the Closing Date and described on Schedule 8.07.

                  8.07 Restricted Payments. The Borrower shall not suffer or
permit any of its Subsidiaries to, directly or indirectly declare or make, any
distribution of income or capital on account of any membership interest of the
Borrower now or hereafter in existence ("Distributions"), or set aside or
otherwise deposit or invest any sums for such purpose, except Distributions to
its members, so long as no Default or Event of Default has occurred or would
result therefrom.

                 8.08 ERISA. The Borrower shall not, nor suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

                  8.09 Change in Business. The Borrower shall not, nor suffer or
permit any of its Subsidiaries to, engage in any line of business different from
the line of business carried on by the Borrower and its Subsidiaries on the date
hereof.

                  8.10 Accounting Changes. The Borrower shall not, nor suffer or
permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Borrower or of any Subsidiary.

                  8.11 Net Position. At no time will the Borrower allow its Net
Position to exceed 5,000,000 MMBTUS of natural gas. At no time will the Borrower
allow the sum of the following: (a) 25% of the Borrower's Net Position Value,
plus (b) Borrower's Transportation and Storage Exposure, plus (c) Borrower's
Below Index Sales Exposure, to exceed 33% of Borrower's Net Working Capital at
such time, where,

                  "Net Position Value" means Borrower's Net Position valued at
$3.00/MMBTU.



                                       62
<PAGE>

                  "Below Index Sales Exposure" means (the maximum volume of gas
                  required to be sold at below index prices multiplied by the
                  discount from index), minus (the net positive value of all
                  hedge contracts related to the utilization of the related
                  storage & transportation assets).

                  "Transportation and Storage Exposure" means the aggregate
                  contractual cost of transportation & storage contracts for a
                  term of in excess of 3 months.

                  8.12 Loans and Investments. The Borrower shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of Borrower, except for:

                  (a) investments in cash equivalents and Marketable Securities;
and

                  (b) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or services in the
ordinary course of business.

                  8.13 Change of Management. Borrower shall not permit any
Change of Management. For purposes of this Section 8.13, "Change of Management"
shall mean that J. D. Woodward has ceased to act in his capacity as chief
executive officer of the Borrower.

                  8.14 Deposit Accounts. Borrower shall not maintain any deposit
accounts with a bank or financial institution other than the Bank Blocked
Account with the Collateral Agent, except that the Borrower may maintain the
Lock Box with Bank of America, N.A. which shall be pledged to the Administrative
Agent, for the benefit of the Agents, the Issuing Banks and the Banks pursuant
to the Three Party Agreement.

                  8.15 Risk Management Policy. The Borrower will not materially
change its risk management policies without the prior written consent of the
Administrative Agent and the Banks. Borrower agrees that upon request by Agents,
from time to time, the Borrower and the Banks will review and evaluate
Borrower's risk management policies.

                 8.16 Swap-Related Standby Letters of Credit. The Borrower shall
not permit outstanding Swap-Related Standby Letters of Credit plus any net
Mark-to-Market values of amounts owed to Swap Banks by the Borrower under Swap
Contracts to exceed $50,000,000.




                                       63
<PAGE>

                                   ARTICLE IX

                                EVENTS OF DEFAULT

                  9.01 Event of Default. Any of the following shall constitute
an "Event of Default":

                  (a) Non-Payment. The Borrower fails to pay any amount payable
hereunder or under any other Loan Document when due including without limitation
such amounts as may come due as a result of a "demand" made by the Banks under
the Notes; or

                  (b) Representation or Warranty. Any representation or warranty
made or deemed made herein, in any other Loan Document, or which is contained in
any certificate, document or financial or other statement by the Borrower, or
any Responsible Officer furnished at any time under this Agreement, or in or
under any other Loan Document, is incorrect or incomplete in any respect on or
as of the date made or deemed made; or

                  (c) Covenant Defaults. The Borrower fails to perform or
observe any other term, covenant or agreement contained in any of the Loan
Documents; or

                  (d) Cross-Default. The Borrower or any Subsidiary of the
Borrower (i) fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $250,000.00
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (ii) fails to perform or observe any other material
condition or covenant, or any other event shall occur or condition exist, under
any agreement or instrument relating to any such Indebtedness or Contingent
Obligation, if, after expiration of any grace or cure period therein provided,
the effect of such failure, event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded, except to
the extent that any such amounts are in bona fide dispute in an aggregate amount
not exceeding $250,000 for which adequate reserves are maintained in accordance
with GAAP; or

                  (e) Insolvency; Voluntary Proceedings. The Borrower or any
Subsidiary of the Borrower (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
whether at stated maturity or otherwise; (ii) commences any Insolvency
Proceeding with respect to itself; or (iii) takes any action to effectuate or
authorize any of the foregoing; or

                  (f) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any Subsidiary of the
Borrower, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower or any
Subsidiary or any of any of the Borrower's properties, and any such proceeding
or petition shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released, vacated or fully
bonded within 60 days after commencement, filing or levy; (ii) the Borrower or
any Subsidiary of the Borrower admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Borrower or any Subsidiary of the Borrower acquiesces in the appointment of a
receiver,


                                       64
<PAGE>

trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business; or

                  (g) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$250,000.00; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $250,000.00; or (iii) the Borrower or any
ERISA Affiliate shall fail to pay when due, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $250,000.00; or

                  (h) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Borrower or any Subsidiary of the Borrower, which such judgment,
order, decree or award is not effectively stayed pending appeal thereof,
involving in the aggregate a liability as to any single or related series of
transactions, incidents or conditions, to pay an amount of $250,000.00 or more;
or

                  (i) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against the Borrower or any Subsidiary of the Borrower
which does or would reasonably be expected to have a Material Adverse Effect; or

                  (j) Change of Control. There occurs any Change of Control not
previously approved by the Banks; or

                  (k) Adverse Change. There occurs a Material Adverse Effect; or

                  (l) Guarantor Defaults. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in the Guaranty
executed by such Guarantor; or such Guaranty is for any reason (other than
satisfaction in full of all Obligations and the termination of the Loans)
partially (including with respect to future advances) or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect, or such
Guarantor or any other Person contests in any manner the validity or
enforceability thereof or denies that it has any further liability or obligation
thereunder; or any event described at subsections (e) or (f) of this Section
occurs with respect to such Guarantor.

IN NO EVENT SHALL ANY PROVISION OF THIS AGREEMENT PROVIDING FOR SPECIFIC EVENTS
OF DEFAULT BE CONSTRUED TO WAIVE, LIMIT OR OTHERWISE MODIFY THE DEMAND NATURE OF
THE LOANS WHICH MAY BE MADE PURSUANT TO THIS AGREEMENT, AND THE BORROWER HEREBY
ACKNOWLEDGES AND AGREES THAT THE BANKS' RIGHT TO DEMAND PAYMENT AT ANY TIME FOR
ANY REASON OR FOR NO REASON IS ABSOLUTE AND UNCONDITIONAL.



                                       65
<PAGE>

                  9.02 Remedies. If any Event of Default occurs, the
Administrative Agent may and shall, at the request of the Required Banks:

                  (a) declare an amount equal to the maximum aggregate amount
that is or at any time thereafter may become available for drawing by the
beneficiary under any outstanding Letters of Credit (whether or not any
beneficiary shall have presented, or shall be entitled at such time to present,
the drafts or other documents required to draw under such Letters of Credit) to
be immediately due and payable, and declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
and

                  (b) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law including, without limitation, seeking to lift the stay in effect under the
Proceeding; provided, however, that upon the occurrence of any event specified
in subsection (e) or (f) of Section 9.01, the obligation of each Bank to make
Loans and any obligation of an Issuing Bank to Issue Letters of Credit shall
automatically terminate and an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing by the beneficiary
under any outstanding Letters of Credit (whether or not any beneficiary shall
have presented, or shall be entitled at such time to present, the drafts or
other documents required to draw under such Letters of Credit) together with the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Administrative Agent, any Issuing Bank or any Bank.

                  9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.


                                    ARTICLE X

                                     AGENTS

                  10.01    Appointment and Authorization.

                  (a) Each Bank hereby irrevocably (subject to Section 10.09)
appoints, designates and authorizes the Agents to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agents shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agents have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agents.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agents is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is


                                       66
<PAGE>

used merely as a matter of market custom and is intended to create or reflect
only an administrative relationship between independent contracting parties.

                  (b) Each Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of the Banks to act for such Issuing Bank with respect
thereto; provided, however, that such Issuing Bank shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this Article
X with respect to any acts taken or omissions suffered by such Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Administrative Agent," as used in
this Article X, included such Issuing Bank with respect to such acts or
omissions, and (ii) as additionally provided in this Agreement with respect to
such Issuing Banks. Prior to the issuance of a Letter of Credit by an Issuing
Bank other than the Administrative Agent, such Issuing Bank shall provide
written notice to the Administrative Agent of the dollar amount, the date of
such issuance and the expiry date of such Letter of Credit. Such issuance shall
be subject to the consent of the Administrative Agent. Such consent shall not
result in the imposition of any liability upon the Administrative Agent.

                  10.02 Delegation of Duties. Each of the Agents may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. Neither of the Agents
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

                  10.03 Liability of Agents. None of Agent-Related Persons shall
(a) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Borrower or any
Subsidiary or Affiliate of the Borrower, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by
Agents under or in connection with, this Agreement or any other Loan Document,
or for the value of or title to any Collateral, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the Borrower's
Subsidiaries or Affiliates.

                  10.04    Reliance by Agents.

                  (a) Each of the Agents shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person


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or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by Agents.
Each of the Agents shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of all of the Banks or the Required Banks, as
applicable, as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Each of the Agents shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of all of the Banks or the
Required Banks, as applicable, and such request and any action taken or failure
to act pursuant thereto shall be binding upon the Banks.

                  (b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by Agents to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.

                  10.05 Notice of Default. Agents shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Administrative Agent for the account of the Banks, unless the
Administrative Agent shall have received written notice from a Bank or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the BNP Paribas, as an agent, and the Banks of
its receipt of any such notice. The Agents shall take such action with respect
to such Default or Event of Default as may be requested by all of the Banks or
the Required Banks, as applicable, in accordance with Article IX; provided,
however, that unless and until the Administrative Agent has received any such
request, the Agents may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.

                  10.06 Credit Decision. Each Bank acknowledges that none of
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agents hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agents that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries, the value of and title to any Collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person 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 Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except


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for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Agents, the Agents shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any of Agent-Related Persons.

                  10.07 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Bank shall be liable for the payment to Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse Agents upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by Agents in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agents are not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agents.

                  10.08 Agents in Individual Capacity. Fortis and its Affiliates
and BNP Paribas and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Borrower and its Subsidiaries and Affiliates as
though Fortis and BNP Paribas were not Agents or Issuing Banks hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, Fortis or its Affiliates and BNP Paribas or its Affiliates
may receive information regarding the Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the Agents shall be under no
obligation to provide such information to them. With respect to its Loans,
Fortis and BNP Paribas shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agents or Issuing Banks, and the terms "Bank" and "Banks" include each of Fortis
and BNP Paribas in its individual capacity.

                  10.09 Successor Administrative Agent. The Administrative Agent
may resign as the Administrative Agent upon thirty (30) days' notice to the
Banks. If the Administrative Agent resigns under this Agreement, BNP Paribas
shall automatically become the successor agent, unless BNP Paribas declines. If
BNP Paribas declines, the Required Banks shall appoint, from among the Banks, a
successor agent for the Banks. If no successor agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the resigning
Administrative Agent may appoint, after consulting with the Banks, a successor
agent from among the Banks. Upon the acceptance of its appointment as successor
agent hereunder, the successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring


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<PAGE>

Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor agent has accepted
appointment as the Administrative Agent by the date which is thirty (30) days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Banks appoint a successor agent as
provided for above.

                  10.10    Withholding Tax.

                  (a) If any Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Administrative Agent, to deliver to the
Administrative Agent:

                     (i) if such Bank claims an exemption from, or a reduction
         of, withholding tax under a United States tax treaty, properly
         completed and executed copies of IRS Form W-8BEN before the payment of
         any interest in the first calendar year and before the payment of any
         interest in each third succeeding calendar year during which interest
         may be paid under this Agreement;

                     (ii) if such Bank claims that interest paid under this
         Agreement is exempt from United States withholding tax because it is
         effectively connected with a United States trade or business of such
         Bank, two properly completed and executed copies of IRS Form W-8ECI
         before the payment of any interest is due in the first taxable year of
         such Bank and in each succeeding taxable year of such Bank during which
         interest may be paid under this Agreement; and

                     (iii) such other form or forms as may be required under the
         Code or other laws of the United States as a condition to exemption
         from, or reduction of, United States withholding tax.

Such Bank agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

                  (b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Bank sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Bank, such Bank agrees to
notify the Administrative Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Bank. To the
extent of such percentage amount, the Administrative Agent will treat such
Bank's IRS Form W-8BEN as no longer valid.

                  (c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form W-8ECI with the Administrative Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.



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<PAGE>

                  (d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Administrative Agent, then the Administrative Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation an
amount equivalent to the applicable withholding tax imposed by Sections 1441 and
1442 of the Code, without reduction.

                  (e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Administrative
Agent did not properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered, was not properly
executed, or because such Bank failed to notify the Administrative Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Bank shall indemnify
the Administrative Agent fully for all amounts paid, directly or indirectly, by
the Administrative Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Administrative Agent under this Section, together with all costs and
expenses (including Attorney Costs), except to the extent caused solely by the
gross negligence or willful misconduct of the Administrative Agent. The
obligation of the Banks under this Subsection shall survive the payment of all
Obligations and the resignation or replacement of the Administrative Agent.

                  10.11 Collateral Matters. (a) The Agents are authorized on
behalf of all the Banks, without the necessity of any notice to or further
consent from the Banks, from time to time to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Loan Documents.

                  (b) The Banks irrevocably authorize the Agents, at their
option and in their discretion, to release any Lien granted to or held by the
Administrative Agent upon any Collateral (I) upon payment in full of all Loans
and all other Obligations known to the Agents and payable under this Agreement
or any other Loan Document; (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Borrower or any Subsidiary
owned no interest at the time the Lien was granted or at any time thereafter;
(iv) constituting property leased to the Borrower or any Subsidiary under a
lease which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
the Borrower or such Subsidiary to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the all of the Banks. Upon request by the Agents at any
time, the Banks will confirm in writing the Agents' authority to release
particular types or items of Collateral pursuant to this Subsection 10.11(b);
provided, however, that the absence of any such confirmation for whatever reason
shall not affect the Agents' rights under this Section 10.11.



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<PAGE>
                  (c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Borrower or any Subsidiary) that
the Borrower's obligations to such Bank under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Bank.


                  10.12 Monitoring Responsibility. Each Bank will make its own
credit decisions hereunder, including the decision whether or not to make
advances or consent to the Issuance of Letters of Credit, thus the Agents shall
have no duty to monitor the Collateral Position, the amounts outstanding under
sub-lines or the reporting requirements or the contents of reports delivered by
the Borrower. Each Bank assumes the responsibility of keeping itself informed at
all times.


                                   ARTICLE XI

                                  MISCELLANEOUS

                  11.01 Amendments and Waivers. No amendment, supplement,
modification or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by the Borrower
therefrom, shall be effective unless the same shall be in accordance with the
provisions of this Section 11.01. The Required Banks may, or, with the written
consent of the Required Banks, the Administrative Agent may, from time to time,
(a) enter into with the Borrower written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Banks or of the Borrower hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Banks or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or of any installment thereof,
or reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Bank's Uncommitted Line Portion, in each case without the
consent of each Bank affected thereby, or (ii) amend, modify or waive any
provision of this Section 11.01 or reduce the percentage specified in the
definition of Required Banks, or consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents or release all or substantially all of the Collateral or release
a Guarantor from its obligations under a Guaranty, in each case without the
written consent of each of the Banks directly affected thereby, or (iii) amend,
modify or waive any provision of Section 10 without the written consent of the
Agents. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Banks and shall be binding upon the Borrower, the
Banks, the Agents and all future holders of the Loans. In the case of any
waiver, the Borrower, the Banks and the Agents shall be restored to their former
positions and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend


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<PAGE>

to any subsequent or other Default or Event of Default or impair any right
consequent thereon. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

                  11.02    Notices.

                  (a) All notices, requests and other communications shall be in
writing (including, unless the context expressly otherwise provides, by
facsimile transmission; provided, however, that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient at the number specified on Schedule 11.02, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and mailed, faxed
or delivered, to the address or facsimile number specified for notices on
Schedule 11.02; or, as directed to the Borrower or the Agents, to such other
address as shall be designated by such party in a written notice to the other
parties, and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Agents.

                  (b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Articles II, III or X shall not be effective until actually
received by the Administrative Agent or Agents, as applicable.

                  (c) Any agreement of the Agents and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Borrower. The Agents and the Banks shall be entitled
to rely on the authority of any Person purporting to be a Person authorized by
the Borrower to give such notice and the Agents and the Banks shall not have any
liability to the Borrower or other Person on account of any action taken or not
taken by the Agents or the Banks in reliance upon such telephonic or facsimile
notice, except to the extent of the gross negligence or willful misconduct of
the Agents or any Bank. The obligation of the Borrower to repay the Loans and
L/C Obligations shall not be affected in any way or to any extent by any failure
by the Agents and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agents and the Banks of a confirmation
which is at variance with the terms understood by the Agents and the Banks to be
contained in the telephonic or facsimile notice.

                  11.03 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agents or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.

                  11.04    Costs and Expenses.  The Borrower shall:

                  (a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse Fortis and BNP Paribas (including in their
capacity as Agents) within five (5) Business Days after demand (subject to
Subsection 5.01(e)) for all the actual and


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<PAGE>

reasonable costs and expenses incurred by Fortis and BNP Paribas (including in
their capacity as Agents) in connection with the preparation, delivery, and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs and costs of commercial finance examinations, incurred
by Fortis and BNP Paribas (including in their capacity as Agents) excluding,
however, any costs or expenses incurred in connection with any negotiation,
dispute or claim solely between or among either of the Agents and/or one or more
of the Banks; and

                  (b) pay or reimburse the Agents and each Bank within five
Business Days after demand (subject to Subsection 5.01(e)) for all actual and
reasonable costs and expenses (including Attorney Costs) incurred by them in
connection with the monitoring, administration, enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
any other Loan Document excluding, however, any costs or expenses incurred in
connection with any negotiation, dispute or claim solely between or among the
Agents and/or one or more of the Banks; and all such costs and expenses during
the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).

                  11.05 INDEMNITY. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE CONSUMMATED, THE BORROWER SHALL INDEMNIFY AND HOLD AGENT-RELATED
PERSONS, AND EACH BANK AND EACH OF ITS RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, COUNSEL, AGENTS AND ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED PERSON")
HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES AND DISBURSEMENTS
(INCLUDING ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY
TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE LOANS, THE TERMINATION OF
THE LETTERS OF CREDIT AND THE TERMINATION, RESIGNATION OR REPLACEMENT OF THE
ADMINISTRATIVE AGENT OR REPLACEMENT OF ANY BANK) BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST ANY SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE
TRANSACTIONS CONTEMPLATED HEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH
PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT
TO ANY INVESTIGATION, LITIGATION OR PROCEEDING (INCLUDING ANY INSOLVENCY
PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT
OR THE LOANS OR LETTERS OF CREDIT OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR
NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY,
THE "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, THAT THE BORROWER SHALL HAVE
NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON FOR THAT PORTION OF ANY
INDEMNIFIED LIABILITIES THAT IS ADJUDGED BY A COURT OF COMPETENT JURISDICTION TO
HAVE BEEN CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON OR THAT PORTION OF ANY INDEMNIFIED LIABILITIES WHICH ARE OWED
BY AN INDEMNIFIED PERSON TO ANY OTHER INDEMNIFIED PERSON, BUT IN ALL EVENTS, THE
BORROWER SHALL REMAIN LIABLE FOR THE REMAINDER OF THE INDEMNIFIED LIABILITIES
NOT SO EXCLUDED. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE PAYMENT OF ALL
OTHER OBLIGATIONS.



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<PAGE>

                  11.06 Payments Set Aside. To the extent that the Borrower
makes a payment to the Agents or the Banks, or the Agents or the Banks exercise
their right of set-off, and such payment or the proceeds of such set-off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Agents or such Bank in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then (a) to the extent of such recovery the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
set-off had not occurred, and (b) each Bank severally agrees to pay to each of
the Agents upon demand its pro rata share of any amount so recovered from or
repaid by the Agents.

                  11.07 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or Obligations under this Agreement without the prior
written consent of the Agents and each Bank.

                  11.08    Assignments, Participations, Etc.

                  (a) Any Bank, at any time may assign and delegate to one or
more Eligible Assignees (each an "Assignee") all, or any ratable part of all, of
the Loans, the Uncommitted Line, the L/C Obligations and the other rights and
obligations of such Bank hereunder, in a minimum amount of $1,000,000.00;
provided, however, that (i) any such disposition shall not, without the prior
consent of the Borrower, require the Borrower to apply to register or qualify
the Loan or any Note under the securities laws of any state, and (ii) the
Borrower and the Administrative Agent may continue to deal solely and directly
with such Bank in connection with the interest so assigned to an Assignee until
(x) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to the Borrower and the Administrative Agent by such Bank and the
Assignee; (y) such Bank and its Assignee shall have delivered to the Borrower
and the Administrative Agent an Assignment and Acceptance ("Assignment and
Acceptance") in form attached hereto as Exhibit D, together with any Note or
Notes subject to such assignment; and (z) the assignor Bank or Assignee has paid
to the Administrative Agent a processing fee in the amount of $2,500.00.

                  (b) From and after the date that the Administrative Agent
notifies the assignor Bank that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.

                  (c) The Borrower shall execute and deliver to the
Administrative Agent, new Notes evidencing such Assignee's assigned Loans and
Uncommitted Line Portion and, if the assignor Bank has retained a portion of its
Loans and its Uncommitted Line Portion, replacement Notes in the principal
amount of the Loans retained by the assignor Bank (such Notes to be in


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<PAGE>

exchange for, but not in payment of, the Notes held by such Bank). Immediately
upon each Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Uncommitted Line Portion arising therefrom. The
Uncommitted Line Portion allocated to each Assignee shall reduce such
Uncommitted Line Portion of the assigning Bank pro tanto. Upon such Assignment,
the Administrative Agent is authorized to revise Schedule 2.01 and Schedule
11.02 to reflect the adjusted status of the Banks.

                  (d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Loans, the Uncommitted Line Portion of that Bank
and the other interests of that Bank (the "originating Bank") hereunder and
under the other Loan Documents; provided, however, that (i) the originating
Bank's and the Borrower's obligations under this Agreement shall remain
unchanged, (ii) the originating Bank shall remain solely responsible for the
performance of such obligations, (iii) the Borrower, the Issuing Banks and the
Administrative Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 11.01. In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.

                  (e) Each Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Borrower and provided to it by
the Borrower or any Subsidiary or Affiliate, or by the Agents on the Borrower or
Subsidiary's or Affiliate's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Bank, or (ii) was or becomes available on a non-confidential basis from a
source other than the Borrower; provided, however, that such source is not bound
by a confidentiality agreement with, or under obligation of confidentiality, the
Borrower known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent, any Bank or their respective


                                       76
<PAGE>

Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to such Bank's independent auditors and other professional advisors; (G) to any
Affiliate of such Bank, or to any Participant or Assignee, actual or potential;
provided, however, that such Affiliate, Participant or Assignee agrees to keep
such information confidential to the same extent required of the Banks
hereunder, and (H) as to any Bank, as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which the Borrower is
party or is deemed party with such Bank. The foregoing is not intended to limit
the Banks' obligations to maintain confidential information received from the
Borrower under applicable laws.

                  (f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.

                  11.09 Set-off. In addition to any rights and remedies of the
Banks provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrower, any such notice being waived by the Borrower to
the fullest extent permitted by law, to set off and apply any and all deposits
at any time held by, and other indebtedness at any time owing by, such Bank to
or for the credit or the account of the Borrower against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
the Agents or such Bank shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each Bank
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.

                  11.10 Automatic Debits of Fees. With respect to any letter of
credit fee or other fee, interest or any other cost or expense (including
Attorney Costs) due and payable to the Agents, the Issuing Banks, Fortis or BNP
Paribas under the Loan Documents, the Borrower hereby irrevocably authorizes the
Collateral Agent to debit any deposit accounts of the Borrower with the
Collateral Agent (such deposit accounts being owned by the Collateral Agent and
under the exclusive dominion and control of the Collateral Agent) including the
Bank Blocked Account in an amount such that the aggregate amount debited from
all such deposit accounts does not exceed such fee or other cost or expense. If
there are insufficient funds in such deposit accounts to cover the amount of the
fee or other cost or expense then due, such debits will be reversed (in whole or
in part, in the Administrative Agent's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section shall be
deemed a set-off.

                  11.11 Notification of Addresses, Lending Offices, Etc. Each
Bank shall notify the Agents in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agents shall reasonably request.



                                       77
<PAGE>

                  11.12 Bank Blocked Account Charges and Procedures. The
Collateral Agent is hereby authorized to (a) charge the Bank Blocked Account or
any deposit account of the Borrower maintained at the Collateral Agent for all
returned checks, service charges, and other fees and charges associated with the
deposits by the Borrower to and withdrawals by the Borrower from the Bank
Blocked Account; (b) follow its usual procedures in the event the Bank Blocked
Account or any check, draft or other order for payment of money should be or
become the subject of any writ, levy, order or other similar judicial or
regulatory order or process; (c) charge the Bank Blocked Account or any deposit
account of the Borrower maintained at the Collateral Agent for any Letter of
Credit reimbursement, Loan repayments, interest or fees; and (d) pay from the
Bank Blocked Account, on behalf of the Borrower, suppliers and other business
expenses of the Borrower. If the available balances in the Bank Blocked Account
relating to the Borrower are not sufficient to pay the Administrative Agent for
any returned check, draft or order for the payment of money relating to the
Borrower, or to compensate the Administrative Agent for any charges or fees due
the Administrative Agent with respect to the deposits by the Borrower to and
withdrawals by the Borrower from the Bank Blocked Account, the Borrower agrees
to pay on demand the amount due the Administrative Agent. The Borrower agrees
that it cannot, and will not, withdraw any monies from the Bank Blocked Account
and it will not permit the Bank Blocked Account to become subject to any other
pledge, assignment, lien, charge or encumbrance of any kind, nature or
description, other than the Administrative Agent's security interest.

                  11.13 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed, shall be
deemed an original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument.

                  11.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

                  11.15 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Borrower, the
Banks, the Administrative Agent and Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.

                  11.16    GOVERNING LAW AND JURISDICTION.

                  (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW (WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAWS) OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE
ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.

                  (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE STATE COURTS LOCATED
IN NEW YORK COUNTY, CITY OF NEW YORK,


                                       78
<PAGE>

STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
THE BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON THE BORROWER AND IRREVOCABLY APPOINTS
CORPORATION SERVICE COMPANY, 80 STATE STREET, ALBANY, NY 12207, AS REGISTERED
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW
YORK AND AGREES TO OBTAIN A LETTER FROM CORPORATION SERVICE COMPANY,
ACKNOWLEDGING SAME AND CONTAINING THE AGREEMENT OF CORPORATION SERVICE COMPANY,
TO PROVIDE THE ADMINISTRATIVE AGENT WITH THIRTY (30) DAYS ADVANCE NOTICE PRIOR
TO ANY RESIGNATION OF CORPORATION SERVICE COMPANY AS SUCH REGISTERED AGENT.

                  11.17 WAIVER OF JURY TRIAL. THE BORROWER, THE BANKS AND THE
AGENTS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER, THE BANKS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.

                  11.18 DISCRETIONARY FACILITY. THE BORROWER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT PROVIDES FOR A CREDIT FACILITY THAT IS COMPLETELY
DISCRETIONARY ON THE PART OF THE BANKS AND THAT THE BANKS HAVE ABSOLUTELY NO
DUTY OR OBLIGATION TO ADVANCE ANY


                                       79
<PAGE>

REVOLVING LOANS OR TO ISSUE ANY LETTER OF CREDIT. THE BORROWER UNDERSTANDS THAT
WITHOUT REASON, CAUSE OR PRIOR NOTICE, THE BANKS MAY CEASE ADVANCING REVOLVING
LOANS AND ISSUING LETTERS OF CREDIT AND MAKE DEMAND FOR PAYMENT OF ALL
OBLIGATIONS OF BORROWER TO THE BANKS AT ANY TIME. BORROWER REPRESENTS AND
WARRANTS TO THE BANKS THAT BORROWER IS AWARE OF THE RISKS ASSOCIATED WITH
CONDUCTING BUSINESS UTILIZING AN UNCOMMITTED FACILITY.

                  11.19 Entire Agreement. THIS AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE
BORROWER, THE BANKS AND THE ADMINISTRATIVE AGENT, AND SUPERSEDES ALL PRIOR OR
CONTEMPORANEOUS AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR
WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.

                  11.20 Effect of Amendment and Restatement. On the Closing
Date, the Original Credit Agreement shall be amended, restated and superseded in
its entirety by this Agreement. The parties hereto acknowledge and agree that
the liens and security interests granted under the Security Agreements (as
defined in the Original Credit Agreement) are continuing and in full force and
effect and, upon the amendment and restatement of the Original Credit Agreement
pursuant to this Agreement, such liens and security interests secure and
continue to secure the payment of the Obligations, and that the Notes
outstanding under and as defined in the Original Credit Agreement are, upon the
Closing Date, replaced by the Notes issued hereunder.




                                       80
<PAGE>



                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.

<TABLE>
<CAPTION>
<S>                                                     <C>
                                                          WOODWARD MARKETING, L.L.C.,
                                                          a Delaware limited liability company

                                                          By:   /s/ RONALD W. BAHR
                                                               ----------------------------------
                                                              Name:  Ronald W. Bahr
                                                                     ----------------------------
                                                              Title:  Senior Vice President
                                                                      ---------------------------

                                                              Borrower's Address:
                                                              11251 Northwest Freeway, Suite 400
                                                              Houston, Texas  77092
                                                              Attention:  Ronald W. Bahr
                                                              Telephone:  (713) 688-7771
                                                              Facsimile:  (713) 688-5124

                                                          FORTIS CAPITAL CORP., a Connecticut corporation as
                                                          Administrative Agent, Collateral Agent, and a Bank

                                                          By:  /s/ IRENE C. RUMMEL
                                                               ----------------------------------
                                                              Name:  Irene C. Rummel
                                                                     ----------------------------
                                                              Title:  Senior Vice President
                                                                      ---------------------------

                                                          By:  /s/ LEONARD RUSSO
                                                               ----------------------------------
                                                              Name:  Leonard Russo
                                                                     ----------------------------
                                                              Title:  Director
                                                                      ---------------------------

                                                              100 Crescent Court
                                                              Suite 1777
                                                              Dallas, TX 75201
                                                              Telephone:  (214) 953-9314
                                                              Facsimile:  (214) 969-9332

                                                     [Woodward - Credit Agreement]
</TABLE>




                                       81
<PAGE>



<TABLE>
<CAPTION>
<S>                                                      <C>
                                                              FORTIS CAPITAL CORP.,
                                                              a Connecticut corporation,
                                                              as a Bank and Issuing Bank

                                                          By:  /s/ IRENE C. RUMMEL
                                                               ----------------------------------
                                                              Name:  Irene C. Rummel
                                                                     ----------------------------
                                                              Title:  Senior Vice President
                                                                      ---------------------------

                                                          By:  /s/ LEONARD RUSSO
                                                               ----------------------------------
                                                              Name:  Leonard Russo
                                                                     ----------------------------
                                                              Title:  Director
                                                                      ---------------------------

                                                              100 Crescent Court
                                                              Suite 1777
                                                              Dallas, TX 75201
                                                              Telephone:  (214) 953-9314
                                                              Facsimile:  (214) 969-9332
</TABLE>




                                       82
<PAGE>



<TABLE>
<CAPTION>
<S>                                                         <C>
                                                              BNP PARIBAS,
                                                              a bank organized under the laws of France, as a
                                                              Bank, Issuing Bank, and Documentation Agent

                                                          By:  /s/ EDWARD K. CHIN
                                                               ----------------------------------
                                                              Name:  Edward K. Chin
                                                                     ----------------------------
                                                              Title:  Director
                                                                      ---------------------------

                                                          By:  /s/ SALI WIN
                                                               ----------------------------------
                                                              Name:  Sali Win
                                                                     ----------------------------
                                                              Title:  Director
                                                                      ---------------------------

                                                              787 Seventh Avenue
                                                              New York, New York  10019
                                                              Attention:  Edward Chin
                                                              Telephone:  (212) 841-2020
                                                              Facsimile:  (212) 841-2536
</TABLE>




                                       83
<PAGE>



<TABLE>
<CAPTION>
<S>                                                      <C>
                                                              SOCIETE GENERALE,
                                                              as a Bank

                                                          By:  /s/ EMMANUEL CHESNEAU
                                                               ---------------------
                                                              Name:  Emmanuel Chesneau
                                                                     ----------------------------
                                                              Title:  Director
                                                                      ---------------------------

                                                              1221 Avenue of the Americas
                                                              New York, New York 10020
                                                              Attention: Barbara Paulsen
                                                              Telephone: (212) 278-6496
                                                              Fax: (212) 278-7417



                                                              NATEXIS BANQUES POPULAIRES,
                                                              NEW YORK BRANCH,
                                                              as a Bank

                                                          By:  /s/ DAVID PERSHAD
                                                               ----------------------------------
                                                              Name:  David Pershad
                                                                     ----------------------------
                                                              Title:  Vice President
                                                                      ---------------------------

                                                          By:  /s/ GUILLAUME DE PARSCAU
                                                               ------------------------
                                                              Name:  Guillaume de Parscau
                                                                     ----------------------------
                                                              Title:  First Vice President
                                                                      ---------------------------

                                                              1251 Avenue of the Americas, 34th Floor
                                                              New York, New York  10020
                                                              Attention:  David Pershad
                                                              Telephone:  (212) 872-5015
                                                              Facsimile:  (212) 354-9095
</TABLE>




                                       84
<PAGE>



<TABLE>
<CAPTION>
<S>                                                      <C>
                                                              RZB FINANCE LLC,
                                                              as a Bank

                                                          By:  /s/ HERMINE KIROLOS
                                                               ----------------------------------
                                                              Name:  Hermine Kirolos
                                                                     ----------------------------
                                                              Title:  Group Vice President
                                                                      ---------------------------

                                                              1133 Avenue of the Americas
                                                              New York, New York  10036
                                                              Attention:  Hermine Kirolos
                                                              Telephone:  (212) 845-4114
                                                              Facsimile:  (212) 944-6389
</TABLE>



                                       85
<PAGE>


                                 Schedule 2.01-1

                                  SCHEDULE 2.01

                              UNCOMMITTED LINE AND
                            UNCOMMITTED LINE PORTION
                           (EXCLUDING SWAP CONTRACTS)

                  I.       UNCOMMITTED LINE:

                  A.       Maximum Line:                      $250,000,000.00

                  B.       Total Line Amount
                           Subscribed:                        $210,000,000.00

                  C.       Subscribed Percentage:             84%

                  II.      UNCOMMITTED LINE PORTIONS, SUBSCRIBED AMOUNTS:

<TABLE>
<CAPTION>
        Line:                   Bank                         Dollar Amount           Share
        ----                    ----                         -------------           -----
<S>                      <C>                                <C>                    <C>
Borrowing Base Line      Fortis Capital Corp.               $ 75,000,000.00         35.71428%

                         BNP Paribas                        $ 75,000,000.00         35.71428%

                         Societe Generale                   $ 35,000,000.00         16.66667%

                         Natexis Banques Populaires,
                         New York Branch                    $ 15,000,000.00          7.14285%

                         RZB Finance LLC                    $ 10,000,000.00          4.76190%

                         TOTAL SUBSCRIBED LINE PORTIONS     $210,000,000.00            100%
</TABLE>



                                Schedule 2.01-1
<PAGE>



                                  SCHEDULE 3.10

                           EXISTING LETTERS OF CREDIT

                               [To be completed.]



                                Schedule 3.10-1

<PAGE>



                                  SCHEDULE 6.05

                 LITIGATION, AND PATENT, TRADEMARK, ETC. CLAIMS
None.


                                Schedule 6.05-1

<PAGE>




                                  SCHEDULE 6.07

                                  ERISA MATTERS
None.





                                Schedule 6.07-1

<PAGE>




                                  SCHEDULE 6.12

                              ENVIRONMENTAL MATTERS
None.




                                Schedule 6.12-1

<PAGE>




                                  SCHEDULE 6.16

                       SUBSIDIARIES AND EQUITY INVESTMENTS
Southern Resources, Inc.




                                Schedule 6.16-1

<PAGE>



                                  SCHEDULE 6.17

                                INSURANCE MATTERS
None.





                                Schedule 6.17-1

<PAGE>



                                SCHEDULE 7.03(F)

                         LOCATIONS OF INVENTORY STORAGE

North Liberty, Kansas
Saltville, Virginia
Barnsley, Kentucky
East Diamond, Kentucky
Bearcreek, Louisiana
Epps, Louisiana





                               Schedule 7.03(f)-1

<PAGE>




                                  SCHEDULE 8.01

                        PERMITTED INDEBTEDNESS AND LIENS
None.






                                 Schedule 8.01-1
<PAGE>


                                  SCHEDULE 8.07

                             CONTINGENT OBLIGATIONS
None.






                                 Schedule 8.07-1
<PAGE>




                                 SCHEDULE 11.02

                    LENDING OFFICES AND ADDRESSES FOR NOTICES

FORTIS CAPITAL CORP.,
--------------------
as Administrative Agent and Collateral Agent

Fortis Capital Corp.
100 Crescent Court
Suite 1777
Dallas, TX 75201
Attention: Marla Jennings
Telephone:  (214) 953-9314
Facsimile:  (214) 969-9332

FORTIS CAPITAL CORP.,
--------------------
as Issuing Bank and a Bank

Fortis Capital Corp.
100 Crescent Court
Suite 1777
Dallas, TX 75201
Attention: Marla Jennings
Telephone:  (214) 953-9314
Facsimile:  (214) 969-9332

BNP PARIBAS,
-----------
as Documentation Agent

BNP Paribas
787 Seventh Avenue
New York, New York  10019
Attention:  Edward Chin
Telephone:  (212) 841-2020
Facsimile:  (212) 841-2536





                                Schedule 11.02-1
<PAGE>


BNP PARIBAS,
-----------
as Issuing Bank and a Bank

BNP Paribas
787 Seventh Avenue
New York, New York  10019
Attention:  Edward Chin
Telephone:  (212) 841-2020
Facsimile:  (212) 841-2536

SOCIETE GENERALE

Societe Generale
1221 Avenue of the Americas
New York, New York 10020
Attention: Barbara Paulsen
Telephone: (212) 278-6496
Fax: (212) 278-7417

NATEXIS BANQUES POPULAIRES, NEW YORK BRANCH

Natexis Banques Populaires, New York Branch
1251 Avenue of the Americas
34th Floor
New York, New York  10020
Attention:  David Pershad
Telephone:  (212) 872-5015
Facsimile:  (212) 354-9095

RZB FINANCE LLC

RZB Finance LLC
1133 Avenue of the Americas
New York, New York  10036
Attention:  Hermine Kirolos
Telephone:  (212) 845-4114
Facsimile:  (212) 944-6389





                                Schedule 11.02-2
<PAGE>


                                    EXHIBIT A

                           FORM OF NOTICE OF BORROWING
                               (LETTERS OF CREDIT)

                                     [DATE]

Fortis Capital Corp.                                  BNP Paribas
100 Crescent Court                                    787 Seventh Avenue
Suite 1777                                            New York, New York 10019
Dallas, TX 75201                                      Attention: Edward Chin
Attention: Marla Jennings                             Telephone:  (212) 841-2020
Telephone:  (214) 953-9314                            Facsimile:  (212) 841-2536
Facsimile:  (214) 969-9332

         Re:      Uncommitted Amended and Restated Credit Agreement, dated to be
                  effective as of July 1, 2002 (as amended or supplemented from
                  time to time, the "Agreement"), by and among Woodward
                  Marketing, L.L.C. (the "Borrower"), the banks that from time
                  to time are parties thereto, Fortis Capital Corp., as
                  Administrative Agent, and BNP Paribas, as Documentation Agent

Ladies and Gentlemen:

                  Reference is made to the Agreement (capitalized terms used
herein that are not defined shall have the respective meanings ascribed thereto
in the Agreement). The Borrower hereby gives notice of its intention to request
the [ISSUANCE, AMENDMENT, OR RENEWAL] of Letters of Credit as is further
described on the Letter of Credit Application attached hereto.

                  The Borrower represents and warrants, as of the date hereof
and as of the date any Letter of Credit is Issued, amended or renewed, that (i)
no Default or Event of Default has occurred and is continuing on the date
hereof, nor will any thereof occur after giving effect to the Letters of Credit
requested above; (ii) that the Borrowing Base Advance Cap will not be exceeded
after giving effect to the Letters of Credit requested above; and (iii) all of
Borrower's representations and warranties under the Agreement are true and
correct, to Borrower's knowledge, as of the date hereof.

                                            Very truly yours,

                                            WOODWARD MARKETING, L.L.C.,

                                            By: ________________________________
                                                Name: __________________________
                                                Title: _________________________




                                      A-1
<PAGE>



                           FORM OF NOTICE OF BORROWING
                                (REVOLVING LOAN)

                                     [DATE]

Fortis Capital Corp.
100 Crescent Court
Suite 1777
Dallas, TX 75201
Attention: Marla Jennings
Telephone:  (214) 953-9314
Facsimile:  (214) 969-9332

         Re:      Uncommitted Amended and Restated Credit Agreement, dated to be
                  effective as of July 1, 2002 (as amended or supplemented from
                  time to time, the "Agreement"), by and among Woodward
                  Marketing, L.L.C. (the "Borrower"), the banks that from time
                  to time are parties thereto, Fortis Capital Corp., as
                  Administrative Agent, and BNP Paribas, as Documentation Agent

Ladies and Gentlemen:

                  Reference is made to the Agreement (capitalized terms used
herein that are not defined shall have the respective meanings ascribed thereto
in the Agreement). The Borrower hereby gives notice of its intention to borrow
under the Borrowing Base Line.
Please advance a Revolving Loan as follows:

                  Date of Borrowing (a-1)       : ______________________________
                  Amount                        : ______________________________
                  Type of Advance
                  (Base Rate or Offshore Rate)  : ______________________________
                  Interest Period
                  (if Offshore Rate)            : ______________________________

                  The Borrower represents and warrants, as of the date hereof
and as of the date any Revolving Loan is made or renewed, that (i) no Default or
Event of Default has occurred and is continuing on the date hereof, nor will any
thereof occur after giving effect to the Revolving


_____________________

(a-1) The aggregate amount of the Borrowing comprised of Offshore Rate Loans
must be made in an amount equal to the Offshore Effective Amount. The date of
the Borrowing must be a Business Day. Borrower must give four (4) Business Days
advance notice for Borrowings comprised of Offshore Rate Loans, and the same
Business Day advance notice for Borrowings comprised of Base Rate Loans.




                                      A-2
<PAGE>

Loan requested above; (ii) that neither the Borrowing Base Advance Cap nor the
Dollar Advance Cap will be exceeded after giving effect to the Revolving Loan
requested above; and (iii) all of Borrower's representations and warranties
under the Agreement are true and correct, to Borrower's knowledge, as of the
date hereof.

                                              Very truly yours,

                                              WOODWARD MARKETING, L.L.C.,

                                              By: ______________________________
                                                  Name: ________________________
                                                  Title: _______________________





                                      A-3
<PAGE>



                                    EXHIBIT B

                                     FORM OF
                        NOTICE OF CONVERSION/CONTINUATION

                                     [Date]

Fortis Capital Corp.
100 Crescent Court
Suite 1777
Dallas, TX 75201
Attention: Marla Jennings
Telephone:  (214) 953-9314
Facsimile:  (214) 969-9332

         Re:      Uncommitted Amended and Restated Credit Agreement, dated to be
                  effective as of July 1, 2002 (as amended or supplemented from
                  time to time, the "Agreement"), by and among Woodward
                  Marketing, L.L.C. (the "Borrower"), the banks that from time
                  to time are parties thereto, Fortis Capital Corp., as
                  Administrative Agent, and BNP Paribas, as Documentation Agent

Ladies and Gentlemen:

                  The Borrower hereby gives you irrevocable notice pursuant to
Section 2.04 of the Agreement that the undersigned hereby requests a
[conversion] [continuation] of [outstanding Borrowings] [an outstanding
Borrowing] into a new Borrowing (the "Proposed Borrowing") on the terms set
forth below:

                  Outstanding Borrowing #1

                  Date of Borrowing                      :
                  Aggregate Amount for Conversion(2)     :
                  Type of Advance                        :
                  Interest Period                        :

                  Proposed Borrowing


_________________________

     (2) The aggregate amount for conversion with respect to Borrowings
comprised of Offshore Rate Loans must be made in an amount equal to the Offshore
Effective Amount or, if the remaining outstanding amount of such Borrowing would
be less than an amount equal to the Offshore Effective Amount following the
conversion or continuation, in the remaining outstanding amount of such
Borrowing.




                                      B-1
<PAGE>

                  Date of Conversion or Continuation(3)    :
                  Aggregate Amount                         :
                  Type of Advance                          :
                  Interest Period                          :

                  The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the proposed
Borrowing:

                  (a) the representations and warranties contained in the
Agreement are correct in all material respects, before and after giving effect
to the proposed Borrowing and the application of the proceeds therefrom, as
though made on the date of the proposed Borrowing;

                  (b) no Default has occurred and remains uncured, nor would
result from the proposed Borrowing; and

                  (c) the Borrowing Base Advance Cap will not be exceeded after
giving effect to the proposed Borrowing.

                                              Very truly yours,

                                              WOODWARD MARKETING, L.L.C.,

                                              By: ______________________________
                                                  Name: ________________________
                                                  Title: _______________________



______________________

     (3) The date of the proposed conversion or continuation must be a Business
Day. Borrower must give four (4) Business Days advance notice for conversions
into or continuations of Borrowings comprised of Offshore Rate Loans, and the
same Business Day advance notice for conversions into or continuations of
Borrowings comprised of Base Rate Loans.




                                      B-2
<PAGE>



                                    EXHIBIT C

                                     FORM OF
                             COMPLIANCE CERTIFICATE

                                     [Date]

Fortis Capital Corp.                                  BNP Paribas
100 Crescent Court                                    787 Seventh Avenue
Suite 1777                                            New York, NY 10019
Dallas, TX 75201                                      Attention: Edward Chin
Attention: Marla Jennings                             Telephone:  (212) 841-2020
Telephone:  (214) 953-9314                            Facsimile:  (212) 841-2536
Facsimile:  (214) 969-9332

         Re:      Uncommitted Amended and Restated Credit Agreement, dated to be
                  effective as of July 1, 2002 (as amended or supplemented from
                  time to time, the "Agreement"), by and among Woodward
                  Marketing, L.L.C. (the "Borrower"), the banks that from time
                  to time are parties thereto, Fortis Capital Corp., as
                  Administrative Agent, and BNP Paribas, as Documentation Agent

Ladies and Gentlemen:

                  The Borrower, acting through its duly authorized Responsible
Officers (as that term is defined in the Agreement), certifies to each of the
Banks that the Borrower is in compliance with the Agreement and in particular
certifies the following as of ____________:

<TABLE>
<CAPTION>
<S>                                                                             <C>
                  (i)      Net Working Capital                                  $                ;
                                                                                 ----------------

                  (ii)     Tangible Net Worth                                   $                ;
                                                                                 ----------------

                  (iii)    Ratio of Total Liabilities to Tangible
                           Net Worth                                                             :1;
                                                                                -----------------

                  (iv)     Borrowing Base Sub-Cap                               $                .
                                                                                 ----------------
</TABLE>

                  Further, the undersigned hereby certify that the Net Position
has at no time exceeded the limitations set forth in Section 8.11 of the
Agreement and that the undersigned has no knowledge of any Defaults under the
Agreement which existed as of [______________] or which exist as of the date of
this letter.

                  The undersigned also certifies that the accompanying financial
statements present fairly, in all material respects, the financial condition of
the Borrower as of [_____________], and the related results of operations for
the [___________] then ended, in conformity with generally accepted accounting
principles.



                                      C-1
<PAGE>

                                           Very truly yours,

                                           WOODWARD MARKETING, L.L.C.

                                           By: _________________________________
                                               Name: ___________________________
                                               Title: __________________________





                                      C-2
<PAGE>



                                    EXHIBIT D

                                     FORM OF
                            ASSIGNMENT AND ACCEPTANCE

                                     [Date]

                  Reference is made to the Uncommitted Amended and Restated
Credit Agreement dated to be effective as of July 1, 2002 (as amended or
supplemented from time to time, the "Agreement"), among WOODWARD MARKETING,
L.L.C. (the "Borrower"), the banks that from time to time are signatories
thereto, and Fortis Capital Corp., as Administrative Agent. Capitalized terms
used herein but not defined herein shall have the meanings specified in the
Agreement.

                  Pursuant to the terms of the Agreement, [_________________]
("Assignor"), wishes to assign and delegate to [________________] ("Assignee"),
[_______]% of its rights and obligations under the Agreement. Therefore,
Assignor, Assignee, and Administrative Agent agree as follows:

                  1. The Assignor hereby sells and assigns and delegates to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor,
without recourse to the Assignor and without representation or warranty except
for the representations and warranties specifically set forth in clauses (i),
(ii), and (iii) of Section 2 of this Assignment and Acceptance, a [_____]%
interest in and to all of the Assignor's rights and obligations under the
Agreement and the other Loan Documents as of the Effective Date (as defined
below), including such percentage interest in the Assignor's Uncommitted Line
Portion, the Loans owing to the Assignor, the Assignor's Pro Rata Share of the
Letters of Credit, and the Note held by the Assignor.

                  2. The Assignor (i) represents and warrants that, prior to
executing this Assignment and Acceptance, its Uncommitted Line Portion is
$[________________], the aggregate outstanding principal amount of Loans owed by
the Borrower to the Assignor is $[______________], and its Pro Rata Share of the
outstanding Effective Amount of L/C Obligations is $[_____________]; (ii)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or representations
made in or in connection with the Agreement or any other Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency, or
value of the Agreement or any other Loan Document or any other instrument or
document furnished pursuant thereto; (iv) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Agreement or any other Loan Document or any other
instrument or document furnished pursuant thereto; and (v) attaches the Note
referred to in Section 1 above and requests that Administrative Agent exchange
such Note for a new Note dated [____________], in the principal amount of
$[_____________] payable to the order of the Assignee[, and a new Note dated in
the principal amount of $[______________] payable to the order of Assignor].



                                      D-1
<PAGE>

                  3. The Assignee (i) confirms that it has received a copy of
the Agreement, together with copies of the financial statements referred to in
Section 7.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance (ii) agrees that it will, independently and without
reliance upon Administrative Agent, the Assignor or any other Bank, 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
the Agreement or any other Loan Document; (iii) appoints and authorizes
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Agreement and any other Loan Document as are delegated to
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Agreement or
any other Loan Document are required to be performed by it as a Bank; (v)
specifies as its Lending Office (and address for notices) the office set forth
beneath its name on the signature pages hereof; (vi) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Agreement and Notes or such other documents as are necessary to indicate
that all such payments are subject to such rates at a rate reduced by an
applicable tax treaty, and (vii) represents that it is an Eligible Assignee.

                  4. The effective date for this Assignment and Acceptance shall
be [___________________] ("Effective Date"), and following the execution of this
Assignment and Acceptance, Administrative Agent will record it in its records of
the transactions under the Agreement.

                  5. Upon such recording, from and after the Effective Date,
Administrative Agent shall make all payments under the Agreement and the Notes
in respect of the interest assigned hereby (including all payments of principal,
interest, and fees) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Agreement and the Notes for
periods prior to the Effective Date directly between themselves.

                  6. This Assignment and Acceptance shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.

                  The parties hereto have caused this Assignment and Acceptance
to be duly executed as of the date first above written.



                                      D-2
<PAGE>


                                  [ASSIGNOR]

                                  By:____________________________________

                                  Name:__________________________________

                                  Title:_________________________________


                                  Address:_______________________________

                                  _______________________________________

                                  _______________________________________

                                  Attention:_____________________________

                                  Telecopy No:___________________________


                                  [ASSIGNEE]

                                  By:____________________________________

                                  Name:__________________________________

                                  Title:_________________________________


                                  Lending Office:

                                  Address:_______________________________

                                  _______________________________________

                                  _______________________________________

                                  Attention:_____________________________

                                  Telecopy No:___________________________


                                  FORTIS CAPITAL CORP., as Administrative Agent

                                  By:____________________________________

                                  Name:__________________________________

                                  Title:_________________________________




                                      D-3
<PAGE>


                                    EXHIBIT E

                                     FORM OF
                    BORROWING BASE COLLATERAL POSITION REPORT

                                     [Date]
Fortis Capital Corp.                                  BNP Paribas
100 Crescent Court                                    787 Seventh Avenue
Suite 1777                                            New York, NY 10019
Dallas, TX 75201                                      Attention: Edward Chin
Attention: Marla Jennings                             Telephone:  (212) 841-2020
Telephone:  (214) 953-9314                            Facsimile:  (212) 841-2536
Facsimile:  (214) 969-9332

         Re:      Uncommitted Amended and Restated Credit Agreement, dated to be
                  effective as of July 1, 2002 (as amended or supplemented from
                  time to time, the "Agreement"), by and among Woodward
                  Marketing, L.L.C. (the "Borrower"), the banks that from time
                  to time are parties thereto, Fortis Capital Corp., as
                  Administrative Agent, and BNP Paribas, as Documentation Agent

Ladies and Gentlemen:

                  The Borrower, acting through its duly authorized Responsible
Officer (as that term is defined in the Agreement), deliver the attached report
to the Banks and certify to each of the Banks that it is in compliance with the
Agreement. Further, the undersigned hereby certifies that the Net Position has
at no time exceeded the limitations set forth in Section 8.11 of the Agreement
and that the undersigned has no knowledge of any Defaults or Events of Default
under the Agreement which exist as of the date of this letter.

                  The undersigned also certifies that the amounts set forth on
the attached report constitute all Collateral which has been or is being used in
determining availability for an advance or letter of credit issued under the
Borrowing Base Line as of the preceding date.

                  This certificate and attached reports are submitted pursuant
to Section 7.02(b) of the Agreement. Capitalized terms used herein and in the
attached reports have the meanings specified in the Agreement.

                                              Very truly yours,

                                              WOODWARD MARKETING, L.L.C.,

                                              By:
                                                    ----------------------------
                                              Name:
                                                    ----------------------------
                                              Title:
                                                    ----------------------------


                                      E-1
<PAGE>



                           WOODWARD MARKETING, L.L.C.,
                    BORROWING BASE COLLATERAL POSITION REPORT
                                  AS OF [DATE]

                  In my capacity as Responsible Officer for Woodward Marketing,
L.L.C., I hereby certify that as of the date written above, the amounts
indicated below were accurate and true as of the date of preparation. I also
certify that the net long or short position has not exceeded the limitations set
forth in Section 8.11 of the Credit Agreement.

I.       COLLATERAL
<TABLE>
<CAPTION>
<S>                                                                 <C>          <C>             <C>
         A.   Cash Collateral                                       $______      100%            $______
         B.   Equity in Eligible Broker
              accounts                                              $______      90%             $______
         C.   Tier I Accounts                                       $______      90%             $______
         D.   Tier II Accounts                                      $______      85%             $______
         E.   Tier I Unbilled Accounts                              $______      85%             $______
         F.   Tier II Unbilled Accounts                             $______      80%             $______
         G.   Eligible Inventory                                    $______      80%             $______
         H.   Eligible Exchange Receivables                         $______      80%             $______
         I.   Undelivered Product Value                             $______      80%             $______
         J.   Realizable Unrealized Profits, up to a maximum
              amount of $50,000,000; less                           $______      70%             $______
         K.   First purchaser liability; less                       $(_____)     100%            $(_____)
         L.   Mark-to-Market amounts owed under Commodity Swap
              Contracts to BNP Paribas; less                        $(_____)     125%            $(_____)
         M.   Unrealized Mark-to-Market Losses                      $(_____)     100%            $(_____)

         TOTAL COLLATERAL                                           $
                                                                     ===========           ===    ============
         BORROWING BASE SUB-CAP                                                                  $
                                                                     -----------           ---
                                                                                                  ------------
         BORROWING BASE ADVANCE CAP                                                              $
                                                                                                  ------------

                                                                                                  ------------
                                                                                                  ------------
II.      BANK OUTSTANDINGS                                                                       $
                                                                                                  ------------
         A.   Loans from the Banks                                                               $
                                                                                                  ------------
         B.   L/C's from the Banks                                                               $
                                                                                                  ------------

                                                                                                  ------------
TOTAL OUTSTANDINGS UNDER BORROWING BASE LINE
                                                                                                  ------------
III.     EXCESS/(DEFICIT) (I-II)
                                                                                                  ------------
IV.      NET SHORT OR LONG POSITION ___________ MMBTUS                                           $
                                                                                                  ------------
</TABLE>

Attached hereto are (i) an aging report, (ii) a schedule of netted qualified
exchange balances, (iii) a schedule of qualified inventory and (iv) a schedule
of all contras applied against (i), (ii), and (iii).




                                      E-2
<PAGE>


                                        By: ____________________________________
                                                   Responsible Officer




                                      E-3
<PAGE>



                                    EXHIBIT F

                 FORM OF NET POSITION REPORT AND EXPOSURE REPORT

                                     [Date]

Fortis Capital Corp.                                  BNP Paribas
100 Crescent Court                                    787 Seventh Avenue
Suite 1777                                            New York, NY 10019
Dallas, TX 75201                                      Attention: Edward Chin
Attention: Marla Jennings                             Telephone: (212) 841-2020
Telephone:  (214) 953-9314                            Facsimile:  (212) 841-2536
Facsimile:  (214) 969-9332

         Re:      Net Positions

                  In my capacity as Responsible Officer of Woodward Marketing,
L.L.C., I hereby certify to you that as of the date written above, such
company's aggregate net positions are as follows:
                                                                      MMBTUS of
                                                                     Natural Gas
                                                                     -----------
        Long                                                            _____
        (Short)                                                         _____

        Net Position                                                    _____

                  To the best of my knowledge, these net positions have at no
time exceeded the limitations set forth in Section 8.11 of that certain
Uncommitted Amended and Restated Credit Agreement, dated to be effective as of
July 1, 2002, as amended or supplemented from time to time, by and among
Woodward Marketing, L.L.C., the banks that from time to time are parties
thereto, Fortis Capital Corp., as Administrative Agent, and BNP Paribas, as
Documentation Agent.

                  Furthermore, at no time has the sum of the following:

            (a) 25% of the Borrower's Net Position Value,   $_____________, plus

            (b) Borrower's Transportation and Storage
         Exposure,                                          $_____________, plus

            (c) Borrower's Below Index Sales Exposure,      $_____________
         exceeded 33% of Borrower's Net Working Capital,

            where,



                                      F-1
<PAGE>

                  "Net Position Value" means Borrower's Net Position valued at
$3.00/MMBTU.

                  "Below Index Sales Exposure" means (the maximum volume of gas
required to be sold at below index prices multiplied by the discount from
index), minus (the net positive value of all hedge contracts related to the
utilization of the related storage & transportation assets).

                  "Transportation and Storage Exposure" means the aggregate
contractual cost of transportation & storage contracts for a term of in excess
of 3 months.

                                          Very truly yours,

                                          WOODWARD MARKETING, L.L.C.,

                                          By: __________________________________
                                              Name: ____________________________
                                              Title: ___________________________

Date:_______





                                      F-2
<PAGE>



                                    EXHIBIT G

                             SUBORDINATION AGREEMENT

                  THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of
the _____ day of __________, 2002, by and between FORTIS CAPITAL CORP. a
Connecticut Corporation ("Administrative Agent"), as Administrative Agent for
the ratable benefit of the Banks (hereinafter defined),
___________________________ (the Subordinated Creditor") and acknowledged by
WOODWARD MARKETING, L.L.C., a Delaware limited liability company ("Borrower").

                                    RECITALS

                  WHEREAS, Administrative Agent and the Banks have made, or in
the future may make, credit accommodations available to Borrower, pursuant to
the terms and provisions of that certain Uncommitted Amended and Restated Credit
Agreement dated to be effective as of July 1, 2002 ("Credit Agreement") among
Administrative Agent, the Borrower and the banks and financial institutions from
time to time party thereto (collectively, the "Banks"); and

                  WHEREAS, Subordinated Creditor has made, or in the future may
make, credit accommodations available to Borrower; and

                  WHEREAS, in order to induce Administrative Agent to consider
making the credit accommodations described above available to Borrower in the
future, Subordinated Creditor has agreed to subordinate certain of its rights
and claims now existing or hereafter arising against Borrower to the rights and
claims of Administrative Agent now existing or hereafter arising against
Borrower, all in accordance with the terms and provisions of this Agreement; and

                  WHEREAS, the parties hereto are entering into this Agreement
in order to set forth their agreements as to payment of the Senior Indebtedness
(hereinafter defined) and the Junior Indebtedness (hereinafter defined) and
their agreements as to certain other matters including but not limited to lien
priorities.

                  NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements contained herein, the parties hereto hereby agree as
follows:

                                    AGREEMENT

                              ARTICLE I DEFINITIONS

                  As used in this Agreement, the terms defined above shall have
their respective meanings set forth above and the following terms shall have the
following meanings:

                  "Collateral" shall mean any and all property which now
constitutes or hereafter will constitute collateral or other security for
payment of the Senior Indebtedness pursuant to the Senior Documents or
otherwise.



                                      G-1
<PAGE>

                  "Default" shall have the meaning set forth in the Credit
Agreement.

                  "Distribution" by any Person shall mean (a) with respect to
any stock issued by such Person, the retirement, redemption, purchase or other
acquisition for value of any such stock, (b) the declaration or payment of any
dividend or other distribution on or with respect to any such stock, (c) any
loan or advance by such Person to, or other investment by such Person in, the
holder of any such stock, and (d) any other payment (other than ordinary
salaries to employees or advances made in the ordinary course of business to
employees for travel or other expenses incurred in the ordinary course of
business) by such Person to or for the benefit of the holder of any such stock.

                  "Event of Default" shall have the meaning set forth in the
Credit Agreement.

                  "Federal Bankruptcy Code" shall have the meaning set forth in
Article VIII of this Agreement.

                  "Junior Creditor" shall mean the Subordinated Creditor and its
successors and assigns.

                  "Junior Documents" shall mean any and all agreements,
documents and instruments evidencing, governing or executed or delivered in
connection with the Junior Indebtedness.

                  "Junior Indebtedness" shall mean any and all indebtedness,
obligations and liabilities of every kind and character of Borrower now or
hereafter owing to any party to this Agreement other than Senior Creditor,
including, without limitation, the indebtedness evidenced and to be evidenced by
the Junior Documents, whether such indebtedness, obligations and liabilities are
direct or indirect, primary or secondary, joint, several or joint and several,
fixed or contingent and whether incurred by Borrower as maker, endorser,
guarantor or otherwise.

                  "Permitted Payments shall have the meaning set forth in
Article IV of this Agreement.

                  "Person" shall mean and include an individual, a partnership,
a corporation, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a governmental
authority.

                  "Proceeds" shall have the meaning assigned to it under the
Uniform Commercial Code, shall also include "products" (as defined in the
Uniform Commercial Code), and, in any event, shall include, but not be limited
to (a) any and all proceeds of any insurance, indemnity, warranty, letter of
credit or guaranty or collateral security payable to any grantor from time to
time with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the owner of the Collateral from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
body, authority, bureau or agency (or any Person acting under color of
governmental authority) and (c) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral.



                                       G-2
<PAGE>

                  "Senior Creditor" shall mean Administrative Agent and its
successors and assigns.

                  "Senior Documents" shall mean any and all agreements,
documents and instruments evidencing, governing or executed or delivered in
connection with the Senior Indebtedness or the Senior Creditor's interests in
the Collateral, including, without limitation, the Credit Agreement.

                  "Senior Indebtedness" shall mean any and all indebtedness,
obligations and liabilities of every kind and character of Borrower now or
hereafter owing to Senior Creditor, whether such indebtedness, obligations and
liabilities are direct or indirect, primary or secondary, joint, several or
joint and several, fixed or contingent and whether incurred by Borrower as
maker, endorser, guarantor or otherwise, including, without limitation, any and
all indebtedness, obligations and liabilities of Borrower now or hereafter owing
to Senior Creditor pursuant to or evidenced by the Senior Documents.

                         ARTICLE II RIGHTS IN COLLATERAL

                  2.1 Priorities Regarding Collateral. The Junior Creditor
covenants and agrees that it will not take or hold any liens or security
interests on any property of Borrower. If for any reason, however, the Junior
Creditor does obtain a lien or security interest in the Collateral, any and
every lien and security interest in the Collateral in favor of or held for the
benefit of the Senior Creditor has and shall have priority over any lien or
security interest that Junior Creditor has or might have or acquire in the
Collateral notwithstanding any statement or provision contained in the Junior
Documents or otherwise to the contrary and irrespective of the time or order of
filing or recording of financing statements, deeds of trust, mortgages or other
notices of security interests, liens or assignments granted pursuant thereto,
and irrespective of anything contained in any filing or agreement to which any
party hereto or its respective successors and assigns may now or hereafter be a
party, and irrespective of the ordinary rules for determining priorities under
the Uniform Commercial Code or under any other law governing the relative
priorities of secured creditors.

                  2.2 Management of Collateral. Senior Creditor shall have the
exclusive right to manage, perform and enforce the terms of the Senior Documents
with respect to the Collateral, to exercise and enforce all privileges and
rights thereunder according to its discretion and the exercise of its business
judgment including, but not limited to, the exclusive right to take or retake
possession of the Collateral and to hold, prepare for sale, process, sell,
lease, dispose of, or liquidate the Collateral, pursuant to a foreclosure or
otherwise. Notwithstanding any rights or remedies available to the Junior
Creditor under applicable law or under any document or instrument evidencing,
securing or otherwise executed in connection with the incurrence of the
obligations contemplated by the Junior Documents, Junior Creditor shall not be
permitted to foreclose upon its security interest in any of the Collateral, or
to exercise similar remedies with respect thereto, so long as any of the Senior
Indebtedness shall continue to exist, and only the Senior Creditor shall have
the right to restrict or permit, or approve or disapprove, the sale, transfer or
other disposition of Collateral. Junior Creditor will not in any manner
interfere with Senior Creditor's security interests in the Collateral unless and
until Borrower has satisfied in full the Senior Indebtedness and Senior Creditor
has given Junior Creditor written notice thereof.


                                      G-3
<PAGE>

The Junior Creditor waives notice of, and agrees not to challenge the method,
manner, time, place or terms, of any disposition of the Collateral by Senior
Creditor. Accordingly, should Senior Creditor elect to exercise its rights and
remedies with respect to any of the Collateral, Senior Creditor may proceed to
do so without regard to any interest of the Junior Creditor, and the Junior
Creditor waives any claims that it may have against Senior Creditor for any
disposition of the Collateral. The Junior Creditor agrees, whether or not a
default has occurred in the payment of any indebtedness or the performance of
any other obligations to it, that any liens on and security interests in the
Collateral or any portion thereof that it might have or acquire shall
automatically be fully released ipso facto as to all indebtedness and other
obligations secured thereby owing to Junior Creditor if and when Senior Creditor
releases its lien in and security interest on such Collateral in the event of
any sale, disposition or other realization by Senior Creditor (or any agent
therefor) upon such Collateral.

                              ARTICLE III PROCEEDS

                  3.1 Distribution of Proceeds of Collateral. At any time during
which all or any part of the Senior Indebtedness remains outstanding, and
whether or not the same is then due and payable, the Proceeds of any sale,
disposition or other realization by Senior Creditor (or any agent therefor) upon
all or any part of the Collateral shall be applied first to the payment in full
of all Senior Indebtedness in such order as Senior Creditor shall determine in
its sole discretion.

                  3.2 Contingent Obligations. For purposes of distributing the
Proceeds of Collateral pursuant to this Article III, the portion of Senior
Indebtedness consisting of loans or advances not yet made by Senior Creditor to
Borrower under the Senior Documents (including, but not limited to, amounts with
respect to letters of credit outstanding and reimbursement for fees, costs and
expenses) shall be considered Senior Indebtedness then outstanding, and the
Senior Creditor shall have the right to retain, in a cash collateral account,
cash collateral equal to the amount thereof which Senior Creditor determines, in
its sole good faith discretion, may arise or exist from time to time.

                  3.3 Holding of Proceeds in Trust. Except as provided for in
Article IV of this Agreement, in the event the Junior Creditor receives Proceeds
of the Collateral, Junior Creditor shall be deemed to hold all of such Proceeds
in trust for the benefit of Senior Creditor until the proper application thereof
in accordance with Section 3.1 hereof. The Junior Creditor shall not seek to
challenge the validity, enforceability, priority or perfection of any of the
Senior Documents if the purpose or effect thereof would in any manner defeat or
delay the distribution of the Proceeds of any Collateral in the manner set forth
in Section 3.1 hereof.

                            ARTICLE IV SUBORDINATION

                  The Junior Creditor covenants and agrees that the Junior
Indebtedness, howsoever evidenced and whether now existing or hereafter
incurred, shall be subordinate and junior in right of payment, to the extent and
in the manner hereinafter set forth, to all Senior Indebtedness:

                  (a) The holder of the Senior Indebtedness shall first be
finally and irrevocably paid in cash an aggregate amount equal to the principal
thereof and termination fees, if any, interest at the time due thereon, and all
other costs, fees, expenses and/or obligations now or


                                      G-4
<PAGE>

hereafter owing thereunder, before any payment or Distribution of any character,
whether in cash, securities or other property, shall be made on account of the
Junior Indebtedness or otherwise to or for the benefit of Junior Creditor; and
any payment or Distribution of any character, whether in cash, securities or
other property, which would otherwise, but for the provisions of this Article
IV, be payable or deliverable in respect of the Junior Indebtedness or otherwise
shall be paid or delivered directly to the holder of the Senior Indebtedness (or
its duly authorized representatives), until all the Senior Indebtedness shall
have been paid in full.

                  (b) Notwithstanding the provisions of subparagraph (a) of this
Article IV, Borrower may (i) pay interest on the unpaid principal balance of the
Junior Indebtedness on a monthly basis in arrears and make both scheduled
payments and prepayments of principal on the terms and conditions set forth in
the Junior Documents and (ii) make Distributions to Atmos Energy Marketing, LLC,
a Delaware limited liability company (the "Permitted Payments"); provided,
however, that as a condition precedent to Borrower's right to make (and the
Junior Creditor's rights to receive) any and all such Permitted Payments, there
shall not have occurred or then exist a Default or Event of Default under any of
the Senior Indebtedness or any of the Senior Documents, or an event or condition
which with notice, lapse of time or the making of such payment or Distribution
would constitute a Default or Event of Default under any of the foregoing.

                  (c) The Junior Creditor agrees to promptly notify the Senior
Creditor in writing of any default or event of default on any Junior
Indebtedness or otherwise or under any of the Junior Documents and further
agrees not to exercise any right or remedy or take any enforcement action with
respect to any default or event of default on any of the Junior Indebtedness or
otherwise or under any of the Junior Documents until such time as the Senior
Indebtedness has been paid in full. Without limiting any of the foregoing, any
failure of Borrower to perform any of its obligations to Junior Creditor as a
result of any of the prohibitions, restrictions or limitations set forth in this
Agreement shall not constitute the basis for a default or event of default on
any Junior Indebtedness or under any Junior Documents.

                  (d) No reimbursement, payment, direct or indirect, or
disbursement of other property or assets of Borrower shall be made by Borrower
on account of the Junior Indebtedness or otherwise or received, accepted,
retained or applied by the Junior Creditor (except for the account and benefit
of Senior Creditor, which shall be held in trust for Senior Creditor or except
for Permitted Payments as allowed in subparagraph (b) of this Article IV) until
such time as the Senior Indebtedness has been finally and irrevocably paid in
full in cash.

                  (e) Without affecting Junior Creditor's obligations set forth
in this Agreement not to exercise any remedy as set forth in this Agreement, in
the event that the Junior Creditor receives any payment of any character,
whether in cash, securities, or other properties, payable or deliverable in
respect of the Junior Indebtedness and (i) such payment would cause an event or
condition to occur which, with notice, lapse of time, or both, would cause a
Default or an Event of Default to occur under the Senior Documents; or (ii) such
payment is made after a Default or an Event of Default has occurred under the
Senior Documents; or (iii) such payment is made at a time that the management of
Borrower knew or reasonably should have known that a Default or an Event of
Default had occurred under the Senior Documents, or that such payment could
reasonably be expected to cause a Default or an Event of Default to occur under
the Senior


                                      G-5
<PAGE>

Documents, then such cash, securities or other properties shall be held in trust
for the benefit of the holder of the Senior Indebtedness and shall be paid or
delivered to the holder of the Senior Indebtedness (or its authorized
representatives), in the proportions in which it holds same, until all the
Senior Indebtedness shall have been paid in full.

                  (f) The provisions of this Agreement are and are intended
solely for the purpose of defining the relative rights of the holder of the
Junior Indebtedness, on the one hand, and the holder of the Senior Indebtedness
on the other hand. Nothing contained in this Agreement is intended to or shall
impair, as between Borrower and its creditors other than the holder of the
Senior Indebtedness and the holder of the Junior Indebtedness, the obligations
of Borrower which are absolute and unconditional, to pay to the holder of the
Junior Indebtedness the principal thereof and interest thereon as and when the
same shall become due and payable in accordance with its terms, or is intended
to or shall affect the relative rights against Borrower of the holder of the
Senior Indebtedness.

                  (g) No right of any present or future holder of any of the
Senior Indebtedness to enforce the subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of Borrower or by any act in good faith or failure to act in good faith by
any such holder, or by any noncompliance by Borrower with the covenants,
agreements and conditions of the Junior Indebtedness, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.

                  (h) Senior Creditor shall have no obligation to preserve the
rights of the Collateral against any prior parties or to marshal any of the
Collateral for the benefit of any Person.

                    ARTICLE V BENEFIT OF AGREEMENT; AMENDMENT

                  This Agreement shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become a Senior Creditor, and
such provisions are made for the benefit of each Senior Creditor and each of
them may enforce such provisions. The Junior Creditor agrees not to assign or
transfer, at any time this Agreement remains in effect, any rights, claim or
interest of any kind in or to any Junior Indebtedness without first notifying
Senior Creditor and making such assignment expressly subject to this Agreement.
The provisions of the Junior Documents as in effect on the date hereof may not
be amended or modified in any respect without the prior written consent of
Senior Creditor.

                          ARTICLE VI FURTHER ASSURANCES
Each of the parties hereto hereby agrees to promptly execute and deliver to the
other parties hereto any and all such further instruments and documents and take
such further action as such other parties may reasonably request in order to
fully effect the purposes of this Agreement.

                   ARTICLE VII REPRESENTATIONS AND WARRANTIES

                  7.1 Senior Creditor and Junior Creditor. Each of the parties
hereto hereby represents and warrants to the other party hereto that:



                                      G-6
<PAGE>

                  (a) such party has full power, authority and legal right to
execute, deliver and perform this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement; and

                  (b) this Agreement constitutes a legal, valid and binding
obligation of such party enforceable against it in accordance with its terms
except as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting creditors rights generally and except
as enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).

                             ARTICLE VIII BANKRUPTCY

                  The Junior Creditor agrees not to commence, or to join with
any other creditor in commencing, any case under Title 11 of the United States
Code, as amended and/or superseded (the "Federal Bankruptcy Code") by or against
Borrower or any of its property without the prior written consent of Senior
Creditor. The provisions of this Agreement shall continue in full force and
effect, notwithstanding the commencement of a case under the Federal Bankruptcy
Code by or against Borrower. In furtherance of the foregoing, if Junior Creditor
receives any property of, or payments from Borrower after the commencement of
such a case on account of a secured claim which is subordinated by the terms of
this Agreement (whether as "adequate protection" payments or otherwise), Junior
Creditor shall immediately turn such property or payments over to the Senior
Creditor. To the extent that Junior Creditor has or acquires any rights under
Section 363 or Section 364 of the Federal Bankruptcy Code with respect to the
Collateral, the Junior Creditor hereby agrees not to assert such rights without
the prior written consent of the Senior Creditor. The Junior Creditor hereby
grants to the Senior Creditor the right, but Senior Creditor shall not be
obligated, to file, prove and vote claims on account of the Junior Indebtedness
in any receivership, bankruptcy, or other proceeding under the Federal
Bankruptcy Code commenced by or against Borrower.

                            ARTICLE IX MISCELLANEOUS

                  9.1 No Waiver, Cumulative Remedies. No failure to exercise,
and no delay in exercising on the part of any party hereto, any right, power or
privilege under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this Agreement
are cumulative and shall not be exclusive of any rights or remedies provided by
law.

                  9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telegraph, telecopier, or telex) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or five days after being deposited in the mail, postage prepaid, or, in the case
of telegraphic notice, when delivered to the telegraph company, or in the case
of telex notice, when sent, answer back received, addressed as set forth below
or to such address or other address as may be hereafter notified by the
respective parties hereto:




                                      G-7
<PAGE>

                To Senior Creditor:               Fortis Capital Corp.
                                                  100 Crescent Court
                                                  Suite 1777
                                                  Dallas, TX 75201
                                                  Attention: Marla Jennings
                                                  Telephone:  (214) 953-9314
                                                  Facsimile:  (214) 969-9332
                To Junior Creditor:               ______________________________
                                                  ______________________________
                                                  ______________________________
                                                  Attention: ___________________
                                                  Telephone: ___________________
                                                  Facsimile: ___________________

                  9.3 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES
HERETO AND THEIR RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.

                  9.4 Amendments and Waivers. Neither this Agreement nor any of
the terms hereof may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed by each of the
parties hereto.

                  9.5 Exculpation. Neither the Senior Creditor nor its agents
have made to the other parties hereto nor do any of them hereby or otherwise
make any representations or warranties, express or implied, nor do they assume
any liability with respect to (i) obligors under any instruments of guarantee;
(ii) the enforceability, validity, value or collectibility of the Senior
Indebtedness, any Collateral therefor, or any guarantee or security which may
have been granted to any of them in connection with the Senior Documents; or
(iii) Borrower's title or right to transfer any collateral or security. No party
hereto shall be liable to any other party hereto for any action or failure to
act or any error of judgment, negligence, or mistake or oversight whatsoever on
its part or its respective agents, officers, employees or attorneys with respect
to any transaction relating to the Collateral or this Agreement. To the maximum
extent permitted by law, except as otherwise provided herein, the Junior
Creditor waives any claim it might have against Senior Creditor with respect to,
or arising out of, the handling of the Collateral (including, without
limitation, any such claim based upon the timing or method of realizing upon
such Collateral).

                  9.6 Third Party Rights. This Agreement is solely for the
benefit of the parties hereto and their respective successors and assigns, and
no other Person shall have any right, benefit, priority or other interest under,
or because of the existence of, this Agreement.

                  9.7 Termination. This Agreement shall terminate upon the final
and indefeasible payment in full of all the Senior Indebtedness and the
termination of all of the Senior Documents.



                                      G-8
<PAGE>

                  9.8 Counterparts. This Agreement may be executed by one or
more of the parties hereto in any number of separate counterparts, each of which
shall be an original, but all of which shall constitute but one agreement.

                  9.9 Legend. All promissory notes issued in connection with the
Junior Indebtedness shall contain a legend substantially in the form of the
following:

                  "THIS PROMISSORY NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS
                  SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN
                  SUBORDINATION AGREEMENT DATED AS OF ________________, 2002
                  BETWEEN FORTIS CAPITAL CORP., AS ADMINISTRATIVE AGENT, AND
                  _________________________________ AS SUCH SUBORDINATION
                  AGREEMENT MAY BE AMENDED FROM TIME TO TIME."

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                           [EXECUTION PAGES TO FOLLOW]




                                      G-9
<PAGE>



                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their proper and duly authorized officers as of
the day and year first above written.

                                   SENIOR CREDITOR:

                                   FORTIS CAPITAL CORP., as Administrative Agent

                                   By:  __________________________________
                                   Name:  ________________________________
                                   Title:  _______________________________




                                      G-10
<PAGE>



                                   JUNIOR CREDITOR:


                                   By:  __________________________________
                                   Name:  ________________________________
                                   Title:  _______________________________



                                      G-11
<PAGE>



                  ACKNOWLEDGMENT BY WOODWARD MARKETING, L.L.C.

                  Woodward Marketing, L.L.C. hereby acknowledges receipt of a
copy of the foregoing Subordination Agreement and agrees that, except as
otherwise provided by the foregoing Subordination Agreement, it will not pay any
indebtedness subordinated by the foregoing Subordination Agreement until all the
Senior Indebtedness shall have been paid in full.

                                       WOODWARD MARKETING, L.L.C.,
                                       a Delaware limited liability company

                                       By:  __________________________________
                                       Name:  ________________________________
                                       Title:  _______________________________



                                      G-12
<PAGE>



                                    EXHIBIT H

                        FORM OF NOTICE OF DISAPPROVAL OF
                     FURTHER ADVANCES AND LETTERS OF CREDIT

Fortis Capital Corp.
100 Crescent Court
Suite 1777
Dallas, TX  75201
Attention:  Marla Jennings
Telephone:  (214) 953-9314
Facsimile:  (214) 969-9332

         Re:      Uncommitted Amended and Restated Credit Agreement, dated to be
                  effective as of July 1, 2002 (as amended or supplemented from
                  time to time, the "Agreement"), by and among Woodward
                  Marketing, L.L.C., (the "Borrower"), the banks that from time
                  to time are parties thereto, Fortis Capital Corp., as
                  Administrative Agent, and BNP Paribas, as Documentation Agent

Ladies and Gentlemen:

                  You are hereby notified that the undersigned Bank disapproves
further advances under Article II of the Agreement and further Issuances,
amendments or renewals of Letters of Credit under Article III of the Agreement.

                  The undersigned acknowledges that one or more Banks may
continue to fund advances and issue Letters of Credit under the Agreement in
which case the Conversion to Reduced Funding Banks Date shall occur. Capitalized
terms used herein and in the attached reports have the meanings specified in the
Agreement.

                                               Very truly yours,

                                               NAME OF BANK

                                               By:  ___________________________
                                               Name: _________________________
                                               Title: __________________________
c/c      Woodward Marketing, L.L.C.
         All other Banks



                                       H-1
<PAGE>




                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page

                                                  ARTICLE I

                                                 DEFINITIONS

<S>                                                                                                             <C>
1.01     Certain Defined Terms.  The following terms have the following meanings:.............................   2
1.02     Other Interpretive Provisions........................................................................  25
1.03     Accounting Principles................................................................................  26


                                                  ARTICLE II

                                                 THE CREDITS

2.01     Amounts and Terms of Uncommitted Line................................................................  26
2.02     Loan Accounts........................................................................................  27
2.03     Procedure for Borrowing..............................................................................  28
2.04     Conversion and Continuation Elections................................................................  29
2.05     Optional Prepayments  The Borrower may, at any time or from time to time, upon the Borrower's
         irrevocable written notice to the Administrative Agent received prior to 1:00 p.m.  (New York City
         time) on the date of prepayment, prepay Loans in whole or in part without premium except any amounts
         due by Borrower pursuant to Article IV.  The Administrative Agent will promptly notify each Bank of
         its receipt of any such prepayment, and of such Bank's Pro Rata Share of such prepayment.............  30
2.06     Mandatory Prepayments of Loans; Mandatory Commitment Reductions.  If on any date the Effective
         Amount of L/C Obligations exceeds the L/C Cap, the Borrower shall Cash Collateralize on such date
         the outstanding Letters of Credit in an amount equal to the excess above any such cap.  If on any
         date after giving effect to any Cash Collateralization made on such date pursuant to the preceding
         sentence, the Effective Amount of all Revolving Loans then outstanding plus the Effective Amount of
         all L/C Obligations exceeds the lesser of (a) the Collateral Position or (b) the total Uncommitted
         Line, or if the Effective Amount of all Revolving Loans under the Borrowing Base Line then
         outstanding, plus the Effective Amount of all L/C Obligations under such Line exceed the Borrowing
         Base Advance Cap, the Borrower shall immediately, and without notice or demand, prepay the
         outstanding principal amount of the Revolving Loans and L/C Advances by an amount equal to the
         applicable excess....................................................................................  30
2.07     Repayment.  The Borrower shall repay the principal amount of each Revolving Loan to the
         Administrative Agent on behalf of the Banks, on the Advance Maturity Date for such Loan. All
         amounts owing a Swap Bank under any Swap Contract, to the extent such amounts have not been repaid
         from the proceeds of a Revolving Loan, shall be paid on demand, or if no demand is made, on the
         first (1st) Business Day after the Borrower receives notice that such amount was advanced by or
         becomes owing to a Swap Bank.........................................................................  30
2.08     Interest.............................................................................................  30
</TABLE>

                                         -i-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
2.09     Fees.  In addition to certain fees described in Section 3.08, the Borrower shall pay to the
         Administrative Agent, for the account of each Bank, fees in accordance with a separate letter
         agreement between the Agents, the Banks and the Borrower. The Borrower shall also pay to the
         Agents, for their own accounts, fees in accordance with a separate letter agreement between the
         Agents and the Borrower...............................................................................  32
2.10     Computation of Fees and Interest......................................................................  32
2.11     Payments by the Borrower..............................................................................  32
2.12     Payments by the Banks to the Administrative Agent.  If and to the extent any Bank shall not have
         made its full amount available to the Administrative Agent in immediately available funds and the
         Administrative Agent in such circumstances has made available to the Borrower such amount, that
         Bank shall on the Business Day following such Borrowing Date make such amount available to the
         Administrative Agent, together with interest at the Federal Funds Rate for each day during such
         period. A notice of the Administrative Agent submitted to any Bank with respect to amounts owing
         under this Section 2.12 shall be conclusive, absent manifest error. If such amount is so made
         available, such payment to the Administrative Agent shall constitute such Bank's Loan on the date
         of Borrowing for all purposes of this Agreement. If such amount is not made available to the
         Administrative Agent on the Business Day following the Borrowing Date, the Administrative Agent
         will notify the Borrower of such failure to fund and, upon demand by the Administrative Agent, the
         Borrower shall pay such amount to the Administrative Agent for the Administrative Agent's account,
         together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per
         annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing........  33
2.13     Sharing of Payments, Etc.  If, other than as expressly provided elsewhere herein, any Bank shall
         obtain on account of the Loans made by it any payment (whether voluntary, involuntary, through the
         exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share or Adjusted Pro
         Rata Share, as the case may be at such time (other than payments to BNP Paribas with respect to
         advances made in excess of the Borrowing Base Advance Cap as a result of payment under a Swap
         Contract), such Bank shall immediately (a) notify the Administrative Agent of such fact, and (b)
         purchase from the other Banks such participations in the Loans made by them as shall be necessary
         to cause such purchasing Bank to share the excess payment pro rata with each of them; provided,
         however, that if all or any portion of such excess payment is thereafter recovered from the
         purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to
         the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying
         Bank's ratable share (according to the proportion of (i) the amount of such paying Bank's required
         repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other
         amount paid or payable by the purchasing Bank in respect of the total amount so recovered.  The
         Borrower agrees that any Bank so purchasing a participation from another Bank may, to the fullest
         extent permitted by law, exercise all its rights of payment (including the right of set-off, but
         subject to Section 11.09) with respect to such participation as fully as if such Bank were the
         direct creditor of the Borrower in the amount of such participation. the Administrative Agent will
         keep records (which shall be conclusive and binding in the absence of manifest error) of
         participations purchased under this Section and will in each case notify the Banks following any
         such purchases or repayments..........................................................................  33
</TABLE>


                                      -ii-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
2.14     The Election of Approving Banks to Continue Funding.  If one or more Banks (the "Declining Bank" or
         "Declining Banks") provides the Administrative Agent with, and the Administrative Agent has
         actually received, a written notice in the form of Exhibit H for reasons other than a Default and
         the other Bank or Banks do approve further Revolving Loans (including the conversion and extension
         of such Revolving Loans) or the further issuances of, extensions of, the automatic renewal of or
         amendments to Letters of Credit, the Administrative Agent shall notify the Banks by 6:00 p.m. (New
         York City time) that same day. If the Bank or Banks which are not the Declining Banks desire, they
         may (on a pro rata basis among the Banks that have elected to continue funding) make the full or
         partial amount of such requested Revolving Loan or issue or amend the requested Letter of Credit
         irrespective of the Declining Banks' disapproval (in such case, the Banks that elect to continue
         funding shall be referred to as the "Approving Banks"). In such event, from such date (the
         "Conversion to Reduced Funding Banks Date") forward (a) all subsequent Revolving Loans and
         Issuances of Letters of Credit or Amendments to Letters of Credit that increase the face amount of
         a Letter of Credit or extend the term of a Letter of Credit shall be made unilaterally by the
         Approving Banks and no Letter of Credit thereafter Issued shall be participated in by the Declining
         Banks, (b) all Banks' interests in the Collateral and loan management decisions shall be pro-rata
         based on each Bank's total Effective Amount of Revolving Loans, plus the Effective Amounts of such
         Bank's L/C Obligations from time to time, and (c) the Approving Banks' Pro Rata Share of the
         Uncommitted Line Portion shall be increased on the basis of each such advance and Issuance of a
         Letter of Credit made by such approving Bank..........................................................  33
2.15     Payments from Guarantor and Liquidation of Collateral.  Notwithstanding anything to the contrary
         contained herein, in the event repayment is made to the Banks by Guarantor or pursuant to a
         liquidation of Collateral, such repayment shall be shared by the Banks on the basis of each Bank's
         then existing Adjusted Pro Rata Share rather than each Bank's Pro Rata Share..........................  34


                                                ARTICLE III

                                           THE LETTERS OF CREDIT

3.01     The Letter of Credit Lines............................................................................  35
3.02     Issuance, Amendment and Renewal of Letters of Credit..................................................  36
3.03     Risk Participations, Drawings, Reducing Letters of Credit and Reimbursements..........................  39
3.04     Repayment of Participations...........................................................................  41
3.05     Role of the Issuing Banks.............................................................................  41
3.06     Obligations Absolute.  The Obligations of the Borrower under this Agreement and any L/C-Related
         Document to reimburse an Issuing Bank for a drawing under a Letter of Credit or for a Reducing L/C
         Borrowing, and to repay any L/C Borrowing and any drawing under a Letter of Credit or Reducing L/C
         Borrowing converted into Revolving Loans, shall be unconditional and irrevocable, and shall be paid
         strictly in accordance with the terms of this Agreement and each such other L/C-Related Document
         under all circumstances, including the following:.....................................................  42
</TABLE>


                                     -iii-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
3.07     Cash Collateral Pledge.  Upon the request of the Administrative Agent, (i) if an Issuing Bank has
         honored any full or partial drawing request on any Letter of Credit and such drawing has resulted
         in an L/C Borrowing hereunder, or (ii) if, as of the Expiration Date, any Letters of Credit may for
         any reason remain outstanding and partially or wholly undrawn, the Borrower shall immediately Cash
         Collateralize the L/C Obligations in an amount equal to such L/C Obligations.  Upon the occurrence
         of the circumstances described in Section 2.06 requiring the Borrower to Cash Collateralize Letters
         of Credit, then, the Borrower shall immediately Cash Collateralize the L/C Obligations in an amount
         equal to the applicable excess........................................................................  43
3.08     Letter of Credit Fees.................................................................................  44
3.09     Applicability of Uniform Customs and Practice and ISP98.  Unless otherwise expressly agreed by an
         Issuing Bank and the Borrower when a Letter of Credit is Issued (including any such agreement
         applicable to an Existing Letter of Credit), the rules of the Uniform Customs and Practice for
         Documentary Credits, as most recently published by the International Chamber of Commerce (the
         "ICC") at the time of Issuance (including the ICC decision published by the Commission on Banking
         Technique and Practice on April 6, 1998 regarding the European single currency (euro)) shall apply
         to each standby Letter of Credit and documentary Letter of Credit. If Borrower desires to use the
         rules of the "International Standby Practices 1998" published by the Institute of International
         Banking Law & Practice (or such later version thereof as may be in effect at the time of Issuance)
         for standby Letters of Credit, Borrower shall request and note this explicitly on the standby
         Letter of Credit application..........................................................................  44
3.10     Existing Letters of Credit.  Borrower hereby acknowledges and agrees that the Existing Letters of
         Credit listed on Schedule 3.10 hereto shall be deemed to be Letters of Credit Issued under this
         Agreement for all purposes............................................................................  44


                                                 ARTICLE IV

                                   TAXES, YIELD PROTECTION AND ILLEGALITY

4.01     Taxes...................................................................................................  44
4.02     Illegality..............................................................................................  45
4.03     Increased Costs and Reduction of Return.................................................................  46
4.04     Funding Losses.  The Borrower shall reimburse each Bank and hold each Bank harmless from any loss or
         expense which the Bank may sustain or incur as a consequence of:........................................  47
4.05     Inability to Determine Rates.  If the Administrative Agent and the Banks determine that for any
         reason adequate and reasonable means do not exist for determining the Offshore Rate for any
         requested Interest Period with respect to a proposed Offshore Rate Loan, or that the Offshore Rate
         applicable pursuant to Subsection 2.08(a) for any requested Interest Period with respect to a
         proposed Offshore Rate Loan does not adequately and fairly reflect the cost to the Banks of funding
         such Loan, the Administrative Agent will promptly so notify the Borrower and each Bank. Thereafter,
         the obligation of the Banks to make or maintain Offshore Rate Loans, as the case may be, hereunder
         shall be suspended until the Administrative Agent upon the instruction of the Banks revokes such
         notice in writing. Upon receipt of such notice, the Borrower may revoke any Notice of Borrowing or
         Notice of Conversion/Continuation then submitted by it. If the Borrower does not revoke such
         Notice, the Banks shall make, convert or continue the Loans, as proposed by the Borrower, in the
         amount specified in the applicable notice submitted by the Borrower, but such Loans shall be made,
         converted or continued as Base Rate Loans instead of Offshore Rate Loans..............................  47
</TABLE>


                                       -iv-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
4.06     Reserves on Offshore Rate Loans.  The Borrower shall pay to each Bank, as long as such Bank shall
         be required under regulations of the FRB to maintain reserves with respect to liabilities or assets
         consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency
         liabilities"), additional costs on the unpaid principal amount of each Offshore Rate Loan equal to
         the actual costs of such reserves allocated to such Loan by the Bank (as determined by the Bank in
         good faith, which determination shall be conclusive), payable on each date on which interest is
         payable on such Loan, provided, however, that the Borrower shall have received at least 15 days'
         prior written notice (with a copy to the Administrative Agent) of such additional interest from the
         Bank.  If a Bank fails to give notice 15 days prior to the relevant Interest Payment Date, such
         additional interest shall be payable 15 days from receipt of such notice..............................  48
4.07     Certificates of Banks.  Together with any demand by a Bank for reimbursement or compensation
         pursuant to this Article IV, such Bank shall provide to the Borrower (with a copy to the
         Administrative Agent) a certificate signed by an authorized officer of the Bank (a) describing the
         event giving rise to such demand, and (b) showing the method and detailed calculations (which may
         include any reasonable averaging, attribution or allocation procedures) used by the Bank to
         determine the amount demanded by the Bank.  In calculating the amount of costs, expenses, capital
         requirements or rate of reduction allocable to the Borrower, such Bank shall use such reasonable
         methods as such Bank shall determine. Such calculation and certification shall be conclusive and
         binding on the Borrower in the absence of manifest error..............................................  48
4.08     Substitution of Banks.  Upon the receipt by the Borrower from any Bank (an "Affected Bank") of a
         claim for compensation under Section 4.03, the Borrower may: (a) request the Affected Bank to use
         its best efforts to obtain a replacement bank or financial institution satisfactory to the Borrower
         to acquire and assume all or a ratable part of all of such Affected Bank's Loans and Uncommitted
         Line Portion (a "Replacement Bank"); (b) request one or more of the other Banks to acquire and
         assume all or part of such Affected Bank's Loans and Uncommitted Line Portion; or (c) designate a
         Replacement Bank.  Any such designation of a Replacement Bank under clause (a) or (c) shall be
         subject to the prior written consent of Agents (which consent shall not be unreasonably withheld).....  48
4.09     Survival.  The agreements and Obligations of the Borrower in this Article IV shall survive the
         payment  all other Obligations........................................................................  48


                                                 ARTICLE V

                                               CLOSING ITEMS

5.01     Matters to be Satisfied Upon Execution of Agreement.  At the time the Banks execute this Agreement,
         unless otherwise waived by the Banks, the Documentation Agent shall have received all of the
         following, in form and substance satisfactory to the Documentation Agent, the Administrative Agent,
         and each Bank, and in sufficient copies for each Bank:................................................  48
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                                                 ARTICLE VI

                                       REPRESENTATIONS AND WARRANTIES

6.01     Existence and Power.  Each of the Borrower, its Subsidiaries and Guarantor:...........................  50
6.02     Authorization; No Contravention.  The execution, delivery and performance by the Borrower and
         Guarantor of each Loan Document to which such Person is party, have been duly authorized, and do
         not and will not:.....................................................................................  50
6.03     Governmental Authorization.  No approval, consent, exemption, authorization, or other action by, or
         notice to, or filing with, any Governmental Authority is necessary or required in connection with the
         execution, delivery or performance by, or enforcement against, the Borrower or any of its
         Subsidiaries or Guarantor, as applicable, of any Loan Document........................................  51
6.04     Binding Effect.  This Agreement and each other Loan Document to which the Borrower or any of its
         Subsidiaries or Guarantor is a party constitute the legal, valid and binding obligations of such
         Person to the extent it is a party thereto, enforceable against such Person in accordance with
         their respective terms, except as enforceability may be limited by applicable bankruptcy,
         insolvency, or similar laws affecting the enforcement of creditors' rights generally or by general
         principles of equity..................................................................................  51
6.05     Litigation.  Except as specifically disclosed in Schedule 6.05, there are no actions, suits or
         proceedings, pending, or to the knowledge of the Borrower, or Guarantor threatened at law, in
         equity, in arbitration or before any Governmental Authority, against the Borrower, or any of its
         Subsidiaries or Guarantor or any of their respective properties which purport to affect or pertain
         to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or
         thereby; and no injunction, writ, temporary restraining order or any order of any nature has been
         issued by any court or other Governmental Authority purporting to enjoin or restrain the execution,
         delivery or performance of this Agreement or any other Loan Document, or directing that the
         transactions provided for herein or therein not be consummated as herein or therein provided..........  51
6.06     No Default.  No Default or Event of Default exists or would result from the incurring of any
         Obligations by the Borrower.  As of the Closing Date, neither the Borrower nor any of its
         Subsidiaries are in default under or with respect to any Contractual Obligation in any respect
         which, individually or together with all such defaults, could reasonably be expected to have a
         Material Adverse Effect...............................................................................  51
6.07     ERISA Compliance.  Except as specifically disclosed in Schedule 6.07:.................................  51
6.08     Use of Proceeds; Margin Regulations.  The proceeds of the Loans are to be used solely for the
         purposes set forth in and permitted by Section 7.12.  Neither the Borrower nor any Subsidiary is
         generally engaged in the business of purchasing or selling Margin Stock or extending credit for the
         purpose of purchasing or carrying Margin Stock........................................................  52
6.09     Title to Properties.  The Borrower and each of its Subsidiaries have good record and marketable
         title in fee simple to, or valid leasehold interests in, all real property necessary or used in the
         ordinary conduct of their respective businesses, except for such defects in title as could not,
         individually or in the aggregate, have a Material Adverse Effect.  As of the Closing Date, the
         property of the Borrower and its Subsidiaries is subject to no Liens, other than Permitted Liens......  52
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6.10     Taxes.  The Borrower and its Subsidiaries have filed all Federal and other material tax returns and
         reports required to be filed, and have paid all Federal and other material taxes, assessments, fees
         and other governmental charges shown thereon to be due and payable, and have paid all material
         taxes, assessments, fees and other governmental charges levied or imposed upon them or their
         properties, income or assets as due and payable, except those which are being contested in good
         faith by appropriate proceedings and for which adequate reserves have been provided in accordance
         with GAAP.  There is no proposed tax assessment against the Borrower or any of its Subsidiaries
         that would, if made, have a Material Adverse Effect...................................................  52
6.11     Financial Condition...................................................................................  52
6.12     Environmental Matters.  The Borrower conducts in the ordinary course of business a review of the
         effect of existing Environmental Laws and existing Environmental Claims on its business, operations
         and properties, and as a result thereof the Borrower has reasonably concluded that, except as
         previously specifically disclosed in Schedule 6.12, such Environmental Laws and Environmental
         Claims could not, individually or in the aggregate, reasonably be expected to have a Material
         Adverse Effect........................................................................................  53
6.13     Regulated Entities.  Neither the Borrower, nor any Person controlling the Borrower, or any of its
         Subsidiaries, is an "Investment Company" within the meaning of the Investment Company Act of 1940.
         The Borrower is not subject to regulation under the Public Utility Holding Company Act of 1935, the
         Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other
         Federal or state statute or regulation limiting its ability to incur Indebtedness.....................  53
6.14     No Burdensome Restrictions.  Neither the Borrower nor any of its Subsidiaries is a party to or
         bound by any Contractual Obligation, or subject to any restriction in any Organization Document, or
         any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect..........  53
6.15     Copyrights, Patents, Trademarks and Licenses, Etc.  To the Borrower's best knowledge, the Borrower
         or its Subsidiaries own or are licensed or otherwise have the right to use all of the patents,
         trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and
         other rights that are reasonably necessary for the operation of their respective businesses,
         without conflict with the rights of any other Person.  To the knowledge of the Borrower, no slogan
         or other advertising device, product, process, method, substance, part or other material now
         employed, or now contemplated to be employed, by the Borrower or any Subsidiary infringes upon any
         rights held by any other Person.  Except as specifically disclosed in Schedule 6.05, no claim or
         litigation regarding any of the foregoing is pending or threatened, and no patent, invention,
         device, application, principle or any statute, law, rule, regulation, standard or code is pending
         or, to the knowledge of the Borrower, proposed........................................................  53
6.16     Subsidiaries.  The Borrower has no Subsidiaries other than those specifically disclosed in part (a)
         of Schedule 6.16 hereto and have no equity investments in any other corporation or entity other
         than those specifically disclosed in part (b) of Schedule 6.16........................................  53
6.17     Insurance.  Except as specifically disclosed in Schedule 6.17, the properties of the Borrower and
         its Subsidiaries are insured with financially sound and reputable insurance companies not
         Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are
         customarily carried by companies engaged in similar businesses and owning similar properties in
         localities where the Borrower or such Subsidiary operates.............................................  53
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6.18     Full Disclosure.  To the Borrower's best knowledge, none of the representations or warranties made
         by the Borrower or any of its Subsidiaries in the Loan Documents as of the date such
         representations and warranties are made or deemed made, and none of the statements contained in any
         exhibit, report, statement or certificate furnished by or on behalf of the Borrower or any of its
         Subsidiaries in connection with the Loan Documents (including the offering and disclosure materials
         delivered by or on behalf of the Borrower to the Banks prior to the Closing Date), contains any
         untrue statement of a material fact or omits any material fact required to be stated therein or
         necessary to make the statements made therein, in light of the circumstances under which they are
         made, not misleading as of the time when made or delivered............................................  54


                                                ARTICLE VII

                                           AFFIRMATIVE COVENANTS

7.01     Financial Statements.  The Borrower shall deliver to the Banks, in form and detail satisfactory to
         the Banks:............................................................................................  54
7.02     Certificates; Other Information.  The Borrower shall furnish to the Agents and the Banks:.............  55
7.03     Notices.  The Borrower shall promptly notify the Agents and each Bank:................................  55
7.04     Preservation of Corporate Existence, Etc.  The Borrower shall, and shall cause each of its
         Subsidiaries to:......................................................................................  56
7.05     Maintenance of Property.  The Borrower shall maintain, and shall cause each of its Subsidiaries to
         maintain, and preserve all its property which is used or useful in its business in good working
         order and condition, ordinary wear and tear excepted and make all necessary repairs thereto and
         renewals and replacements thereof except in any case where the failure to do so could not
         reasonably be expected to have a Material Adverse Effect..............................................  57
7.06     Insurance.  The Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, with
         financially sound and reputable independent insurers, insurance with respect to its properties and
         business against loss or damage of the kinds customarily insured against by Persons engaged in the
         same or similar business, of such types and in such amounts as are customarily carried under
         similar circumstances by such other Persons, including, without limitation, marine cargo insurance,
         if appropriate. The Administrative Agent, for the benefit of the Banks, shall be named as an
         additional insured and loss payee under all such polices, without liability for premiums or club
         calls.................................................................................................  57
7.07     Payment of Obligations.  The Borrower shall, and shall cause each of its Subsidiaries to, pay and
         discharge as the same shall become due and payable, all their respective obligations and
         liabilities, including:...............................................................................  57
7.08     Compliance with Laws.  The Borrower shall comply, and shall cause each of its Subsidiaries to comply,
         with all Requirements of Law of any Governmental Authority having jurisdiction over it or its
         business (including the Federal Fair Labor Standards Act).............................................  57
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7.09     Compliance with ERISA.  The Borrower shall, and shall cause each of its ERISA Affiliates to: (a)
         maintain each Plan in compliance with the applicable provisions of ERISA, the Code and other
         federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
         maintain such qualification; and (c) make all required contributions to any Plan subject to Section
         412 of the Code.......................................................................................  57
7.10     Inspection of Property and Books and Records.  The Borrower shall maintain and shall cause each of
         its Subsidiaries to maintain proper books of record and account, in which full, true and correct
         entries in conformity with GAAP consistently applied shall be made of all financial transactions
         and matters involving the assets and business of the Borrower and such Subsidiary.  The Borrower
         shall permit, and shall cause each of its Subsidiaries to permit representatives and independent
         contractors of either of the Agents or any Bank to visit and inspect any of their respective
         properties, to examine their respective corporate, financial and operating records, and make copies
         thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with
         their respective directors, officers, and independent public accountants, all at the expense of the
         Agent or Bank causing such inspection and at such reasonable times during normal business hours and
         as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided,
         however, that when an Event of Default exists either of the Agents or any Bank may do any of the
         foregoing at the expense of the Borrower at any time during normal business hours and without
         advance notice........................................................................................  57
7.11     Environmental Laws.  The Borrower shall, and shall cause each of its Subsidiaries to, conduct its
         operations and keep and maintain its property in compliance in all material respects with all
         Environmental Laws....................................................................................  58
7.12     Use of Proceeds.  The Borrower shall use the proceeds of the Loans for the uses described in this
         Agreement and not in contravention of any Requirement of Law or of any Loan Document restrictions on
         use of loan proceeds..................................................................................  58
7.13     Collateral Position Audit.  At such times as Agents deem advisable, the Borrower will allow Agents
         or an entity satisfactory to Agents to conduct a thorough examination of the Collateral, and the
         Borrower will fully cooperate in such examination.  The Borrower will pay the costs and expenses of
         one such examination each calendar year...............................................................  58
7.14     Lock Box.  The Borrower shall (i) maintain a lock box with Bank of America, N.A. (the "Lock Box")
         and shall notify in writing and otherwise take such reasonable steps to ensure that all Account
         Debtors under any of its Accounts forward payment in the form of cash, checks, drafts or other
         similar items of payment directly to such Lock Box and shall provide Banks with reasonable evidence
         of such notification, and (ii) deposit and cause its Subsidiaries to deposit or cause to be
         deposited all payments under such Accounts to the Lock Box.  In the event that any Account Debtor
         does make any payment directly to the Borrower, the Borrower shall promptly deposit such amounts
         into the Lock Box.  The Borrower and each Bank acknowledge and agree that prior to the Activation
         Period, the Borrower may operate and transact business through the Lock Box account in its normal
         fashion, including making withdrawals from the Lock Box account. The Borrower and each Bank further
         acknowledge and agree that during the Activation Period, Bank of America, N.A. shall transfer all
         collected and available balances in the Lock Box to the Bank Blocked Account pursuant to the Three
         Party Agreement.  The Borrower and each Bank acknowledge and agree that the Bank Blocked Account is
         owned by the Collateral Agent for the benefit of the Agents, the Issuing Banks and the Banks and
         the Lock Box is under the dominion and control of the Collateral Agent. The Collateral Agent at any
         time may apply amounts contained in the Bank Blocked Account toward satisfaction of the Obligations...  58
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7.15     Financial Covenants.  The Borrower will, at all times, observe the following financial covenants:.....  58
7.16     Separate Operations.  The Borrower will at all times maintain and observe policies and procedures to
         insure that its operations are separate and distinct from the operations of Borrower's Affiliates.....  59


                                                ARTICLE VIII

                                             NEGATIVE COVENANTS

8.01     Limitation on Liens. The Borrower shall not, and shall not suffer or permit any Subsidiary to,
         directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
         respect to any part of its property, whether now owned or hereafter acquired, other than the
         following ("Permitted Liens"):........................................................................  60
8.02     Consolidations and Mergers.  The Borrower shall not, nor shall it suffer or permit any of its
         Subsidiaries to, merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of
         (whether in one transaction or in a series of transactions) all or substantially all of its assets
         (whether now owned or hereafter acquired) to or in favor of any Person................................  61
8.03     Limitation on Indebtedness.  The Borrower shall not suffer or permit any of its Subsidiaries to,
         create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable
         with respect to, any Indebtedness, except:............................................................  61
8.04     Transactions with Affiliates.  The Borrower shall not, and shall not suffer or permit any of its
         Subsidiaries to, enter into any transaction with any Affiliate of the Borrower, except upon fair
         and reasonable terms no less favorable to the Borrower or such Subsidiary than would obtain in a
         comparable arm's-length transaction with a Person not an Affiliate of the Borrower or such
         Subsidiary.  Without limiting the foregoing, all sales of Product by Borrower to, and purchases of
         Product by Borrower from, any Affiliate of Borrower shall be at the market price on the day of
         sale, except for transactions made in connection with Borrower's Index Sales Strategies which
         strategies shall have been approved by the Banks prior to any such transactions.......................  61
8.05     Use of Proceeds.  The Borrower shall not suffer or permit any of its Subsidiaries to, use any
         portion of the Loan proceeds or any Letter of Credit, directly or indirectly, (a) to purchase or
         carry Margin Stock, (b) to repay or otherwise refinance indebtedness of the Borrower or others
         incurred to purchase or carry Margin Stock, (c) to extend credit for the purpose of purchasing or
         carrying any Margin Stock, or (d) to acquire any security in any transaction that is subject to
         Section 13 or 14 of the Exchange Act..................................................................  62
8.06     Contingent Obligations.  The Borrower shall not suffer or permit any of its Subsidiaries to, create,
         incur, assume or suffer to exist any Contingent Obligations except:...................................  62
8.07     Restricted Payments.  The Borrower shall not suffer or permit any of its Subsidiaries to, directly
         or indirectly declare or make, any distribution of income or capital on account of any membership
         interest of the Borrower now or hereafter in existence ("Distributions"), or set aside or otherwise
         deposit or invest any sums for such purpose, except Distributions to its members, so long as no
         Default or Event of Default has occurred or would result therefrom....................................  62
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8.08     ERISA.  The Borrower shall not, nor suffer or permit any of its ERISA Affiliates to:  (a) engage in
         a prohibited transaction or violation of the fiduciary responsibility rules with respect to any
         Plan; or (b) engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA........  62
8.09     Change in Business.  The Borrower shall not, nor suffer or permit any of its Subsidiaries to,
         engage in any line of business different from the line of business carried on by the Borrower and
         its Subsidiaries on the date hereof...................................................................  62
8.10     Accounting Changes.  The Borrower shall not, nor suffer or permit any of its Subsidiaries to, make
         any significant change in accounting treatment or reporting practices, except as required by GAAP,
         or change the fiscal year of the Borrower or of any Subsidiary........................................  62
8.11     Net Position.  At no time will the Borrower allow its Net Position to exceed 5,000,000 MMBTUS of
         natural gas.  At no time will the Borrower allow the sum of the following:  (a) 25% of the
         Borrower's Net Position Value, plus (b) Borrower's Transportation and Storage Exposure, plus (c)
         Borrower's Below Index Sales Exposure, to exceed 33% of Borrower's Net Working Capital at such
         time, where,..........................................................................................  62
8.12     Loans and Investments.  The Borrower shall not purchase or acquire, or suffer or permit any
         Subsidiary to purchase or acquire, or make any commitment therefor, any capital stock, equity
         interest, or any obligations or other securities of, or any interest in, any Person, or make or
         commit to make any Acquisitions, or make or commit to make any advance, loan, extension of credit
         or capital contribution to or any other investment in, any Person including any Affiliate of
         Borrower, except for:.................................................................................  63
8.13     Change of Management.  Borrower shall not permit any Change of Management.  For purposes of this
         Section 8.13, "Change of Management" shall mean that J. D. Woodward has ceased to act in his
         capacity as chief executive officer of the Borrower...................................................  63
8.14     Deposit Accounts.  Borrower shall not maintain any deposit accounts with a bank or financial
         institution other than the Bank Blocked Account with the Collateral Agent, except that the Borrower
         may maintain the Lock Box with Bank of America, N.A. which shall be pledged to the Administrative
         Agent, for the benefit of the Agents, the Issuing Banks and the Banks pursuant to the Three Party
         Agreement.............................................................................................  63
8.15     Risk Management Policy.  The Borrower will not materially change its risk management policies
         without the prior written consent of the Administrative Agent and the Banks.  Borrower agrees that
         upon request by Agents, from time to time, the Borrower and the Banks will review and evaluate
         Borrower's risk management policies...................................................................  63

8.16     Swap-Related Standby Letters of Credit. The Borrower shall not permit outstanding Swap-Related
         Standby Letters of Credit plus any net Mark-to-Market values of amounts owed to Swap Banks by the
         Borrower under Swap Contracts to exceed $50,000,000...................................................  63


                                                 ARTICLE IX

                                             EVENTS OF DEFAULT

9.01     Event of Default.  Any of the following shall constitute an "Event of Default":.......................  64
9.02     Remedies.  If any Event of Default occurs, the Administrative Agent may and shall, at the request
         of the Required Banks:................................................................................  66
9.03     Rights Not Exclusive.  The rights provided for in this Agreement and the other Loan Documents are
         cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by
         law or in equity, or under any other instrument, document or agreement now existing or hereafter
         arising...............................................................................................  66
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                                                 ARTICLE X

                                                   AGENTS

10.01    Appointment and Authorization.........................................................................  66
10.02    Delegation of Duties.  Each of the Agents may execute any of its duties under this Agreement or any
         other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to
         advice of counsel concerning all matters pertaining to such duties.  Neither of the Agents shall
         not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it
         selects with reasonable care..........................................................................  67
10.03    Liability of Agents.  None of Agent-Related Persons shall (a) be liable for any action taken or
         omitted to be taken by any of them under or in connection with this Agreement or any other Loan
         Document or the transactions contemplated hereby (except for its own gross negligence or willful
         misconduct), or (b) be responsible in any manner to any of the Banks for any recital, statement,
         representation or warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower, or
         any officer thereof, contained in this Agreement or in any other Loan Document, or in any
         certificate, report, statement or other document referred to or provided for in, or received by
         Agents under or in connection with, this Agreement or any other Loan Document, or for the value of
         or title to any Collateral, or the validity, effectiveness, genuineness, enforceability or
         sufficiency of this Agreement or any other Loan Document, or for any failure of the Borrower or any
         other party to any Loan Document to perform its obligations hereunder or thereunder.  No
         Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the
         observance or performance of any of the agreements contained in, or conditions of, this Agreement
         or any other Loan Document, or to inspect the properties, books or records of the Borrower or any
         of the Borrower's Subsidiaries or Affiliates..........................................................  67
10.04    Reliance by Agents....................................................................................  67
10.05    Notice of Default.  Agents shall not be deemed to have knowledge or notice of the occurrence of any
         Default or Event of Default, except with respect to defaults in the payment of principal, interest
         and fees required to be paid to the Administrative Agent for the account of the Banks, unless the
         Administrative Agent shall have received written notice from a Bank or the Borrower referring to
         this Agreement, describing such Default or Event of Default and stating that such notice is a
         "notice of default." The Administrative Agent will notify the BNP Paribas, as an agent, and the
         Banks of its receipt of any such notice. The Agents shall take such action with respect to such
         Default or Event of Default as may be requested by all of the Banks or the Required Banks, as
         applicable, in accordance with Article IX; provided, however, that unless and until the
         Administrative Agent has received any such request, the Agents may (but shall not be obligated to)
         take such action, or refrain from taking such action, with respect to such Default or Event of
         Default as it shall deem advisable or in the best interest of the Banks...............................  68
10.06    Credit Decision.  Each Bank acknowledges that none of Agent-Related Persons has made any
         representation or warranty to it, and that no act by Agents hereinafter taken, including any review
         of the affairs of the Borrower and its Subsidiaries, shall be deemed to constitute any
         representation or warranty by any Agent-Related Person to any Bank.  Each Bank represents to the
         Agents that it has, independently and without reliance upon any Agent-Related Person and based on
         such documents and information as it has deemed appropriate, made its own appraisal of and
         investigation into the business, prospects, operations, property, financial and other condition and
         creditworthiness of the Borrower and its Subsidiaries, the value of and title to any Collateral,
         and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made
         its own decision to enter into this Agreement and to extend credit to the Borrower hereunder.  Each
         Bank also represents that it will, independently and without reliance upon any Agent-Related Person
         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
         Agreement and the other Loan Documents, and to make such investigations as it deems necessary to
         inform itself as to the business, prospects, operations, property, financial and other condition
         and creditworthiness of the Borrower.  Except for notices, reports and other documents expressly
         herein required to be furnished to the Banks by the Agents, the Agents shall not have any duty or
         responsibility to provide any Bank with any credit or other information concerning the business,
         prospects, operations, property, financial and other condition or creditworthiness of the Borrower
         which may come into the possession of any of Agent-Related Persons....................................  68











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10.07    Indemnification.  Whether or not the transactions contemplated hereby are consummated, the Banks
         shall indemnify upon demand Agent-Related Persons (to the extent not reimbursed by or on behalf of
         the Borrower and without limiting the obligation of the Borrower to do so), pro rata, from and
         against any and all Indemnified Liabilities; provided, however, that no Bank shall be liable for
         the payment to Agent-Related Persons of any portion of such Indemnified Liabilities resulting
         solely from such Person's gross negligence or willful misconduct.  Without limitation of the
         foregoing, each Bank shall reimburse Agents upon demand for its ratable share of any costs or
         out-of-pocket expenses (including Attorney Costs) incurred by Agents in connection with the
         preparation, execution, delivery, administration, modification, amendment or enforcement (whether
         through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
         responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
         referred to herein, to the extent that Agents are not reimbursed for such expenses by or on behalf
         of the Borrower.  The undertaking in this Section shall survive the payment of all Obligations
         hereunder and the resignation or replacement of Agents................................................  69
10.08    Agents in Individual Capacity.  Fortis and its Affiliates and BNP Paribas and its Affiliates may
         make loans to, issue letters of credit for the account of, accept deposits from, acquire equity
         interests in and generally engage in any kind of banking, trust, financial advisory, underwriting
         or other business with the Borrower and its Subsidiaries and Affiliates as though Fortis and BNP
         Paribas were not Agents or Issuing Banks hereunder and without notice to or consent of the Banks.
         The Banks acknowledge that, pursuant to such activities, Fortis or its Affiliates and BNP Paribas
         or its Affiliates may receive information regarding the Borrower or its Affiliates (including
         information that may be subject to confidentiality obligations in favor of the Borrower or such
         Subsidiary) and acknowledge that the Agents shall be under no obligation to provide such
         information to them.  With respect to its Loans, Fortis and BNP Paribas shall have the same rights
         and powers under this Agreement as any other Bank and may exercise the same as though it were not
         the Agents or Issuing Banks, and the terms "Bank" and "Banks" include each of Fortis and BNP
         Paribas in its individual capacity....................................................................  69
</TABLE>



                                     -xiii-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
10.09    Successor Administrative Agent.  The Administrative Agent may resign as the Administrative Agent
         upon thirty (30) days' notice to the Banks.  If the Administrative Agent resigns under this
         Agreement, BNP Paribas shall automatically become the successor agent, unless BNP Paribas declines.
         If BNP Paribas declines, the Required Banks shall appoint, from among the Banks, a successor agent
         for the Banks.  If no successor agent is appointed prior to the effective date of the resignation
         of the Administrative Agent, the resigning Administrative Agent may appoint, after consulting with
         the Banks, a successor agent from among the Banks.  Upon the acceptance of its appointment as
         successor agent hereunder, the successor agent shall succeed to all the rights, powers and duties
         of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor
         agent and the retiring Administrative Agent's appointment, powers and duties as Administrative
         Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as
         Administrative Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to
         its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent
         under this Agreement.  If no successor agent has accepted appointment as the Administrative Agent
         by the date which is thirty (30) days following a retiring Administrative Agent's notice of
         resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become
         effective and the Banks shall perform all of the duties of the Administrative Agent hereunder until
         such time, if any, as the Banks appoint a successor agent as provided for above.......................  69
10.10    Withholding Tax.......................................................................................  70
10.11    Collateral Matters.  (a)  The Agents are authorized on behalf of all the Banks, without the
         necessity of any notice to or further consent from the Banks, from time to time to take any action
         with respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain
         perfected the security interest in and Liens upon the Collateral granted pursuant to the Loan
         Documents.............................................................................................  71
10.12    Monitoring Responsibility.  Each Bank will make its own credit decisions hereunder, including the
         decision whether or not to make advances or consent to the Issuance of Letters of Credit, thus the
         Agents shall have no duty to monitor the Collateral Position, the amounts outstanding under
         sub-lines or the reporting requirements or the contents of reports delivered by the Borrower.  Each
         Bank assumes the responsibility of keeping itself informed at all times...............................  72


                                                 ARTICLE XI

                                               MISCELLANEOUS

11.01    Amendments and Waivers.  No amendment, supplement, modification or waiver of any provision of this
         Agreement or any other Loan Document, and no consent with respect to any departure by the Borrower
         therefrom, shall be effective unless the same shall be in accordance with the provisions of this
         Section 11.01. The Required Banks may, or, with the written consent of the Required Banks, the
         Administrative Agent may, from time to time, (a) enter into with the Borrower written amendments,
         supplements or modifications hereto and to the other Loan Documents for the purpose of adding any
         provisions to this Agreement or the other Loan Documents or changing in any manner the rights of
         the Banks or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as
         the Required Banks or the Administrative Agent, as the case may be, may specify in such instrument,
         any of the requirements of this Agreement or the other Loan Documents or any Default or Event of
         Default and its consequences; provided, however, that no such waiver and no such amendment,
         supplement or modification shall (i) reduce the amount or extend the scheduled date of maturity of
         any Loan or of any installment thereof, or reduce the stated rate of any interest or fee payable
         hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the
         expiration date of any Bank's Uncommitted Line Portion, in each case without the consent of each
         Bank affected thereby, or (ii) amend, modify or waive any provision of this Section 11.01 or reduce
         the percentage specified in the definition of Required Banks, or consent to the assignment or
         transfer by the Borrower of any of its rights and obligations under this Agreement and the other
         Loan Documents or release all or substantially all of the Collateral or release the Guarantor from
         its obligations under the Guaranty, in each case without the written consent of each of the Banks
         directly affected thereby, or (iii) amend, modify or waive any provision of Section 10 without the
         written consent of the Agents.  Any such waiver and any such amendment, supplement or modification
         shall apply equally to each of the Banks and shall be binding upon the Borrower, the Banks, the
         Agents and all future holders of the Loans.  In the case of any waiver, the Borrower, the Banks and
         the Agents shall be restored to their former positions and rights hereunder and under the other
         Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not
         continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default
         or impair any right consequent thereon. Any such waiver or consent shall be effective only in the
         specific instance and for the specific purpose for which given........................................  72



</TABLE>



                                     -xiv-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
11.02    Notices...............................................................................................  73
11.03    No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of
         the Agents or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver
         thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
         hereunder preclude any other or further exercise thereof or the exercise of any other right,
         remedy, power or privilege............................................................................  73
11.04    Costs and Expenses.  The Borrower shall:..............................................................  73
11.05    INDEMNITY.  WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE BORROWER SHALL
         INDEMNIFY AND HOLD AGENT-RELATED PERSONS, AND EACH BANK AND EACH OF ITS RESPECTIVE OFFICERS,
         DIRECTORS, EMPLOYEES, COUNSEL, AGENTS AND ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED PERSON")
         HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
         ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES AND DISBURSEMENTS (INCLUDING ATTORNEY COSTS) OF
         ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF
         THE LOANS, THE TERMINATION OF THE LETTERS OF CREDIT AND THE TERMINATION, RESIGNATION OR REPLACEMENT
         OF THE ADMINISTRATIVE AGENT OR REPLACEMENT OF ANY BANK) BE IMPOSED ON, INCURRED BY OR ASSERTED
         AGAINST ANY SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT
         CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY ACTION TAKEN
         OR OMITTED BY ANY SUCH PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH
         RESPECT TO ANY INVESTIGATION, LITIGATION OR PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING OR
         APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE LOANS OR LETTERS OF CREDIT
         OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO (ALL
         THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, THAT THE BORROWER
         SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON FOR THAT PORTION OF ANY INDEMNIFIED
         LIABILITIES THAT IS ADJUDGED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN CAUSED BY THE GROSS
         NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON OR THAT PORTION OF ANY INDEMNIFIED
         LIABILITIES WHICH ARE OWED BY AN INDEMNIFIED PERSON TO ANY OTHER INDEMNIFIED PERSON, BUT IN ALL
         EVENTS, THE BORROWER SHALL REMAIN LIABLE FOR THE REMAINDER OF THE INDEMNIFIED LIABILITIES NOT SO
         EXCLUDED.  THE AGREEMENTS IN THIS SECTION SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS..............  74
</TABLE>


                                      -xv-
<PAGE>

<TABLE>
<CAPTION>
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<S>                                                                                                             <C>
11.06    Payments Set Aside.  To the extent that the Borrower makes a payment to the Agents or the Banks, or
         the Agents or the Banks exercise their right of set-off, and such payment or the proceeds of such
         set-off or any part thereof are subsequently invalidated, declared to be fraudulent or
         preferential, set aside or required (including pursuant to any settlement entered into by the
         Agents or such Bank in its discretion) to be repaid to a trustee, receiver or any other party, in
         connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
         obligation or part thereof originally intended to be satisfied shall be revived and continued in
         full force and effect as if such payment had not been made or such set-off had not occurred, and
         (b) each Bank severally agrees to pay to each of the Agents upon demand its pro rata share of any
         amount so recovered from or repaid by the Agents......................................................  75
11.07    Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the
         benefit of the parties hereto and their respective successors and assigns, except that the Borrower
         may not assign or transfer any of its rights or Obligations under this Agreement without the prior
         written consent of the Agents and each Bank...........................................................  75
11.08    Assignments, Participations, Etc......................................................................  75
11.09    Set-off.  In addition to any rights and remedies of the Banks provided by law, if an Event of
         Default exists or the Loans have been accelerated, each Bank is authorized at any time and from
         time to time, without prior notice to the Borrower, any such notice being waived by the Borrower to
         the fullest extent permitted by law, to set off and apply any and all deposits at any time held by,
         and other indebtedness at any time owing by, such Bank to or for the credit or the account of the
         Borrower against any and all Obligations owing to such Bank, now or hereafter existing,
         irrespective of whether or not the Agents or such Bank shall have made demand under this Agreement
         or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees
         promptly to notify the Borrower and the Administrative Agent after any such set-off and application
         made by such Bank; provided, however, that the failure to give such notice shall not affect the
         validity of such set-off and application..............................................................  77
</TABLE>



                                  -xvi-
<PAGE>

<TABLE>
<CAPTION>
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<S>                                                                                                             <C>
11.10    Automatic Debits of Fees.  With respect to any letter of credit fee or other fee, interest or any
         other cost or expense (including Attorney Costs) due and payable to the Agents, the Issuing Banks,
         Fortis or BNP Paribas under the Loan Documents, the Borrower hereby irrevocably authorizes the
         Collateral Agent to debit any deposit accounts of the Borrower with the Collateral Agent (such
         deposit accounts being owned by the Collateral Agent and under the exclusive dominion and control
         of the Collateral Agent) including the Bank Blocked Account in an amount such that the aggregate
         amount debited from all such deposit accounts does not exceed such fee or other cost or expense.
         If there are insufficient funds in such deposit accounts to cover the amount of the fee or other
         cost or expense then due, such debits will be reversed (in whole or in part, in the Administrative
         Agent's sole discretion) and such amount not debited shall be deemed to be unpaid.  No such debit
         under this Section shall be deemed a set-off..........................................................  77
11.11    Notification of Addresses, Lending Offices, Etc.  Each Bank shall notify the Agents in writing of
         any changes in the address to which notices to the Bank should be directed, of addresses of any
         Lending Office, of payment instructions in respect of all payments to be made to it hereunder and
         of such other administrative information as the Agents shall reasonably request.......................  77
11.12    Bank Blocked Account Charges and Procedures.  The Collateral Agent is hereby authorized to (a)
         charge the Bank Blocked Account or any deposit account of the Borrower maintained at the Collateral
         Agent for all returned checks, service charges, and other fees and charges associated with the
         deposits by the Borrower to and withdrawals by the Borrower from the Bank Blocked Account; (b)
         follow its usual procedures in the event the Bank Blocked Account or any check, draft or other
         order for payment of money should be or become the subject of any writ, levy, order or other
         similar judicial or regulatory order or process; (c) charge the Bank Blocked Account or any deposit
         account of the Borrower maintained at the Collateral Agent for any Letter of Credit reimbursement,
         Loan repayments, interest or fees; and (d) pay from the Bank Blocked Account, on behalf of the
         Borrower, suppliers and other business expenses of the Borrower.  If the available balances in the
         Bank Blocked Account relating to the Borrower are not sufficient to pay the Administrative Agent
         for any returned check, draft or order for the payment of money relating to the Borrower, or to
         compensate the Administrative Agent for any charges or fees due the Administrative Agent with
         respect to the deposits by the Borrower to and withdrawals by the Borrower from the Bank Blocked
         Account, the Borrower agrees to pay on demand the amount due the Administrative Agent.  The
         Borrower agrees that it cannot, and will not, withdraw any monies from the Bank Blocked Account and
         it will not permit the Bank Blocked Account to become subject to any other pledge, assignment,
         lien, charge or encumbrance of any kind, nature or description, other than the Administrative
         Agent's security interest.............................................................................  78
11.13    Counterparts.  This Agreement may be executed in any number of separate counterparts, each of which,
         when so executed, shall be deemed an original, and all of said counterparts taken together shall be
         deemed to constitute but one and the same instrument..................................................  78
11.14    Severability.  The illegality or unenforceability of any provision of this Agreement or any
         instrument or agreement required hereunder shall not in any way affect or impair the legality or
         enforceability of the remaining provisions of this Agreement or any instrument or agreement
         required hereunder....................................................................................  78
</TABLE>


                                     -xvii-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
11.15    No Third Parties Benefited.  This Agreement is made and entered into for the sole protection and
         legal benefit of the Borrower, the Banks, the Administrative Agent and Agent-Related Persons, and
         their permitted successors and assigns, and no other Person shall be a direct or indirect legal
         beneficiary of, or have any direct or indirect cause of action or claim in connection with, this
         Agreement or any of the other Loan Documents..........................................................  78
11.16    GOVERNING LAW AND JURISDICTION........................................................................  78
11.17    WAIVER OF JURY TRIAL.  THE BORROWER, THE BANKS AND THE AGENTS EACH WAIVE THEIR RESPECTIVE RIGHTS TO
         A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
         AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
         ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
         PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
         CLAIMS, TORT CLAIMS, OR OTHERWISE.  THE BORROWER, THE BANKS AND THE ADMINISTRATIVE AGENT EACH AGREE
         THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT
         LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
         WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
         IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
         LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
         AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ....  79
11.18    DISCRETIONARY FACILITY.  THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT PROVIDES FOR A
         CREDIT FACILITY THAT IS COMPLETELY DISCRETIONARY ON THE PART OF THE BANKS AND THAT THE BANKS HAVE
         ABSOLUTELY NO DUTY OR OBLIGATION TO ADVANCE ANY REVOLVING LOANS OR TO ISSUE ANY LETTER OF CREDIT.
         THE BORROWER UNDERSTANDS THAT WITHOUT REASON, CAUSE OR PRIOR NOTICE, THE BANKS MAY CEASE ADVANCING
         REVOLVING LOANS AND ISSUING LETTERS OF CREDIT AND MAKE DEMAND FOR PAYMENT OF ALL OBLIGATIONS OF
         BORROWER TO THE BANKS AT ANY TIME.  BORROWER REPRESENTS AND WARRANTS TO THE BANKS THAT BORROWER IS
         AWARE OF THE RISKS ASSOCIATED WITH CONDUCTING BUSINESS UTILIZING AN UNCOMMITTED FACILITY..............  79
11.19    Entire Agreement.  THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, EMBODIES THE ENTIRE
         AGREEMENT AND UNDERSTANDING AMONG THE BORROWER, THE BANKS AND THE ADMINISTRATIVE AGENT, AND
         SUPERSEDES ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR
         WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF............................................  80
</TABLE>


                                    -xviii-
<PAGE>

<TABLE>
<CAPTION>
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<S>                                                                                                             <C>
11.20    Effect of Amendment and Restatement.  On the Closing Date, the Original Credit Agreement shall be
         amended, restated and superseded in its entirety by this Agreement.  The parties hereto acknowledge
         and agree that the liens and security interests granted under the Security Agreements (as defined
         in the Original Credit Agreement) are continuing and in full force and effect and, upon the
         amendment and restatement of the Original Credit Agreement pursuant to this Agreement, such liens
         and security interests secure and continue to secure the payment of the Obligations, and that the
         Notes outstanding under and as defined in the Original Credit Agreement are, upon the Closing Date,
         replaced by the Notes issued hereunder................................................................  80
</TABLE>


                                     -xix-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>d99023exv10w2.txt
<DESCRIPTION>364-DAY REVOLVING CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.2



                                                                  EXECUTION COPY

                       364-DAY REVOLVING CREDIT AGREEMENT

                                      among

                            ATMOS ENERGY CORPORATION
                                  as Borrower,

                         THE LENDERS IDENTIFIED HEREIN,

                                       AND

                                  BANK ONE, NA
                            as Administrative Agent,

                                       AND

                       WACHOVIA BANK, NATIONAL ASSOCIATION
                                       and

                                  SUNTRUST BANK

                            as Co-Syndication Agents

                                       AND

                                   COBANK ACB
                                       and

                        SOCIETE GENERALE, NEW YORK BRANCH

                           as Co-Documentation Agents


                            DATED AS OF JULY 31, 2002





                         BANC ONE CAPITAL MARKETS, INC.
                   as Sole Lead Arranger and Sole Book Manager



<PAGE>




                                364-DAY REVOLVING
                                CREDIT AGREEMENT

         THIS 364-DAY REVOLVING CREDIT AGREEMENT (this "Credit Agreement"),
dated as of July 31, 2002, is entered into among ATMOS ENERGY CORPORATION, a
Texas and Virginia corporation (the "Borrower"), the Lenders (as defined herein)
and BANK ONE, NA as agent for the Lenders (in such capacity, the "Administrative
Agent").

                                    RECITALS

         WHEREAS, the Borrower wishes, from time to time, to obtain loans in the
principal sum of up to $300,000,000 and the Lenders are willing to make such
loans to the Borrower, 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.

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

                  "Administrative Agent" means Bank One, NA 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
         securities, by contract or otherwise.

                  "Agency Services Address" means 1 Bank One Plaza, 10th Floor,
         Chicago, IL 60670 or such other address as the Administrative Agent may
         designate in writing.

                  "Applicable Percentage" - See the Pricing Schedule.
<PAGE>

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

                  "Base Rate" means a fluctuating rate of interest equal to the
         higher of (a) the Prime Rate and (b) the sum of the Federal Funds Rate
         most recently determined by the Administrative Agent plus 1/2% per
         annum. 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 Chicago,
         Illinois; 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




                                       2
<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(a), 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(a).

                  "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).

                  "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


                                       3
<PAGE>

         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.

                  "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


                                       4
<PAGE>

         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 a Default or 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 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.



                                       5
<PAGE>

                  "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 Interest Period,
         the applicable London interbank offered rate for deposits in U.S.
         dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time)
         two Business Days prior to the first day of the applicable Interest
         Period, and having a maturity equal to such Interest Period, adjusted
         for Federal Reserve Board reserve requirements.

                  "Eurodollar Reserve Percentage" means, for any day, that
         percentage (expressed as a decimal) which is in effect from time to
         time under Regulation D, 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.

                  "Existing Revolving Credit Agreement" means that certain
         Amended and Restated Credit Agreement, dated as of August 2, 2001,
         among the Borrower, the lenders identified therein and Bank of America,
         N.A., as administrative agent, as amended, modified, supplemented or
         replaced from time to time.

                  "Federal Funds Rate" means, for any day, an interest rate per
         annum 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, as published for such day by the Federal
         Reserve Bank of New York, or if such rate is not so published for such
         day, the average of the quotations for such day on such transactions
         received by the Administrative Agent from three Federal funds brokers
         of recognized standing selected by it.

                  "Fee Letter" means that certain letter agreement, dated as of
         June 14, 2002, between the Administrative Agent and the Borrower, as
         amended, modified, supplemented or replaced from time to time.



                                       6
<PAGE>

                  "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 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


                                       7
<PAGE>

         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.

                  "LGS 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.

                  "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.

                  "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 LGS Purchase
         and Sale Agreement and the MVG Merger 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 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 Credit 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 July 30, 2003.

                  "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.

                  "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.



                                       8
<PAGE>

                  "Moody's Rating" - see the Pricing Schedule.

                  "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.

                  "MVG Acquisition" means the merger of Mississippi Valley Gas
         Company with and into the Borrower pursuant to the MVG Merger
         Agreement.

                  "MVG Merger Agreement" means the Agreement and Plan of Merger
         and Reorganization, dated as of September 21, 2001, by and among Atmos
         Energy Corporation, Mississippi Valley Gas Company and the Shareholders
         of the Mississippi Valley Gas Company.

                  "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, 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.



                                       9
<PAGE>

                  "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 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.



                                       10
<PAGE>

                  "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.

                  "Pricing Schedule" - See Schedule 1.1(b).

                  "Prime Rate" means a rate per annum equal to the prime rate of
         interest announced from time to time by Bank One, NA or its parent
         (which is not necessarily the lowest rate charged to any customer),
         changing when and as said prime rate changes.

                  "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 (or any successor body) 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 51% 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


                                       11
<PAGE>

         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.

                  "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.

                  "S&P Rating" - see the Pricing Schedule.

                  "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 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


                                       12
<PAGE>

         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.

                  "2001 Indenture" means, collectively, that certain Indenture,
         dated as of May 22, 2001, granted by the Borrower to SunTrust Bank,
         Atlanta, as Trustee, and all Supplemental Indentures thereto.

                  "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.

                  "Woodward Acquisition" means the acquisition by the Borrower
         on April 1, 2001, of the remaining 55% ownership interest in Woodward
         Marketing LLC theretofore not owned by the Borrower, pursuant to that
         certain Asset Purchase Agreement, dated as of August 7, 2000, by and
         among the Borrower, Atmos Energy Marketing, LLC, a wholly-owned
         Subsidiary of the Borrower, Woodward Marketing, Inc. and the
         shareholders of Woodward Marketing, Inc.

         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


                                       13
<PAGE>

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.

                                   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


                                       14
<PAGE>

                  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 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


                                       15
<PAGE>

                  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 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


                                       16
<PAGE>

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 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,


                                       17
<PAGE>

(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 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 2.5, 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").



                                       18
<PAGE>

         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
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 in integral
         multiples of $1,000,000 above such amount; 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


                                       19
<PAGE>

         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 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 (as set forth on the
                  Pricing Schedule) 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 and one third percent (33 1/3%) 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 the Applicable
         Percentage for Utilization Fees as set forth on the Pricing Schedule
         (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.



                                       20
<PAGE>

                  (c) Administrative Fees. The Borrower agrees to pay to the
         Administrative 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
unconditionally and without setoff, deduction, defense, recoupment 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 accruing interest at the Prime
         Rate, 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


                                       21
<PAGE>

         Loan is made until the date such Loan is 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


                                       22
<PAGE>

of a participation 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.



                                       23
<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


                                       24
<PAGE>


         repay 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
4.1 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 will compensate such Lender for such reduction. Each



                                       25
<PAGE>


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 4.2 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 4.3 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 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


                                       26
<PAGE>


         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 W8-BEN or W8-ECI, 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;

                                    (A) 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

                                    (B) 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

                           (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


                                       27
<PAGE>


                  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 (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:



                                       28
<PAGE>

                           (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, 2000 and September 30, 2001, and
         the unaudited financial statements for the quarters ending December 31,
         2001 and March 31, 2002, including balance sheets and income and cash
         flow statements, in each case audited (except for the quarterly
         financial statements) by 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, 2002 that has had or would be reasonably
         expected to have a Material Adverse Effect.


                                       29
<PAGE>


                  (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) the
         Borrower and its Subsidiaries are in compliance with all existing
         material financial obligations, (ii) 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, (iii) 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 (iv) 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 the Existing Revolving Credit Agreement has been
         terminated and all amounts owing to the Lenders 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.

                  (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.



                                       30
<PAGE>

                                   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 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


                                       31
<PAGE>


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 MVG Acquisition, since March 31, 2002,
         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, in each case which
         is not (i) reflected in the most recent financial statements delivered
         to the Lenders pursuant to Section 5.1(d) or 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, 2002, 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 MVG Acquisition, in and of itself, does not constitute a
Material Adverse Effect.

         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
Effect.

         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.



                                       32
<PAGE>


         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; (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


                                       33
<PAGE>


         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 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.


                                       34
<PAGE>


                  (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 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 (a) good title to, or the
legal right to use, all material properties and assets and (b) all material
franchises, certificates, licenses, permits and other authorizations, in each
case as are necessary for the operation of their respective businesses.



                                       35
<PAGE>


         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:

         7.1      INFORMATION COVENANTS.

         The Borrower will furnish, or cause to be furnished, to the
Administrative Agent (who shall forward copies thereof to each Lender):

                  (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


                                       36
<PAGE>


         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
         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


                                       37
<PAGE>



         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.

         7.2      DEBT TO CAPITALIZATION RATIO.

         At all times, the Debt to Capitalization Ratio shall be less than or
equal to 0.70 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,


                                       38
<PAGE>


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 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 refinance the
indebtedness under the Existing Revolving Credit Agreement 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:


                                       39
<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, other
than the closing of the MVG Acquisition, 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 permit 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 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



                                       40
<PAGE>


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, (o) any Lien on the assets of the Borrower pursuant to
Section 803 of the 1998 Indenture or Section 803 of the 2001 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, (p) 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 (q) 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 (p) 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 covered by the Lien extended, renewed or replaced
(plus improvements on such property or assets).



                                       41
<PAGE>

                                   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 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.



                                       42
<PAGE>

                  (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
         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.




                                       43
<PAGE>



                  (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.

                           (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


                                       44
<PAGE>

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 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.


                                       45
<PAGE>


                                   SECTION 10.

                                AGENCY PROVISIONS

         10.1     APPOINTMENT.

         Each Lender hereby designates and appoints Bank One, NA 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 10.1 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 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


                                       46
<PAGE>


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 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.


                                       47
<PAGE>


         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 at the time the indemnification request is made, 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 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.



                                       48
<PAGE>


         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.

                                   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.


                                       49
<PAGE>


         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, 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 $3,000,000
                  (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


                                       50
<PAGE>


                  substantially the form of Exhibit 11.3(b), together with a
                  processing fee from the assignor of $5,000.

         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 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.




                                       51
<PAGE>

                  (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 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).



                                       52
<PAGE>


         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 One Capital Markets, Inc. ("BOCM")
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 Mayer, Brown, Rowe & Maw, 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 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, BOCM 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, BOCM 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


                                       53
<PAGE>


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

                  (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.


                                       54
<PAGE>


         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 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


                                       55
<PAGE>



         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 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. The Borrower and the Lenders party to the
         Existing Revolving Credit Agreement each hereby agrees that, at such
         time as this Credit Agreement shall have become effective pursuant to
         the terms of the immediately preceding sentence, the Existing Revolving
         Credit Agreement automatically shall be deemed terminated and the
         Borrowers and the Lenders party to the Existing Revolving Credit
         Agreement shall no longer have any obligations thereunder (other than
         those obligations in the Existing Revolving Credit Agreement that
         expressly survive the termination thereof).



                                       56
<PAGE>

                  (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]



                                       57
<PAGE>



                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





         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/ LAURIE M. SHERWOOD
                                     ---------------------------------------
                                 Name:         Laurie M. Sherwood
                                       -------------------------------------
                                 Title:     Vice President & Treasurer
                                        ------------------------------------


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





LENDERS:                     BANK ONE, NA
                             individually in its capacity as a
                             Lender and in its capacity as Administrative Agent



                             By:           /s/ SHARON K. WEBB
                                 ---------------------------------------
                             Name:           Sharon K. Webb
                                   -------------------------------------
                             Title:        Associate Director
                                    ------------------------------------


<PAGE>





                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement






                                 WACHOVIA BANK, NATIONAL ASSOCIATION



                                 By:           /s/ C. REID HARDEN
                                     ---------------------------------------
                                 Name:           C. Reid Harden
                                       -------------------------------------
                                 Title:          Vice President
                                        ------------------------------------


<PAGE>



                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement






                                 SUNTRUST BANK



                                 By:          /s/ LINDA LEE STANLEY
                                     ---------------------------------------
                                 Name:         Linda Lee Stanley
                                       -------------------------------------
                                 Title:             Director
                                        ------------------------------------


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





                                 COBANK ACB



                                 By:         /s/  CATHLEEN  D. REED
                                     ---------------------------------------
                                 Name:          Cathleen D. Reed
                                       -------------------------------------
                                 Title:      Assistant Vice President
                                        ------------------------------------


<PAGE>



                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement






                                 SOCIETE GENERALE, NEW YORK BRANCH



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


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





                                 KBC BANK N.V.



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

                                 By:          /s/  ERIC RASKIN
                                     ---------------------------------------
                                 Name:            Eric Raskin
                                       -------------------------------------
                                 Title:          Vice President
                                        ------------------------------------


<PAGE>



                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement






                                 THE BANK OF TOKYO-MITSUBISHI, LTD.



                                 By:           /s/  K. GLASSCOCK
                                     ---------------------------------------
                                 Name:           K. Glasscock
                                       -------------------------------------
                                 Title:          VP & Manager
                                        ------------------------------------


<PAGE>

                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement




                                 U.S. BANK NATIONAL ASSOCIATION



                                 By:         /s/  WARD C. WILSON
                                     ---------------------------------------
                                 Name:          Ward C. Wilson
                                       -------------------------------------
                                 Title:      Senior Vice President
                                        ------------------------------------


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





                                 WELLS FARGO BANK TEXAS, N.A.



                                 By:         /s/  DUSTIN S. HANSEN
                                     ---------------------------------------
                                 Name:          Dustin S. Hansen
                                       -------------------------------------
                                 Title:       Relationship Manager
                                        ------------------------------------


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





                                 BANK OF AMERICA, N.A.



                                 By:        /s/  MICHELLE A. SCHOENFELD
                                     ---------------------------------------
                                 Name:        Michelle A. Schoenfeld
                                       -------------------------------------
                                 Title:             Principal
                                        ------------------------------------


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





                                 BANK HAPOALIM B.M.



                                 By:         /s/ SHAUN BREIDBART
                                     ---------------------------------------
                                 Name:         Shaun Breidbart
                                       -------------------------------------
                                 Title:         Vice President
                                        ------------------------------------

                                 By:          /s/  CONRAD WAGNER
                                       -------------------------------------
                                 Name:          Conrad Wagner
                                       -------------------------------------
                                 Title:      First Vice President
                                        ------------------------------------


<PAGE>




                   Signature Page to Atmos Energy Corporation
                       364-Day Revolving Credit Agreement





                                 HIBERNIA NATIONAL BANK



                                 By:          /s/  DONNA J. RICHARDSON
                                       -------------------------------------
                                 Name:          Donna J. Richardson
                                       -------------------------------------
                                 Title:        Relationship Manager
                                        ------------------------------------

<PAGE>





                                 SCHEDULE 1.1(A)

                             COMMITMENT PERCENTAGES


<TABLE>
<CAPTION>
                                                                   COMMITMENT
           LENDERS                            COMMITMENT           PERCENTAGE
           -------                            ----------           ----------
<S>                                          <C>                    <C>
Bank One, NA                                 $ 30,000,000             10.00%
Wachovia Bank, National Association          $ 30,000,000             10.00%
SunTrust Bank                                $ 30,000,000             10.00%
CoBank ACB                                   $ 30,000,000             10.00%
Societe Generale, New York Branch            $ 30,000,000             10.00%
KBC Bank N.V.                                $ 30,000,000             10.00%
The Bank of Tokyo-Mitsubishi Ltd.            $ 24,500,000              8.17%
U.S. Bank National Association               $ 22,000,000              7.33%
Wells Fargo Bank Texas, N.A.                 $ 22,000,000              7.33%
Bank of America, N.A.                        $ 22,000,000              7.33%
Bank Hapoalim B.M.                           $ 22,000,000              7.33%
Hibernia National Bank                       $  7,500,000              2.50%
                                             ------------           -------
TOTAL                                        $300,000,000               100%
</TABLE>

<PAGE>

                                 SCHEDULE 1.1(B)

                                PRICING SCHEDULE

<TABLE>
<CAPTION>
                                   Level I       Level II      Level III      Level IV      Level V     Level VI
Applicable Percentage               Status        Status         Status        Status       Status       Status
---------------------              --------      --------      ---------      --------     --------     --------
<S>                                 <C>           <C>             <C>           <C>          <C>          <C>
Eurodollar Rate                     0.50%         0.625%          0.75%         1.0%         1.25%        1.75%

Base Rate                            0.0%          0.0%           0.0%          0.0%         0.0%         0.25%

Unused Fee                          0.085%         0.10%         0.125%         0.15%        0.20%        0.30%

Utilization Fee (when
usage exceeds 33 1/3%)              0.125%        0.125%         0.125%        0.125%       0.125%        0.25%
</TABLE>

         "Level I Status" exists at any date if, on such date, the Borrower's
Moody's Rating is A2 or better or the Borrower's S&P Rating is A or better.

         "Level II Status" exists at any date if, on such date, (i) the Borrower
has not qualified for Level I Status and (ii) the Borrower's Moody's Rating is
A3 or better or the Borrower's S&P Rating is A- or better.

         "Level III Status" exists at any date if, on such date, (i) the
Borrower has not qualified for Level I Status or Level II Status and (ii) the
Borrower's Moody's Rating is Baa1 or better or the Borrower's S&P Rating is BBB+
or better.

         "Level IV Status" exists at any date if, on such date, (i) the Borrower
has not qualified for Level I Status, Level II Status or Level III Status and
(ii) the Borrower's Moody's Rating is Baa2 or better or the Borrower's S&P
Rating is BBB or better.

         "Level V Status" exists at any date if, on such date, (i) the Borrower
has not qualified for Level I Status, Level II Status, Level III Status or Level
IV Status and (ii) the Borrower's Moody's Rating is Baa3 or better or the
Borrower's S&P Rating is BBB- or better.

         "Level VI Status" exists at any date if, on such date, the Borrower has
not qualified for Level I Status, Level II Status, Level III Status, Level IV
Status or Level V Status.

         "Moody's Rating" means, at any time, the rating issued by Moody's
Investors Service, Inc. and then in effect with respect to the Borrower's senior
unsecured long-term non-credit enhanced debt securities.

         "S&P Rating" means, at any time, the rating issued by Standard and
Poor's Rating Services, a division of The McGraw Hill Companies, Inc., and then
in effect with respect to the Borrower's senior unsecured long-term non-credit
enhanced debt securities.

         "Status" means Level I Status, Level II Status, Level III Status, Level
IV Status, Level V Status or Level VI Status.

         The Applicable Percentage shall be determined in accordance with the
foregoing table based on the Borrower's Status as determined from its
then-current Moody's and S&P Ratings.

                               Schedule 1.1(b)-1

<PAGE>
The credit rating in effect on any date for the purposes of this Schedule is
that in effect at the close of business on such date. If at any time the
Borrower has no Moody's Rating or no S&P Rating, Level VI Status shall exist.

         If the Borrower is split-rated and the ratings differential is one
level, the better rating will apply. If the Borrower is split-rated and the
ratings differential is two levels or more, the applicable rating shall be one
level below the higher of the Moody's or S&P Rating.

                               Schedule 1.1(b)-2


<PAGE>



                                  SCHEDULE 6.20

                              SECURED INDEBTEDNESS

                    SECURED INDEBTEDNESS AS OF JUNE 30, 2002

<TABLE>
<CAPTION>
                                         INTEREST                                               BALANCE AT
                                           RATE      MATURITY                                     6/30/02
                                         --------    --------                                 --------------
<S>                                       <C>        <C>                                      <C>
FIRST MORTGAGE BONDS
FMB Series P                              10.43%     due 2012 issued under 1959 Indenture      16,250,000.00
FMB Series Q                              9.75%      due 2020 issued under 1959 Indenture      18,000,000.00
FMB Series R                              11.32%     due 2004 issued under 1959 Indenture       4,300,000.00
FMB Series T                              9.32%      due 2021 issued under 1959 Indenture      18,000,000.00
FMB Series U                              8.77%      due 2022 issued under 1959 Indenture      20,000,000.00
FMB Series J                              9.40%      due 2021 issued under 1957 Indenture      17,000,000.00
FMB Series V                              7.50%      due 2007 issued under 1959 Indenture      10,000,000.00
                                                                                              --------------
                                                                                              103,550,000.00
                                                                                              --------------

Rental Property fixed rate term note      7.90%      due 2013 due in installments               1,505,951.57
                                                                                              --------------
Total Secured Indebtedness                                                                    105,055,951.57
                                                                                              ==============
</TABLE>



                                Schedule 6.20-1



<PAGE>



                                  SCHEDULE 6.21

                                  SUBSIDIARIES


Atmos Energy Holdings, Inc.


         Atmos Energy Marketing, LLC
                  Woodward Marketing, L.L.C.
                  Trans Louisiana Industrial Gas Company, Inc.
                  Southern Resources, Inc.

         Atmos Energy Services, LLC
                  Energas Energy Services Trust
                  Trans Louisiana Energy Services, Inc.
                  United Cities Energy Services, Inc.
                  Greeley Energy Services, Inc.
                  WKG Energy Services, Inc.

         Enermart Energy Services Trust

         Egasco, LLC

         Atmos Power Systems, Inc.

         United Cities Propane Gas, Inc.

         Atmos Pipeline and Storage, LLC
                  UCG Storage, Inc.
                  WKG Storage, Inc.
                  Trans Louisiana Gas Storage, Inc.
                  Trans Louisiana Gas Pipeline, Inc.
                  Atmos Exploration & Production, Inc.


* Each of these subsidiaries is 100% owned by its parent.

** No Subsidiary of the Borrower currently qualifies as a Material Subsidiary as
that term is defined in the Credit Agreement.



                                Schedule 6.21-1


<PAGE>



                                  SCHEDULE 11.1

                                     NOTICES


BANK ONE, NA                                BANC ONE CAPITAL MARKETS, INC.

Sharon Webb                                 William Banks
1 Bank One Plaza                            1 Bank One Plaza
Suite IL1-0363, 10th Floor                  Suite IL1-0429, 8th Floor
Chicago, IL 60670                           Chicago, IL 60670
Tel: 312-732-7437                           Tel: 312-732-9781
Fax: 312-732-3055                           Fax: 312-732-7455
E-mail: sharon_k_webb@bankone.com           E-mail: william_banks@bankone.com


SOCIETE GENERALE, NEW YORK BRANCH           COBANK ACB

David Bird                                  Cathleen Reed
1221 Avenue of the Americas, 11th Floor     550 South Quebec Street
New York, NY 10020                          Greenwood Village, CO 80111
Tel: 212-278-7429                           Tel:  303-740-4101
E-mail: david.bird@us.socgen.com            Fax: 303-740-4002
                                            E-mail: careed@cobank.com


KBC BANK N.V.                               THE BANK OF TOKYO-MITSUBISHI, LTD.

Filip Ferrante                              Damian Sullivan
245 Peachtree Center Avenue, Suite 2550     1100 Louisiana Street, Suite 2800
Atlanta, GA 30303                           Houston, TX 77002
Tel:  404-584-5466                          Tel:  713-655-3808
Fax: 404-584-5465                           Fax: 713-658-0116
E-Mail: filip.ferrante@kbc.be               E-Mail: dsullivan@btmna.com

                                            Jay Fort
                                            Tel: 713-655-3807
                                            Email: jfort@btmny.com


U.S. BANK NATIONAL ASSOCIATION              BANK OF AMERICA, N.A.

Ward Wilson                                 Shelly Schoenfeld
150 Fourth Avenue N, Third Floor            100 N. Tyron Street, 16th Floor
Nashville, TN 37219                         Charlotte, NC 28255
Tel: 615-251-9253                           Tel:  704-386-1432
Fax: 615-251-9245                           Fax: 704-386-1319
E-Mail: ward.wilson@usbank.com              E-Mail: michelle.a.schoenfeld@
                                                    bankofamerica.com


                                Schedule 11.1-1

<PAGE>



WELLS FARGO BANK TEXAS, N.A.                BANK HAPOALIM B.M.

Dustin Hansen                               Shaun Breidbart
1445 Ross Avenue, Suite 2360                1177 Avenue of the Americas
Dallas, TX 75202                            New York, NY 10036-2790
Tel: 214-661-1233                           Tel: 212-782-2186
Fax: 214-661-1242                           Fax: 212-782-2222
E-Mail: hanseds@wellsfargo.com              E-Mail: sbreidbart@hapoalimusa.com


HIBERNIA NATIONAL BANK                      WACHOVIA BANK, NATIONAL ASSOCIATION

Donna Richardson                            Reid Harden
313 Carondelet Street                       999 Peachtree Street
New Orleans, LA 70130                       Atlanta, GA  30309
Tel: 504-533-7813                           Tel: 404-332-1420
E-Mail: drichardson@hibernia.com            E-mail: reid.harden@wachovia.com

                                            Mitch Wilson
                                            Tel: 704-383-5642
                                            Email: mitch.wilson@wachoiva.com


SUNTRUST BANK

Ryan Simmons
303 Peachtree Street, 10th Floor
Atlanta, GA  30308
Tel:  404-724-3924
Fax: 404-827-6270
E-mail: ryan.simmons@suntrust.com



                                Schedule 11.1-2




<PAGE>


                                                                  Exhibit 2.1(b)

                         FORM OF COMPETITIVE BID REQUEST

TO:      BANK ONE, NA, as Administrative Agent
         One Bank One Plaza
         Chicago, Illinois  60670

RE:      364-Day Credit Agreement dated as of July 31, 2002, among Atmos Energy
         Corporation (the "Borrower"), the Lenders named therein and Bank One,
         NA, as Administrative Agent for the Lenders (as the same may be
         amended, modified, extended or restated from time to time, the "Credit
         Agreement")

DATE:    ____________, 200__

________________________________________________________________________________


1.       This Competitive Bid Request is made pursuant to the terms of the
         Credit Agreement. Capitalized terms used herein and not otherwise
         defined herein shall have the meanings assigned to such terms in the
         Credit Agreement.

2.       Please be advised that the Borrower is requesting quotes for a proposed
         Competitive Bid Loan and in connection therewith sets forth below the
         terms of such proposed Competitive Bid Loan:

         (A)      Date of requested Competitive      _________________
                  Bid Loan

         (B)      Principal amount of requested
                  Competitive Bid Loan               $________________

         (C)      Interest Period(s) and the
                  last day thereof                   _________________

3.       Subsequent to the funding of the requested Competitive Bid Loan, the
         sum of the amount of Revolving Loans outstanding plus the amount of
         Competitive Bid Loans outstanding will be $______________, which is
         less than or equal to the Revolving Loan Commitment.

4.       As of the date on which funds are to be advanced, all representations
         and warranties contained in the Credit Agreement and in the other
         Credit Documents will be true and correct in all material respects.


                                Exhibit 2.1(b)-1


<PAGE>


5.       As of the date on which funds are to be advanced, no Default or Event
         of Default will exist or be continuing or will be caused by the making
         of the requested Competitive Bid Loan.


                                       ATMOS ENERGY CORPORATION,
                                       a Texas and Virginia corporation

                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------


                                Exhibit 2.1(b)-2


<PAGE>




                                                                     Exhibit 2.2


                           FORM OF NOTICE OF BORROWING


TO:      BANK ONE, NA, as Administrative Agent
         One Bank One Plaza
         Chicago, Illinois  60670

RE:      364-Day Credit Agreement dated as of July 31, 2002, among Atmos Energy
         Corporation (the "Borrower"), the Lenders named therein and Bank One,
         NA, as Administrative Agent for the Lenders (as the same may be
         amended, modified, extended or restated from time to time, the "Credit
         Agreement")

DATE:    ____________, 200__
________________________________________________________________________________

1.       This Notice of Borrowing is made pursuant to the terms of the Credit
         Agreement. All capitalized terms used herein unless otherwise defined
         shall have the meanings set forth in the Credit Agreement.

2.       Please be advised that the Borrower is requesting Revolving Loans in
         the amount of $_________ to be funded on __________, 200__ at the
         interest rate option set forth in paragraph 3 below.

         Subsequent to the funding of the requested Revolving Loans, the sum of
         the amount of Competitive Bid Loans outstanding plus the amount of
         Revolving Loans outstanding will be $__________, which is less than or
         equal to the Revolving Loan Commitment.

3.       The interest rate option applicable to the requested Revolving Loans
         shall be:

         a.    ________the Base Rate

         b.    ________the Adjusted Eurodollar Rate for an Interest Period of:

                       ________one month
                       ________two months
                       ________three months
                       ________six months

4.       As of the date on which funds are to be advanced, all representations
         and warranties contained in the Credit Agreement and in the other
         Credit Documents will be true and correct in all material respects.


                                  Exhibit 2.2-1

<PAGE>

5.       As of the date on which funds are to be advanced, no Default or Event
         of Default will exist or be continuing or will be caused by the making
         of Revolving Loans pursuant to this Notice of Borrowing.


                                       ATMOS ENERGY CORPORATION,
                                       a Texas and Virginia corporation

                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------


                                  Exhibit 2.2-2



<PAGE>


                                                                     Exhibit 2.4

                    FORM OF NOTICE OF CONTINUATION/CONVERSION

TO:      BANK ONE, N.A., as Administrative Agent
         One Bank One Plaza
         Chicago, Illinois 60670

RE: 364-Day Credit Agreement dated as of July 31, 2002 among Atmos Energy
Corporation (the "Borrower"), the Lenders named therein and Bank One, NA, as
Administrative Agent for the Lenders (as the same may be amended, modified,
extended or restated from time to time, the "Credit Agreement")

DATE:    _____________, 200___


________________________________________________________________________________


1. This Notice of Continuation/Conversion is made pursuant to the terms of the
Credit Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.

2. Please be advised that the Borrower is requesting that a portion of the
current outstanding Revolving Loans in the amount of $_________ currently
accruing interest at _____ be continued or converted as of ___________, 200__ at
the interest rate option set forth in paragraph 3 below.

3. The interest rate option applicable to the continuation or conversion of all
or part of the existing Revolving Loans (as set forth above) shall be:

         a.   _______  the Base Rate

         b.   _______  the adjusted Eurodollar Rate for an Interest Period of:

                       _______ one month
                       _______ two months
                       _______ three months
                       _______ six months




                                       ATMOS ENERGY CORPORATION,
                                       a Texas and Virginia corporation

                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------



                                 Exhibit 2.4-1

<PAGE>

                                                                  Exhibit 2.7(a)

                                     FORM OF
                               REVOLVING LOAN NOTE


                                                             ___________, 200___


         FOR VALUE RECEIVED, ATMOS ENERGY CORPORATION, a Texas and Virginia
corporation (the "Borrower"), hereby promises to pay to the order of
______________ (the "Lender"), at the office of Bank One, NA (the
"Administrative Agent") as set forth in that certain 364-Day Credit Agreement
dated as of July 31, 2002 among the Borrower, the Lenders named therein
(including the Lender) and the Administrative Agent (as the same may be amended,
modified, extended or restated from time to time, the "Credit Agreement") (or at
such other place or places as the holder of this Revolving Loan Note may
designate), the aggregate amount of all Revolving Loans made by the Lender under
the Credit Agreement (and not otherwise repaid), in lawful money and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each Revolving Loan made by the Lender, at such office, in like money and funds,
for the period commencing on the date of each Revolving Loan until each
Revolving Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.

         This Note is one of the Revolving Loan Notes referred to in the Credit
Agreement and evidences Revolving Loans made by the Lender thereunder. The
Lender shall be entitled to the benefits of the Credit Agreement. Capitalized
terms used in this Revolving Loan Note have the respective meanings assigned to
them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.

         The Credit Agreement provides for the acceleration of the maturity of
the Revolving Loans evidenced by this Revolving Loan Note upon the occurrence of
certain events (and for payment of collection costs in connection therewith) and
for prepayments of Revolving Loans upon the terms and conditions specified
therein. In the event this Revolving Loan Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable attorney
fees.

         Except as permitted by Section 11.3(b) of the Credit Agreement, this
Revolving Loan Note may not be assigned by the Lender to any other Person.

         THIS REVOLVING LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


                                Exhibit 2.7(a)-1


<PAGE>


         IN WITNESS WHEREOF, the Borrower has caused this Revolving Loan Note to
be executed as of the date first above written.


                                        ATMOS ENERGY CORPORATION,
                                        a Texas and Virginia corporation


                                        By:_________________________

                                        Name:_______________________

                                        Title:______________________


                                Exhibit 2.7(a)-2

<PAGE>


                                                                  Exhibit 2.7(b)

                                     FORM OF
                            COMPETITIVE BID LOAN NOTE

                                                             ___________, 200___


         FOR VALUE RECEIVED, ATMOS ENERGY CORPORATION, a Texas and Virginia
corporation (the "Borrower"), hereby promises to pay to the order of ___________
(the "Lender"), at the office of Bank One, NA (the "Administrative Agent") as
set forth in that certain 364-Day Credit Agreement dated as of July 31, 2002
among the Borrower, the Lenders named therein (including the Lender) and the
Administrative Agent (as the same may be amended, modified, extended or restated
from time to time, the "Credit Agreement") (or at such other place or places as
the holder of this Competitive Bid Loan Note may designate), the aggregate
amount of all advances made by the Lender as Competitive Bid Loans (and not
otherwise repaid) and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each Competitive Bid Loan made by the Lender, at such
office, in like money and funds, for the period commencing on the date of each
Competitive Bid Loan until each Competitive Bid Loan shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.

         This Note is one of the Competitive Bid Loan Notes referred to in the
Credit Agreement and evidences Competitive Bid Loans made by the Lender
thereunder. The Lender shall be entitled to the benefits of the Credit
Agreement. Capitalized terms use in this Competitive Bid Loan Note have the
respective meanings assigned to them in the Credit Agreement and the terms and
conditions of the Credit Agreement are expressly incorporated herein and made a
part hereof.

         The Credit Agreement provides for the acceleration of the maturity of
the Competitive Bid Loans evidenced by this Competitive Bid Loan Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of Competitive Bid Loans upon the terms and
conditions specified therein. In the event this Competitive Bid Loan Note is not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest, all costs of collection, including
reasonable attorney fees.

         Except as permitted by Section 11.3(b) of the Credit Agreement, this
Competitive Bid Loan Note may not be assigned by the Lender to any other Person.

         THIS COMPETITIVE BID LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


                                Exhibit 2.7(b)-1


<PAGE>


         IN WITNESS WHEREOF, the Borrower has caused this Competitive Bid Loan
Note to be executed as of the date first above written.


                                        ATMOS ENERGY CORPORATION,
                                        a Texas and Virginia corporation


                                        By:_________________________

                                        Name:_______________________

                                        Title:______________________



                                Exhibit 2.7(b)-2


<PAGE>

                                                                  Exhibit 7.1(c)

                          FORM OF OFFICER'S CERTIFICATE

TO:      BANK ONE, N.A., as Administrative Agent
         One Bank One Plaza
         Chicago, Illinois 60670

RE:      364-Day Credit Agreement dated as of July 31, 2002 among Atmos Energy
         Corporation (the "Borrower"), the Lenders named therein and Bank One,
         N.A., as Administrative Agent for the Lenders (as the same may be
         amended, modified, extended or restated from time to time, the "Credit
         Agreement")

DATE:    ________________, 200_

________________________________________________________________________________

         Pursuant to the terms of the Credit Agreement, I,______________________
_____________________________, ____________ of the Borrower, hereby certify on
behalf of the Borrower that, as of the quarter/year ending ____________, 200_,
the statements below are accurate and complete in all material respects (all
capitalized terms used herein unless defined shall have the meanings set forth
in the Credit Agreement):

                  a. Attached hereto as Schedule I are calculations
         demonstrating compliance by the Borrower with the financial covenant
         set forth in Section 7.2 of the Credit Agreement, as of the end of the
         fiscal period cited above.

                  b. No Default or Event of Default exists under the Credit
         Agreement, except as indicated on a separate page attached hereto,
         together with an explanation of the action taken or proposed to be
         taken by the Borrower with respect thereto.

                  c. The quarterly/annual financial statements for the fiscal
         period cited above which accompany this certificate are true and
         correct and have been prepared in accordance with GAAP (in the case of
         any quarterly financial statements, subject to changes resulting from
         audit and normal year-end audit adjustments).



                                        ATMOS ENERGY CORPORATION,


                                        By:_________________________

                                        Name:_______________________

                                        Title:______________________


                                Exhibit 7.1(c)-1

<PAGE>


                       SCHEDULE I TO OFFICER'S CERTIFICATE

            COMPLIANCE WITH SECTION 7.2: DEBT TO CAPITALIZATION RATIO

1.   Consolidated Funded Debt                                       $__________

2    Consolidated Capitalization                                    $__________

3.   Debt to Capitalization Ratio:  (Line 1  /  Line 2)              __________


     Maximum Allowed:  Line 3 shall be less than or equal to 0.70 to 1.0


                                Exhibit 7.1(c)-2



<PAGE>


                                                                 Exhibit 11.3(b)

                          FORM OF ASSIGNMENT AGREEMENT

         Reference is made to that certain 364-Day Credit Agreement, dated as of
July 31, 2002, among Atmos Energy Corporation (the "Borrower"), the Lenders
party thereto and Bank One, NA, as Administrative Agent for the Lenders (as the
same may be amended, modified, extended or restated from time to time, the
"Credit Agreement"). Capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement.

         1. The Assignor hereby sells and assigns to the Assignee, without
recourse and without representation and warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, without
recourse and without representation and warranty except as expressly set forth
herein, the interests set forth below (the "Assigned Interest") in the
Assignor's rights and obligations under the Credit Agreement, including, without
limitation, the interest set forth below in the Commitment Percentage of the
Assignor on the Effective Date (as defined below) and the Loans owing to the
Assignor in connection with the Assigned Interest which are outstanding on the
Effective Date. The purchase of the Assigned Interest shall be at par (unless
otherwise agreed to by the Assignor and the Assignee) and periodic payments made
with respect to the Assigned Interest which (a) accrued prior to the Effective
Date shall be remitted to the Assignor and (b) accrue from and after the
Effective Date shall be remitted to the Assignee.

         2. The Assignor (a) warrants to the Assignee that it is the legal and
beneficial owner of the Assigned Interest and that the Assigned Interest is free
and clear of any adverse claim created by the Assignor; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Documents or any other document or instrument furnished pursuant thereto
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of Credit Documents or any document or instrument furnished pursuant
thereto; (c) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under the Credit Documents
or any document or instrument furnished pursuant thereto and (d) if the Assignor
is hereby assigning all of its Commitment, the Assignor attaches the Notes held
by the Assignor and requests that the Administrative Agent exchange such Notes
for new Notes in favor of the Assignee.

         3. The Assignee (a) confirms that it is legally authorized to enter
into this Assignment Agreement; (b) confirms that it has received a copy of the
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 to this Assignment Agreement; (c) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
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 the Credit Agreement and the other Credit
Documents; (d) confirms that it is an Eligible Assignee; (e) appoints and
authorizes the Administrative Agent to take such action on its behalf and to
exercise such powers under the Credit Documents as are delegated to the
Administrative Agent


                               Exhibit 11.3(b)-1

<PAGE>


by the terms thereof, together with such powers as are
reasonably incidental thereto; (f) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement and the other Credit Documents are required to be performed by it as a
Lender; and (g) attaches any U.S. Internal Revenue Service or other forms
required under Section 4.4.

         4. Following the execution of this Assignment Agreement, it will be
delivered to the Administrative Agent, together with the transfer fee required
pursuant to Section 11.3(b) of the Credit Agreement, if any, for acceptance and
recording by the Administrative Agent. The effective date for this Assignment
Agreement (the "Effective Date") shall be the date of acceptance hereof by the
Administrative Agent and the Borrower, as applicable, unless otherwise specified
herein.

         5. Upon the consent of the Borrower and the Administrative Agent, as
applicable, as of the Effective Date, (a) the Assignment shall be a party to the
Credit Agreement and the other Credit Documents and, to the extent provided in
this Assignment Agreement, have the rights and obligations of a Lender
thereunder and (b) the Assignor shall, to the extent provided in this Assignment
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement and the other Credit Documents.

         6. This Assignment Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

         7. This Assignment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         8. Terms of Assignment

            (a)  Date of Assignment:                           _________________

            (b)  Legal Name of Assignor:                       _________________

            (c)  Legal Name of Assignee:                       _________________

            (d)  Effective Date of Assignment:                 _________________

            (e)  Commitment Percentage Assigned:               ________________%

            (f)  Commitment Percentage of Assignor after
                 Assignment                                    ________________%

            (g)  Total Revolving Loans outstanding as of
                 Effective Date                                $________________

                               Exhibit 11.3(b)-2

<PAGE>

            (h)  Principal Amount of Revolving Loans
                 assigned on Effective Date (the amount set
                 forth in (g) multiplied by the percentage
                 set forth in (e))                             $________________

            (i)  Principal Amount of Competitive Bid Loans
                 Assigned on Effective Date                    $________________

            (j)  Revolving Loan Commitment                     $________________

            (k)  Principal Amount of Revolving Loan
                 Commitment Assigned on the Effective Date
                 (the amount set forth in (j) multiplied by
                 the percentage set forth in (e))              $________________


                               Exhibit 11.3(b)-3


<PAGE>


The terms set forth above are hereby agreed
to as of the date first above written:


____________________________ , as Assignor


By:_____________________________

Name:___________________________

Title:__________________________


____________________________ , as Assignor


By:_____________________________

Name:___________________________

Title:__________________________


                                        CONSENTED TO (if applicable):

                                        ATMOS ENERGY CORPORATION


                                        By:_____________________________

                                        Name:___________________________

                                        Title:__________________________


                                        BANK ONE, NA,
                                        as Administrative Agent


                                        By:_____________________________

                                        Name:___________________________

                                        Title:__________________________




                               Exhibit 11.3(b)-4

<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
SCHEDULES
Schedule 1.1(a)        Commitment Percentages
Schedule 1.1(b)        Pricing Schedule
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


                                      -v-



<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                                <C>
SECTION 1.    DEFINITIONS AND ACCOUNTING TERMS....................................   1

        1.1   Definitions.........................................................   1

        1.2   Computation of Time Periods.......................................... 13

        1.3   Accounting Terms..................................................... 13

        1.4   Time................................................................. 14

SECTION 2.    LOANS................................................................ 14

        2.1   Revolving Loan Commitment............................................ 14

        2.2   Method of Borrowing for Revolving Loans.............................. 16

        2.3   Funding of Revolving Loans........................................... 17

        2.4   Continuations and Conversions........................................ 17

        2.5   Minimum Amounts...................................................... 18

        2.6   Reductions of Revolving Loan Commitment.............................. 18

        2.7   Notes................................................................ 18

SECTION 3.    PAYMENTS............................................................. 19

        3.1   Interest............................................................. 19

        3.2   Prepayments.......................................................... 19

        3.3   Payment in full at Maturity.......................................... 20

        3.4   Fees................................................................. 20

        3.5   Place and Manner of Payments......................................... 21

        3.6   Pro Rata Treatment................................................... 21

        3.7   Computations of Interest and Fees.................................... 21

        3.8   Sharing of Payments.................................................. 22

        3.9   Evidence of Debt..................................................... 23

SECTION 4.    ADDITIONAL PROVISIONS REGARDING LOANS................................ 24

        4.1   Eurodollar Loan Provisions........................................... 24

        4.2   Capital Adequacy..................................................... 25

        4.3   Compensation......................................................... 26

        4.4   Taxes................................................................ 26

SECTION 5.    CONDITIONS PRECEDENT................................................. 28

        5.1   Closing Conditions................................................... 28
</TABLE>


                                      -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                                <C>
        5.2   Conditions to Loans.................................................. 30

SECTION 6.    REPRESENTATIONS AND WARRANTIES....................................... 31

        6.1   Organization and Good Standing....................................... 31

        6.2   Due Authorization.................................................... 31

        6.3   No Conflicts......................................................... 31

        6.4   Consents............................................................. 31

        6.5   Enforceable Obligations.............................................. 31

        6.6   Financial Condition.................................................. 32

        6.7   No Material Change................................................... 32

        6.8   No Default........................................................... 32

        6.9   Litigation........................................................... 32

        6.10  Taxes................................................................ 32

        6.11  Compliance with Law.................................................. 33

        6.12  Material Agreements.................................................. 33

        6.13  ERISA................................................................ 33

        6.14  Use of Proceeds...................................................... 34

        6.15  Government Regulation................................................ 34

        6.16  Disclosure........................................................... 35

        6.17  Environmental Matters................................................ 35

        6.18  Insurance............................................................ 35

        6.19  Franchises, Licenses, Etc............................................ 35

        6.20  Secured Indebtedness................................................. 36

        6.21  Subsidiaries......................................................... 36

SECTION 7.    AFFIRMATIVE COVENANTS................................................ 36

        7.1   Information Covenants................................................ 36

        7.2   Debt to Capitalization Ratio......................................... 38

        7.3   Preservation of Existence, Franchises and Assets..................... 38

        7.4   Books and Records.................................................... 38

        7.5   Compliance with Law.................................................. 38

        7.6   Payment of Taxes and Other Indebtedness.............................. 38
</TABLE>


                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                                <C>
        7.7   Insurance............................................................ 39

        7.8   Use of Proceeds...................................................... 39

        7.9   Audits/Inspections................................................... 39

SECTION 8.    NEGATIVE COVENANTS................................................... 39

        8.1   Nature of Business................................................... 40

        8.2   Consolidation and Merger............................................. 40

        8.3   Sale or Lease of Assets.............................................. 40

        8.4   Arm's-Length Transactions............................................ 40

        8.5   Fiscal Year; Organizational Documents................................ 40

        8.6   Liens................................................................ 40

SECTION 9.    EVENTS OF DEFAULT.................................................... 42

        9.1   Events of Default.................................................... 42

        9.2   Acceleration; Remedies............................................... 44

        9.3   Allocation of Payments After Event of Default........................ 45

SECTION 10.   AGENCY PROVISIONS.................................................... 46

        10.1  Appointment.......................................................... 46

        10.2  Delegation of Duties................................................. 46

        10.3  Exculpatory Provisions............................................... 46

        10.4  Reliance on Communications........................................... 47

        10.5  Notice of Default.................................................... 47

        10.6  Non-Reliance on Administrative Agent and Other Lenders............... 48

        10.7  Indemnification...................................................... 48

        10.8  Administrative Agent in Its Individual Capacity...................... 49

        10.9  Successor Agent...................................................... 49

SECTION 11.   MISCELLANEOUS........................................................ 49

        11.1  Notices.............................................................. 49

        11.2  Right of Set-Off..................................................... 50

        11.3  Benefit of Agreement................................................. 50

        11.4  No Waiver; Remedies Cumulative....................................... 53

        11.5  Payment of Expenses, etc............................................. 53
</TABLE>


                                      -iii-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                                <C>
        11.6  Amendments, Waivers and Consents..................................... 53

        11.7  Counterparts/Telecopy................................................ 54

        11.8  Headings............................................................. 55

        11.9  Defaulting Lender.................................................... 55

        11.10 Survival of Indemnification and Representations and Warranties....... 55

        11.11 Governing Law; Venue................................................. 55

        11.12 Waiver of Jury Trial................................................. 56

        11.13 Severability......................................................... 56

        11.14 Further Assurances................................................... 56

        11.15 Entirety............................................................. 56

        11.16 Binding Effect; Continuing Agreement................................. 56
</TABLE>


                                      -iv-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>5
<FILENAME>d99023exv12.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>
<PAGE>
                                                                      Exhibit 12


                            Atmos Energy Corporation
                    Computation of Earnings to Fixed Charges
                                  June 30, 2002


<Table>
<Caption>
                                                                     Three Months Ended          Nine Months Ended
                                                                          June 30                     June 30
                                                                  ------------------------  ------------------------
                                                                      2002         2001         2002         2001
                                                                  -----------  -----------  ------------ -----------
<S>                                                                 <C>          <C>           <C>         <C>
Income (loss) from continuing operations before
     provision for income taxes per statement of income             $  5,173     $ (5,414)     $103,760    $101,347
Add:
     Portion of rents representative of the interest factor              948          659         2,832       2,129
     Interest on debt & amortization of debt expense                  13,823        9,232        44,304      31,295
                                                                    --------     --------      --------    --------
        Income as adjusted                                           $19,944     $  4,477      $150,896    $134,771
                                                                    ========     ========      ========    ========

Fixed charges:
     Interest on debt & amortization of debt expense (1)             $13,823     $  9,232     $  44,304   $  31,295
     Capitalized interest (2)                                            300        2,036         1,003       2,036
     Capitalized expenses related to indebtedness (3)                      -        2,901             -       2,901
     Rents                                                             2,843        1,976         8,496       6,387
     Portion of rents representative of the interest factor(4)           948          659         2,832       2,129

                                                                     -------      -------     ---------   ---------
        Fixed charges (1)+(2)+(3)+(4)                                $15,071      $14,828     $  48,139   $  38,361
                                                                     =======      =======     =========   =========

Ratio of earnings to fixed charges                                      1.32          .30          3.13        3.51

</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-15
<SEQUENCE>6
<FILENAME>d99023exv15.txt
<DESCRIPTION>LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
<TEXT>
<PAGE>
                                                                      Exhibit 15



Board of Directors
Atmos Energy Corporation


We are aware of the incorporation by reference in the Registration Statements
(Form S-3, No. 33-37869; Form S-3 D/A, No. 33-70212; Form S-3, No. 33-58220;
Form S-3, No. 33-56915; Form S-3/A, No. 333-03339; Form S-3/A, No. 333-32475;
Form S-3/A, No. 333-50477; Form S-3/A, No. 333-93705; Form S-3, No. 333-95525;
Form S-3, No. 333-75576; Form S-4, No. 333-13429; Form S-8, No. 33-68852; Form
S-8, No. 33-57687; Form S-8, No. 33-57695; Form S-8, No. 333-32343; Form S-8,
No. 333-46337; Form S-8, No. 333-73143; Form S-8, No. 333-73145; Form S-8, No.
333-63738; and Form S-8, No. 333-88832) of Atmos Energy Corporation and in the
related Prospectuses of our report dated August 9, 2002, relating to the
unaudited condensed consolidated interim financial statements of Atmos Energy
Corporation which are included in its Form 10-Q for the quarter ended June 30,
2002.





                                                               ERNST & YOUNG LLP


Dallas, Texas
August 13, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>7
<FILENAME>d99023exv99w1.txt
<DESCRIPTION>CERTIFICATION BY CHIEF EXECUTIVE OFFICER
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Atmos Energy Corporation (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Robert
W. Best, Chairman, President and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.




/s/ ROBERT W. BEST
-----------------------
Robert W. Best
Chairman, President and
Chief Executive Officer
August 14, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>8
<FILENAME>d99023exv99w2.txt
<DESCRIPTION>CERTIFICATION BY CHIEF FINANCIAL OFFICER
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Atmos Energy Corporation (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John P.
Reddy, Senior Vice President and Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.



/s/ JOHN P. REDDY
-------------------------
John P. Reddy
Senior Vice President and
Chief Financial Officer
August 14, 2002

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