-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QV/MYjNlIBOZMYHzzEy4pgTkOscma6d0kn/V9P7WlZ7PQavQRD7e6PgkD5VpRWGT hBqPLDt23RYPHuI1e06g5w== 0000731802-98-000004.txt : 19980518 0000731802-98-000004.hdr.sgml : 19980518 ACCESSION NUMBER: 0000731802-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATMOS ENERGY CORP CENTRAL INDEX KEY: 0000731802 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 751743247 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10042 FILM NUMBER: 98622335 BUSINESS ADDRESS: STREET 1: 1800 THREE LINCOLN CTR STREET 2: 5430 LBJ FREEWAY CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2149349227 MAIL ADDRESS: STREET 1: 1800 THREE LINCOLN CTR STREET 2: 5430 LBJ FREEWAY CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: ENERGAS CO DATE OF NAME CHANGE: 19881024 10-Q 1 ATMOS ENERGY CORP 10-Q FOR QE 03/31/98 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 March 31, 1998 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.) 1800 Three Lincoln Centre 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 May 1, 1998. Class Shares Outstanding ----- ------------------ No Par Value 30,087,113 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) March 31, September 30, 1998 1997 ------------ ------------ ASSETS Property, plant and equipment $1,384,992 $1,332,672 Less accum. depreciation and amort. 508,923 483,545 ---------- ---------- Net property, plant and equipment 876,069 849,127 Current assets Cash and cash equivalents 10,025 6,016 Accounts receivable, net 110,442 71,217 Inventories of supplies and mdse. 13,289 12,333 Gas stored underground 22,910 48,122 Prepayments 4,132 6,017 ---------- ---------- Total current assets 160,798 143,705 Deferred charges and other assets 111,307 95,479 ---------- ---------- $1,148,174 $1,088,311 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity Common stock $ 150 $ 148 Additional paid-in capital 262,295 251,174 Retained earnings 117,630 75,938 ---------- ---------- Total shareholders' equity 380,075 327,260 Long-term debt 252,152 302,981 ---------- ---------- Total capitalization 632,227 630,241 Current liabilities Current maturities of long-term debt 57,508 15,201 Notes payable to banks 146,843 167,300 Accounts payable 73,463 62,626 Taxes payable 27,332 416 Customers' deposits 13,581 15,098 Other current liabilities 51,198 52,582 ---------- ---------- Total current liabilities 369,925 313,223 Deferred income taxes 87,486 87,828 Deferred credits and other liabilities 58,536 57,019 ---------- ---------- $1,148,174 $1,088,311 ========== ========== See accompanying notes to condensed consolidated financial statements. - 2 - ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data) Three months ended March 31, ----------------------------- 1998 1997 -------- -------- Operating revenues $288,550 $362,637 Purchased gas cost 164,579 238,389 -------- -------- Gross profit 123,971 124,248 Operating expenses Operation 33,227 43,562 Maintenance 2,288 3,150 Depreciation and amortization 11,876 11,553 Taxes, other than income 9,377 10,133 Income taxes 22,710 18,775 -------- -------- Total operating expenses 79,478 87,173 -------- -------- Operating income 44,493 37,075 Other income 2,241 2,214 Interest charges, net 9,336 8,663 -------- -------- Net income $ 37,398 $ 30,626 ======== ======== Basic net income per share $ 1.26 $ 1.04 ======== ======== Diluted net income per share $ 1.25 $ 1.04 ======== ======== Cash dividends per share $ .265 $ .252 ======== ======== Weighted average shares outstanding: Basic 29,740 29,379 ======== ======== Diluted 29,965 29,397 ======== ======== See accompanying notes to condensed consolidated financial statements. - 3 - ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data) Six months ended March 31, -------------------- 1998 1997 -------- -------- Operating revenues $583,881 $643,261 Purchased gas cost 360,309 421,744 -------- -------- Gross profit 223,572 221,517 Operating expenses Operation 69,268 81,735 Maintenance 4,769 5,738 Depreciation and amortization 23,784 23,065 Taxes, other than income 17,596 18,312 Income taxes 34,994 29,624 -------- -------- Total operating expenses 150,411 158,474 -------- -------- Operating income 73,161 63,043 Other income 3,004 3,102 Interest charges 18,645 17,364 -------- -------- Net income $ 57,520 $ 48,781 ======== ======== Basic net income per share $ 1.94 $ 1.66 ======== ======== Diluted net income per share $ 1.94 $ 1.66 ======== ======== Cash dividends per share $ .53 $ .50 ======== ======== Weighted average shares outstanding Basic 29,654 29,310 ======= ====== Diluted 29,668 29,328 ======= ====== See accompanying notes to condensed consolidated financial statements. - 4 - ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Six months ended March 31, ------------------- 1998 1997 -------- -------- Cash Flows From Operating Activities Net income $57,520 $ 48,781 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Charged to depreciation and amortization 23,784 23,065 Charged to other accounts 1,634 1,938 Deferred income taxes (benefit) (342) 3,584 Net change in operating assets and liabilities 7,457 (20,650) -------- -------- Net cash provided by operating activities 90,053 56,718 Cash Flows From Investing Activities Capital expenditures (52,575) (53,547) Retirements of property, plant and equipment 215 314 -------- -------- Net cash used in investing activities (52,360) (53,233) Cash Flows From Financing Activities Net decrease in notes payable to banks (20,457) (15,943) Cash dividends paid (15,828) (14,789) Issuance of long-term debt - 40,000 Repayment of long-term debt (8,522) (9,724) Issuance of common stock 11,123 5,382 -------- -------- Net cash provided (used) by financing activities (33,684) 4,926 -------- -------- Net increase in cash and cash equivalents 4,009 8,411 Cash and cash equivalents at beginning of period 6,016 8,757 -------- -------- Cash and cash equivalents at end of period $ 10,025 $ 17,168 ======== ======== See accompanying notes to condensed consolidated financial statements. - 5 - ATMOS ENERGY CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1998 1. Unaudited interim financial information In the opinion of management, all material adjustments necessary for a fair presentation have been made to the unaudited interim period financial statements. Such adjustments consisted only of normal recurring accruals. Because of seasonal and other factors, the results of operations for the six-month period ended March 31, 1998 are not indicative of expected results of operations for the year ending September 30, 1998. 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 ("Atmos" or the "Company") in its 1997 annual report to shareholders. The condensed consolidated balance sheet of Atmos as of March 31, 1998, the related condensed consolidated statements of income for the three-month and six-month periods ended March 31, 1998 and 1997, and the condensed consolidated statements of cash flows for the six-month periods ended March 31, 1998 and 1997, included herein have been subjected to a review by Ernst & Young LLP, the Company's independent accountants, whose report is included herein. Common stock - As of March 31, 1998, the Company had 75,000,000 shares of common stock, no par value (stated at $.005 per share), authorized and 30,056,436 shares outstanding. At September 30, 1997 29,642,437 shares were outstanding. 2. Business Combination As discussed in Note 2 of notes to consolidated financial statements in the Company's Form 10-K for the year ended September 30, 1997, on July 31, 1997, Atmos acquired by means of a merger all of the assets and liabilities of United Cities Gas Company ("UCGC"). The transaction was accounted for as a pooling of interests. Therefore, financial statements for prior periods have been restated to reflect the merger. Certain UCGC account balances for prior periods have been reclassified to conform UCGC's classifications to Atmos' presentation. - 6 - 3. Rates The Company's ratemaking activity over the three-year period ended September 30, 1997 was discussed in Note 3 of notes to consolidated financial statements in the Company's Form 10-K for the year ended September 30, 1997. The status of such activity at March 31, 1998 has not changed, except as discussed below. In fiscal 1997, the Colorado Office of Consumer Counsel filed a complaint with the Colorado Public Utilities Commission ("Colorado Commission") requesting a $3.5 million reduction in the annual revenues in Colorado of Greeley Gas Company ("the Greeley Gas Division"). On December 17, 1997, a hearing was held at the Colorado Commission presenting a Stipulation and Agreement reached by the Greeley Gas Division and the Colorado Office of Consumer Counsel. It settled the Consumer Counsel's complaint against the Greeley Gas Division for a $1.6 million reduction in annual revenues. The Stipulation and Agreement became effective in late January 1998. The reduction will decrease the estimated annual gross profit of the Greeley Gas Division by approximately 4% and the gross profit of Atmos by approximately .5%. 4. Contingencies For a review of the status of the Company's litigation and environmental matters as of September 30, 1997, please refer to Note 5 of notes to consolidated financial statements in the Company's Form 10-K for the year ended September 30, 1997. Material contingencies and new developments since September 30, 1997 are discussed below. Litigation On March 15, 1991, suit was filed in the 15th Judicial District Court of Lafayette Parish, Louisiana, by the "Lafayette Daily Advertiser" and others against Trans Louisiana Gas Company ("Trans La Division"), Trans Louisiana Industrial Gas Company, Inc. ("TLIG"), a wholly owned subsidiary of the Company, and Louisiana Intrastate Gas Corporation and certain of its affiliates ("LIG"). LIG is the Company's primary supplier of natural gas in Louisiana and is not otherwise affiliated with the Company. The plaintiffs purported to represent a class consisting of all residential and commercial gas customers in the Trans La Division's service area. Among other things, the lawsuit alleged that the defendants violated the antitrust laws of the state of Louisiana by manipulating the cost-of-gas component of the Trans La Division's gas rate to the purported customer class, thereby causing such purported class members to pay a higher rate. The plaintiffs made no specific allegation of an amount of damages. The case was concluded when the Court entered its final approval of the settlement and the suit was dismissed with prejudice at a fairness hearing on December 15, 1997. - 7 - In Colorado, the Greeley Gas Division is a defendant in several lawsuits filed as a result of a fire in a building in Steamboat Springs, Colorado on February 3, 1994. The plaintiffs claim that the fire resulted from a leak in a severed gas service line owned by the Greeley Gas Division. On January 12, 1996, the jury awarded the plaintiffs approximately $2.5 million in compensatory damages and approximately $2.5 million in punitive damages. The jury assessed the Company with liability for all of the damages awarded. The Company has appealed the judgment to the Colorado Court of Appeals. The Company believes it has meritorious issues for such appeal but cannot assess, at this time, the likelihood of success in the appeal. The Company has adequate insurance to cover the compensatory and punitive damages awarded. In March 1997, Western Kentucky Gas Company ("Western Kentucky Division") was named as a defendant in a lawsuit in the District Court in Danville, Kentucky, as a result of an explosion and fire at a residence in Danville, Kentucky on March 4, 1997. The plaintiffs, Lisa Benedict, et al, who were leasing the residence, suffered serious burns in the accident and have alleged that the Western Kentucky Division was negligent in installing and servicing gas lines at the residence. The plaintiffs, who are also suing the landlord/owner of the house, have asked for punitive damages and compensatory damages in the case. Discovery has just begun; accordingly, the Company cannot assess, at this time, the likelihood of success in this case. However, the Company believes it has adequate insurance and reserves to cover damages that may be awarded. In November 1997, a jury in Plaquemine, Louisiana awarded Brian L. Heard General Contractor, Inc., ("Heard") a total of $177,929 in actual damages and $15 million in punitive damages resulting from a lawsuit by Heard against the Trans La Division, the successor in interest to Oceana Heights Gas Company, which the Company acquired in November 1995. The trial judge also awarded interest on the total judgment amount. The claims are for events that occurred prior to the time the Company acquired Oceana Heights Gas Company. Heard claimed damages associated with delays he allegedly incurred in constructing a sewer system in Iberville Parish, Louisiana. Heard filed the suit against the Trans La Division and two other defendants, alleging that gas leaks had caused delays in Heard s completion of a sewer project, resulting in lost business opportunities for the contractor during 1994. The Company believes that the gas leaks claimed in the lawsuit were minor leaks, common in normal operations of gas systems, and were repaired in accordance with standard industry practices and did not cause the damages claimed. The jury awarded punitive damages under a prior Louisiana statute that allowed punitive damages to be awarded in cases involving hazardous substances, which, as defined in the statute, included natural gas. Although not retroactive, the Louisiana legislature repealed the statute in 1996. The Company does not believe that punitive damages are applicable in the case and - 8 - should not be awarded because there were no direct damages caused by natural gas. The Company is appealing the verdict and aggressively pursuing the reversal of the judgment. However, the Company cannot assess, at this time, the likelihood of the judgment being reversed on appeal. The Company is in the process of reviewing its insurance coverage with respect to this case. Although Oceana Heights Gas Company was insured, it appears that a claim of this nature will not be covered by such insurance. However, the Company does not expect the final outcome of this case to have a material adverse effect on the financial condition, results of operations or net cash flows of the Company. From time to time, other claims are made and lawsuits are filed against the Company arising out of the ordinary business of the Company. In the opinion of the Company's management, liabilities, if any, arising from these other claims and lawsuits are either covered by insurance, adequately reserved for by the Company or would not have a material adverse effect on the financial condition, results of operations, or net cash flows of the Company. Environmental Matters The United Cities Division owned a former manufactured gas plant site in Americus, Georgia. On May 14, 1997, the Georgia Environmental Protection Division requested that UCGC enter into a proposed voluntary consent order for the remediation of the Americus site. Subsequently, the other responsible parties at the site advised UCGC that they would be willing to enter into a "cashout" settlement for a one-time payment by the Company of $250,000. A Settlement Agreement wherein the Company agreed to pay $250,000 for a "cashout" settlement was entered into by the parties on December 16, 1997. The agreement contains a Covenant not to sue, an indemnification provision from the other parties and gives the other parties all responsibility for investigation and environmental response actions of the site. As of March 31, 1998, the Company had accrued and deferred for recovery amounts related to this site. The Company addresses other environmental matters from time to time in the regular and ordinary course of its business. Management expects that future expenditures related to response action at any site will be recovered through rates or insurance, or shared among other potentially responsible parties. Therefore, the costs of responding to these sites are not expected to materially affect the financial condition, results of operations, or net cash flows of the Company. 5. Short-term debt At March 31, 1998, the Company had committed, short-term, unsecured bank credit facilities totaling $187,000,000, of which $65,000,000 was unused. The Company also had aggregate - 9 - uncommitted lines of credit totaling $160,000,000, of which $140,300,000 was unused. 6. Statements of cash flows Supplemental disclosures of cash flow information for the six-month periods ended March 31, 1998 and 1997 are presented below. Six months ended March 31, 1998 1997 ------ ------ (In thousands) Cash paid for Interest $18,460 $13,375 Income taxes 7,399 5,658 7. Earnings per share In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. Adoption of Statement 128 did not change the fully diluted earnings per share amounts for the three-month and six-month periods ended March 31, 1997. Reconciliations of the numerators and denominators of the basic and diluted per-share computations for net income for the three- month and six-month periods ended March 31, 1998 and 1997 are as follows: - 10 - For the three months ended March 31, 1998 ----------------------------------- Income Shares Per-Share (Numerator) (Denominator) Amount ----------- ------------- --------- (In thousands) Basic EPS: Income available to common stockholders $37,398 29,740 $1.26 ===== Effect of dilutive securities: Restricted stock - 211 Stock options - 14 ------- ------ Diluted EPS: Income available to common stockholders and assumed conversions $37,398 29,965 $1.25 ======= ====== ===== For the three months ended March 31, 1997 ----------------------------------- Income Shares Per-Share (Numerator) (Denominator) Amount ----------- ------------- --------- (In thousands) Basic EPS: Income available to common stockholders $30,626 29,379 $1.04 ===== Effect of dilutive securities: Restricted stock - - Stock options - 18 ------- ------ Diluted EPS: Income available to common stockholders and assumed conversions $30,626 29,397 $1.04 ======= ====== ===== - 11 - For the six months ended March 31, 1998 ----------------------------------- Income Shares Per-Share (Numerator) (Denominator) Amount ----------- ------------- --------- (In thousands) Basic EPS: Income available to common stockholders $57,520 29,654 $1.94 ===== Effect of dilutive securities: Restricted stock - - Stock options - 14 ------- ------ Diluted EPS: Income available to common stockholders and assumed conversions $57,520 29,668 $1.94 ======= ====== ===== For the six months ended March 31, 1997 ----------------------------------- Income Shares Per-Share (Numerator) (Denominator) Amount ----------- ------------- --------- (In thousands) Basic EPS: Income available to common stockholders $48,781 29,310 $1.66 ===== Effect of dilutive securities: Restricted stock - - Stock options - 18 ------- ------ Diluted EPS: Income available to common stockholders and assumed conversions $48,781 29,328 $1.66 ======= ====== ===== - 12 - 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 March 31, 1998, and the related condensed consolidated statements of income for the three-month and six-month periods ended March 31, 1998 and 1997 and the condensed consolidated statements of cash flows for the six-month periods ended March 31, 1998 and 1997. 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 generally accepted auditing standards, 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 at March 31, 1998, and for the three-month and six-month periods ended March 31, 1998 and 1997 for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Atmos Energy Corporation as of September 30, 1997, 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 11, 1997, 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, 1997, 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 April 27, 1998 - 13 - 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 the Company's 1997 Annual Report to Shareholders and the Company's Annual Report on Form 10-K for the year ended September 30, 1997. The Company distributes and sells natural gas and propane to residential, commercial, industrial and agricultural customers in thirteen states. Such business is subject to regulation by state and/or local authorities in each of the states in which the Company operates. In addition, the Company's business is affected by seasonal weather patterns, competitive factors within the energy industry, and economic conditions in the areas that the Company serves. Cautionary Statement under the Private Securities Litigation Reform Act of 1995 The matters discussed or incorporated by reference in this Quarterly Report on Form 10-Q contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this Quarterly Report including, but not limited to, those contained in the following sections, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and Note 4 of notes to condensed consolidated financial statements, regarding the Company's financial position, business strategy and plans and objectives of management of the Company for future operations, are forward- looking statements made in good faith by the Company. When used in this Report or in any of the Company's other documents or oral presentations, the words "anticipate," "report," "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 operations, markets, services, rates, recovery of costs, availability of gas supply, and other factors. These risks and uncertainties include, but are not limited to, national, regional and local economic competitive conditions, regulatory and business trends and decisions, technological developments, Year 2000 issues, inflation rates, weather conditions, and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the Company. 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. Ratemaking Activity In December 1997, the Company and the Colorado Office of Consumer Counsel presented a Stipulation and Agreement to the Colorado Commission to settle the Consumer Counsel's $3.5 million rate reduction complaint against - 14 - the Greeley Gas Division. It was approved by the Colorado Commission, effective in late January 1998. It provides for a reduction of approximately $1.6 million in annual revenues in Colorado. The reduction will decrease the estimated annual gross profit of the Greeley Gas Division by approximately 4% and the gross profit of Atmos by approximately .5%. Year 2000 The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs that have date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Company has developed a Year 2000 plan to identify, evaluate, implement and test solutions to issues regarding four digit dates. The Company understood the importance of this issue several years ago and began implementing four digit solutions to in-house developed systems that were being enhanced or changed due to non-Year 2000 issues. The major mission critical system of the Company is a customer information system that is being replaced and is planned to be placed in full operation in September 1998. This system uses many best practices and will add to the quality of service to the Company's customers. The Company's Year 2000 plan includes implementing all critical solutions by the end of calendar 1998 and testing during calendar 1999. At this time, the Company, does not have a specific estimated total cost for the remaining systems or mechanical device changes, but does not believe that it will be a material amount. Weather and Seasonality The Company's natural gas and propane distribution businesses are seasonal due to weather conditions in the Company's service areas. Sales are affected by winter heating season requirements. Sales to agricultural customers (who use natural gas as fuel in the operation of irrigation pumps) during the period from April through September are affected by rainfall amounts. These factors generally result 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. Although weather for the six months ended March 31, 1998 was 4% warmer than normal, it was 2% colder than weather in the corresponding period of the prior year and sales volumes to weather sensitive customers increased .5 billion cubic feet ("Bcf"). The Company has weather normalization adjustments ("WNAs") in Georgia and Tennessee, where it serves approximately 170,000 customers or 53% of the United Cities Division's total customers and revenues. The WNAs increase the base rate when weather is warmer than normal and decrease it when weather is colder than normal. The effect of the WNAs was to increase revenues approximately $.6 million for the six months ended March 31, 1998, as compared with an increase of approximately $2.8 million for the six month period ended March 31, 1997. The Company does not have WNAs in its other service areas. - 15 - FINANCIAL CONDITION For the six months ended March 31, 1998 net cash provided by operating activities totaled $90.1 million compared with $56.7 million for the six months ended March 31, 1997. The increase resulted from increased net income and decreased net operating assets and liabilities. Net income increased $8.7 million to $57.5 million for the six months ended March 31, 1998 from $48.8 million for the six months ended March 31, 1997. Net operating assets and liabilities decreased $7.5 million for the six months ended March 31, 1998 compared with an increase of $20.7 million for the six months ended March 31, 1997. This decrease in net operating assets and liabilities resulted primarily from large swings in accounts receivable, accounts payable and inventories of gas in underground storage that occur when entering and leaving the winter or heating season. These fluctuations were due primarily to weather in the month of March 1998 being 38% colder than in the month of March 1997. Major cash flows used in investing activities for the six months ended March 31, 1998 included capital expenditures of $52.6 million compared with $53.5 million for the six months ended March 31, 1997. The capital expenditures budget for fiscal 1998 is currently $109.1 million, including $37.0 million for completing the Customer Service Initiative ("CSI"), as compared with actual capital expenditures of $122.3 million in fiscal 1997. Other budgeted capital projects include major expenditures for mains, services, meters, vehicles and computer software and equipment. The CSI project includes a new Customer Information System, a call center, and related business process and infrastructure changes which are planned to be placed in full operation in September 1998. These expenditures will be financed from internally generated funds and financing activities. For the six months ended March 31, 1998, cash flows used by financing activities amounted to $33.7 million as compared with cash flows provided of $4.9 million for the six months ended March 31, 1997. During the six month period, notes payable to banks decreased $20.5 million, as compared with a decrease of $15.9 million in the six months ended March 31, 1997, due to seasonal factors and the refinancing of short-term debt with proceeds from the issuance of $40.0 million of long-term debt in the quarter ended December 31, 1996. The debt issued in November 1996 consisted of $40.0 million of 6.09% term notes, payable in November 1998. Payments of long- term debt totaled $8.5 million for the six months ended March 31, 1998. Such payments consisted of a $3.0 million installment on the Company's 9.76% Senior Notes, a $2.0 million installment on the Company's 11.2% Senior Notes, an installment of $2.0 million on the Company's 8.69% Series N First Mortgage Bonds, and installments of $1.5 million on various non-utility notes. The Company paid $15.8 million in cash dividends during the six months ended March 31, 1998, compared with dividends of $14.8 million paid during the six months ended March 31, 1997. This reflects increases in the quarterly dividend rate and in the number of shares outstanding. In the six months ended March 31, 1998, the Company issued 413,999 shares of common stock, of which 25,815 were for the Employee Stock Ownership Plan ("ESOP"), 221,786 were for the Direct Stock Purchase Plan ("DSPP"), 1,148 for the Outside Directors Stock-for-Fee Plan, 111,250 for the Restricted Stock Grant Plan and 54,000 for stock options under the Long Term Stock Plan for the United Cities Division. In the six months ended March 31, 1997, the Company issued 236,569 shares of common stock of which 146,484 were for the ESOP and - 16 - 401(k) plans, 88,452 for the DSPP, and 1,633 for the Outside Directors Stock-for-Fee Plan. The Company believes that internally generated funds, its short-term credit facilities and access to the debt and equity capital markets will provide necessary working capital and liquidity for capital expenditures and other cash needs for the remainder of fiscal 1998. At March 31, 1998 the Company had $187.0 million in committed short-term credit facilities, $65.0 million of which was unused. The committed lines of credit are renewed or renegotiated at least annually. At March 31, 1998, the Company also had $160.0 million of uncommitted short-term lines of credit, of which $140.3 million was unused. On April 20, 1998 the Company filed a registration statement on Form S- 3 with the SEC to register the issuance of up to $150 million of unsecured debt securities. Before the debt securities may be issued, the registration statement must become effective and approvals must be obtained from several states' utility commissions. The proceeds from the debt issuance are to be used to refinance short-term borrowings under the Company's credit facilities. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998, COMPARED WITH THREE MONTHS ENDED MARCH 31, 1997 Operating revenues decreased by 20% to $288.6 million for the three months ended March 31, 1998 from $362.6 million for the three months ended March 31, 1997. The most significant factor contributing to the decrease in operating revenues was an 18% decrease in the average sales revenue per Mcf. The decrease in the revenue per Mcf sold reflects a 27% decrease in the average cost of gas per Mcf sold which is passed through to customers. In addition, there was a 3% decrease in the volumes delivered. During the quarter ended March 31, 1998, temperatures were 6% warmer than in the corresponding quarter of the prior year, and were 13% warmer than the 30- year normal weather for the quarter. The total volume of gas sold and transported for the three months ended March 31, 1998 was 74.2 billion cubic feet ("Bcf") compared with 76.3 Bcf for the three months ended March 31, 1997. Sales volumes to weather sensitive customer classes were lower for the quarter ended March 31, 1998 than for the corresponding period of the prior year due to the warmer winter weather. Sales volumes to industrial (including agricultural) customers were reduced by lower demand by agricultural customers and switching from sales service to transportation service by certain large industrial customers in Kentucky. The average sales price per Mcf sold decreased $.97 to $4.42 primarily due to a decrease in the average cost of gas. The average cost of gas per Mcf sold decreased 27% to $2.77 for the three months ended March 31, 1998 from $3.78 for the three months ended March 31, 1997 due to increased supply availability in the current market. Gross profit decreased by .2% to $124.0 million for the three months ended March 31, 1998, from $124.2 million for the three months ended March 31, 1997. The decrease in gross profit was primarily due to the decrease in volumes sold. Changes in cost of gas do not directly affect gross profit. However, the Company estimates that the impact of the weather being 13% - 17 - warmer than normal and rainfall being above normal for the three months ended March 31, 1998 caused gross profit to be approximately $6.0 million less than it would have been had the Company experienced normal temperatures and rainfall in its respective service areas. Weather was approximately 8% warmer than normal for the three months ended March 31, 1997. Operating expenses, excluding income taxes, decreased 17% to $56.8 million for the three months ended March 31, 1998 from $68.4 million for the three months ended March 31, 1997. The major factors contributing to the decrease in operation and maintenance expenses in the 1998 quarter were savings from restructuring and the integration of United Cities, as well as higher administrative and general expenses in the 1997 quarter, which included expenses associated with severance pay of $4.4 million ($2.8 million after tax) due to management reorganization. The decrease in taxes other than income taxes was related to taxes on decreased revenues and payroll taxes related to the reduced labor force. Operating income increased 20% for the three months ended March 31, 1998 to $44.5 million from $37.1 million for the three months ended March 31, 1997. The increase in operating income resulted from decreased operating expenses, as mentioned above. Income taxes increased $3.9 million or 21% in the quarter ended March 31, 1998 compared with the corresponding quarter of the prior year due to increased pre-tax income. Interest expense increased $.7 million, or 8%, for the three months ended March 31, 1998 compared with the three months ended March 31, 1997 due to an increased amount of total debt outstanding. Net income increased for the three months ended March 31, 1998 by 22% to $37.4 million from $30.6 million for the three months ended March 31, 1997. This increase in net income resulted primarily from the decrease in operating expenses discussed above. SIX MONTHS ENDED MARCH 31, 1998, COMPARED WITH SIX MONTHS ENDED MARCH 31, 1997 Operating revenues decreased by 9% to $583.9 million for the six months ended March 31, 1998 from $643.3 million for the six months ended March 31, 1997. The primary factor contributing to the lower operating revenues was a 7% decrease in the average gas sales revenue per Mcf, due to a 12% decrease in the average cost of gas per Mcf sold, which is reflected in revenues. Total volumes delivered was unchanged for the six months ended March 31, 1998. However, the volume of gas sold decreased 4.0 Bcf and the volume transported increased 4.0 Bcf compared with the six months ended March 31, 1997. This switching of industrial sales customers to transportation service reduced gross revenues, purchased gas cost and, to a lesser extent, gross profit. Sales volumes to weather sensitive customer classes increased .5 Bcf for the six months ended March 31, 1998 compared with the corresponding period of the prior year due to 2% colder weather. Sales volumes to industrial (including agricultural) customers were reduced by lower agricultural usage and switching by industrial sales customers to transportation service. Although the weather in the Company's service areas was 2% colder than weather in the corresponding six-month period of the prior fiscal year, it was 4% warmer than 30-year normal weather. The average sales price per Mcf decreased to $4.89 for the six months ended March 31, 1998 from $5.27 for the six months ended March 31, 1997. The decrease in the average sales price reflects a decrease in the average cost - 18 - of gas, partially offset by rate increases. The average cost of gas per Mcf sold decreased to $3.28 for the six months ended March 31, 1998 from $3.71 for the six months ended March 31, 1997 because of generally lower gas supply costs. Gross profit increased 1% to $223.6 million for the six months ended March 31, 1998, compared with $221.5 million for the six months ended March 31, 1997. This increase was primarily due to an increase of $.05 average transportation revenue per Mcf and secondarily to rate increases in Texas, Georgia and Illinois. The decreased cost of gas did not directly affect gross profit. However, the Company estimates that the impact of the weather being 4% warmer than normal and rainfall being above normal for the six months ended March 31, 1998 caused gross profit to be approximately $3.9 million less than it would have been had the Company experienced normal temperatures and rainfall in its respective service areas. Weather was approximately 6% warmer than normal for the six months ended March 31, 1997. Operating expenses, excluding income taxes, decreased to $115.4 million in the six months ended March 31, 1998, from $128.9 million in the six months ended March 31, 1997. The decrease was comprised of $12.5 million in operation expense, $1.0 million in maintenance and $.7 million in taxes other than income. The principal factors contributing to the decrease in operation and maintenance expenses were savings realized in connection with integration and reorganization initiatives and the administrative and general expenses incurred in the six months ended March 31, 1997 in connection with management reorganization. The increase in depreciation related to utility plant additions placed in service during the past year. Significant factors in the decrease in taxes other than income taxes were lower taxes on decreased revenues and payroll taxes related to the reduced labor force. The provision for income taxes for the six months ended March 31, 1998 increased $5.4 million from the provision for the corresponding period of the prior year due to increased pre-tax income. Operating income increased for the six months ended March 31, 1998 to $73.2 million from $63.0 million for the six months ended March 31, 1997. The increase in operating income was primarily related to the decreased operating expenses and, to a lesser extent, to increased gross profit, as discussed above. Interest charges increased $1.3 million, or 7%, due to an increased amount of debt outstanding during the six months ended March 31, 1998 compared with the corresponding six-month period of the prior year. Net income increased 18% for the six months ended March 31, 1998, to $57.5 million from $48.8 million for the six months ended March 31, 1997. The increase in net income resulted primarily from the decrease in operating expenses which was supplemented by an increase in gross profit. Dividends per share increased approximately 6% to $.53 for the six months ended March 31, 1998. Diluted average shares outstanding increased 1% due to shares issued under the Employee Stock Ownership Plan and the Direct Stock Purchase Plan. UTILITY AND NON-UTILITY DATA The following table summarizes certain information regarding the operation of the utility and non-utility businesses of the Company for each of the six-month periods ended March 31, 1998 and 1997. Prior periods have - 19 - been restated to reflect the pooling of interests with UCGC on July 31, 1997. Utility Non-utility Total ------- ----------- --------- Six months ended March 31: (In thousands) 1998 Operating revenues $555,206 $28,675 $583,881 Net income 53,788 3,732 57,520 1997 Operating revenues $612,970 $30,291 $643,261 Net income 44,917 3,864 48,781 The utility business is comprised of the Company's five utility divisions: Energas Division, Greeley Gas Division, Trans La Division, United Cities Division and Western Kentucky Division. It includes regulated as well as certain nonregulated utility businesses such as irrigation, transportation and gas marketing activities in the utility divisions' respective service areas. The non-utility business includes the operations of UCG Storage and UCG Energy, which includes a 45% interest in Woodward Marketing LLC, Atmos Propane, and leasing of real estate, vehicles and appliances. The net income for such operations for the six-month periods ended March 31, 1998 and 1997 are recapped below: Six months ended March 31, 1998 1997 ------ -------- (In thousands) Non-utility net income: Atmos Propane $1,554 $1,736 Woodward Marketing 1,462 1,414 Leasing and rental 474 596 Storage and other 242 118 ------ ------- Total $3,732 $3,864 ====== ======= Atmos Propane sells and transports propane to both wholesale and retail customers. Propane statistics for the six-month periods ended March 31, 1998 and 1997 are included in the "Consolidated Operating Statistics" table which appears at the end of Management's Discussion and Analysis. The division sold 24.3 million gallons of propane for the six-month period ended March 31, 1998, as compared with 23.7 million gallons for the six-month period ended March 31, 1997. The decrease in revenues for the six months ended March 31, 1998 compared with the same period last year was the result of a lower average sales price due to comparatively lower cost of supply to the division. - 20 - Total customers at March 31, 1998 increased 17,515, or 2%, compared with March 31, 1997. March 31, -------------------------- 1998 1997 ------------ ----------- Meters-in-service at end of period Residential 892,069 875,243 Commercial 96,430 94,585 Public authority and other 4,874 4,786 Industrial (including agricultural) 16,833 17,330 --------- ---------- Total natural gas meters 1,010,206 991,944 Propane customers 29,229 29,976 --------- ---------- Total 1,039,435 1,021,920 ========= ========== - 21 - ATMOS ENERGY CORPORATION CONSOLIDATED OPERATING STATISTICS Quarter ended March 31, 1998 1997 Sales volumes -- MMcf(1) ------- ------- Residential 33,404 33,554 Commercial 14,903 15,518 Public authority and other 2,183 2,213 Industrial (including agricultural) 8,985 11,853 ------- ------- Total 59,475 63,138 Transportation volumes -- MMcf(1) 14,748 13,189 ------- ------- Total volumes delivered 74,223 76,327 ======= ======= Propane - Gallons (000's) 13,022 12,081 Gas sales revenues (000's): ======= ======= Residential $155,456 $195,352 Commercial 66,865 85,449 Public authority and other 6,656 10,696 Industrial (including agricultural) 34,129 48,510 -------- -------- Total gas revenues 263,106 340,007 Transportation revenues 6,420 5,261 Other revenues 3,613 2,028 -------- -------- Total utility revenues 273,139 347,296 Non-utility revenues: Propane revenues 11,375 12,559 Other revenues 4,036 2,782 -------- -------- Total non-utility revenues 15,411 15,341 -------- -------- Total operating revenues $288,550 $362,637 ======== ======== Average Gas Sales Revenues per Mcf $ 4.42 $ 5.39 Average Transportation Revenue per Mcf $ .44 $ .40 Cost of Gas per Mcf Sold $ 2.77 $ 3.78 HEATING DEGREE DAYS Service Weather Sensitive Quarter ended March 31, Area Customers % 1998 1997 Normal - -------------- ----------- ----- ----- ------ Energas 30% 1,762 1,839 1,884 Trans La 8% 855 882 1,068 Western Kentucky 18% 1,796 2,071 2,355 Greeley Gas 11% 2,779 2,945 2,963 United Cities 33% 1,862 1,916 2,200 ---- System Average 100% 1,831 1,940 2,115 (1) Volumes are reported as metered in million cubic feet ("MMcf"). - 22 - ATMOS ENERGY CORPORATION CONSOLIDATED OPERATING STATISTICS Six months ended March 31, 1998 1997 Sales volumes -- MMcf(1) ------- ------- Residential 59,871 58,875 Commercial 27,452 27,965 Public authority and other 4,066 4,049 Industrial (including agricultural) 18,319 22,799 ------- ------- Total 109,708 113,688 Transportation volumes -- MMcf(1) 29,089 25,084 ------- ------- Total volumes delivered 138,797 138,772 ======= ======= Propane - Gallons (000's) 24,280 23,705 Gas sales revenues (000's): ======= ======= Residential $310,566 $340,741 Commercial 136,082 150,039 Public authority and other 15,606 19,861 Industrial (including agricultural) 74,241 88,456 -------- -------- Total gas revenues 536,495 599,097 Transportation revenues 13,255 10,360 Other revenues 5,456 3,513 -------- -------- Total utility revenues $555,206 $612,970 Non-utility revenues: Propane revenues 21,818 25,375 Other revenues 6,857 4,916 -------- -------- Total non-utility revenues $ 28,675 $ 30,291 -------- -------- Total operating revenues $583,881 $643,261 ======== ======== Average Gas Sales Revenues per Mcf $ 4.89 $ 5.27 Average Transportation Revenue per Mcf $ .46 $ .41 Cost of Gas per Mcf Sold $ 3.28 $ 3.71 HEATING DEGREE DAYS Service Weather Sensitive Six months ended March 31, Area Customers % 1998 1997 Normal - -------------- ----------- ----- ----- ------ Energas 30% 3,394 3,128 3,286 Trans La 8% 1,651 1,421 1,729 Western Kentucky 18% 3,509 3,684 3,968 Greeley Gas 11% 5,150 5,237 5,313 United Cities 33% 3,503 3,489 3,726 ---- System Average 100% 3,486 3,421 3,631 (1) Volumes are reported as metered in million cubic feet ("MMcf"). - 23 - PART II. OTHER INFORMATION Item 1. Legal Proceedings See Note 4 of notes to consolidated financial statements herein for a description of legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Shareholders of Atmos Energy Corporation on February 11, 1998, 27,391,818 votes were cast as follows: VOTES VOTES BROKER FOR WITHHELD NON-VOTE ---------- ---------- -------- Class III Directors: Robert W. Best 27,096,540 295,278 Thomas J. Garland 27,077,093 314,725 - Phillip E. Nichols 27,090,372 301,446 - Charles K. Vaughan 27,090,257 301,561 - The other directors will continue to serve until the expiration of their terms. The term of the Class II directors, Richard W. Cardin, Thomas C. Meredith, Carl S. Quinn and Richard Ware II will expire in 2000. The term of the Class I directors, Travis W. Bain II, Gene C. Koonce, Vincent J. Lewis and Dan Busbee, will expire in 1999. The term of the Class III directors, listed above, will expire in 2001. Lee E. Schlessman retired from the Board at the expiration of his term in February 1998 in accordance with the Company's mandatory retirement policy. Proposal to increase the total number of shares that may be issued under the Restricted Stock Grant Plan by 650,000 shares. VOTES VOTES VOTES BROKER FOR AGAINST ABSTAINING NON-VOTE ---------- ---------- ---------- -------- 25,360,895 1,430,549 483,882 116,492 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. (b) Reports on Form 8-K None. - 24 - 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: May 14, 1998 By: /s/ David L. Bickerstaff ------------------------------ David L. Bickerstaff Vice President and Controller (Chief Accounting Officer and duly authorized signatory) - 25 - EXHIBITS INDEX Item 6(a) Exhibit Page Number Description Number ------- ----------- ------- 10.1 Agreement for Firm Intrastate Transportation of Natural Gas in the State of Louisiana between Trans La and Louisiana Intrastate Gas Company L.L.C.( LIG ) dated December 22, 1997, and effective July 1, 1997. 10.2 Agreement for Firm 311(a)(2) Transportation of Natural Gas in the State of Louisiana between Trans La and Louisiana Intrastate Gas Company L.L.C.( LIG ) dated December 22, 1997, and effective July 1, 1997. 10.3 Firm Transportation Service Agreement No. 33180000, Rate Schedule TF-1, between Greeley Gas Company and Colorado Interstate Gas Company dated October 1, 1996. 10.4 Gas Transportation Agreement Service Package No. 4272 between United Cities Gas Company and East Tennessee Natural Gas Company dated November 1, 1993. 10.5 Gas Transportation Agreement Service Package No. 4219 between United Cities Gas Company and Tennessee Gas Pipeline Company dated November 1, 1993. 10.6 Transportation-Storage Contract (Request 0180) between United Cities Gas Company and Williams Natural Gas Company dated October 1, 1993. 10.7 Transportation-Storage Contract (Request 0002) between United Cities Gas Company and Williams Natural Gas Company dated October 1, 1993. 10.8 Service Agreement No. 867760 under Rate Schedule FT between United Cities Gas Company and Southern Natural Gas Company dated November 1, 1993. - 26 - Exhibit Page Number Description Number ------- ----------- ------- 10.9 Service Agreement No. 867761 under Rate Schedule FT-NN between United Cities Gas Company and Southern Natural Gas Company dated November 1, 1993. 15 Letter regarding unaudited interim financial information 27.1 Financial Data Schedule for Atmos Energy Corporation for the six months ended March 31, 1998 27.2 Restated Financial Data Schedules for Atmos Energy Corporation for the following periods: - Three months ended December 31, 1996 - Six months ended March 31, 1997 - Nine months ended June 30, 1997 27.3 Restated Financial Data Schedules for Atmos Energy Corporation for the following periods: - Three months ended December 31, 1995 - Six months ended March 31, 1996 - Nine months ended June 30, 1996 - Year ended September 30, 1996 27.4 Restated Financial Data Schedule for Atmos Energy Corporation for the year ended September 30, 1995 - 27 - EX-15 2 AUDITOR'S REVIEW LETTER EXHIBIT 15 ---------- Board of Directors Atmos Energy Corporation We are aware of the incorporation by reference in the Registra- tion Statements (Form S-3 No. 33-37869, Form S-3 No. 33-70212, Form S-3 No. 33-58220, Form S-3 No. 33-56915, Form S-3 No. 333- 03339, Form S-3/A No. 333-32475, Form S-3 No. 333-50477, Form S-4 No. 333-13429, Form S-8 No. 33-57687, Form S-8 No. 33-68852, Form S-8 No. 33-57695, Form S-8 No. 333-32343, and Form S-8 No. 333- 46337) of Atmos Energy Corporation of our report dated April 27, 1998, relating to the unaudited condensed consolidated interim financial statements of Atmos Energy Corporation which are in- cluded in its Form 10-Q for the quarter ended March 31, 1998. Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. ERNST & YOUNG LLP Dallas, Texas May 14, 1998 EX-27 3 FDS FOR QE 3/31/98
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS SEP-30-1998 MAR-31-1998 PER-BOOK 876,069 0 160,798 111,307 0 1,148,174 150 262,295 117,630 380,075 0 0 252,152 146,843 0 0 57,508 0 2,235 328 309,033 1,148,174 583,881 34,994 475,726 510,720 73,161 3,004 76,165 18,645 57,520 0 57,520 15,828 3,514 90,053 1.94 1.94
EX-10 4 Exhibit 10.1 AGREEMENT FOR FIRM INTRASTATE TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA BETWEEN LOUISIANA INTRASTATE GAS COMPANY L.L.C. AND TRANS LOUISIANA GAS COMPANY A DIVISION OF ATMOS ENERGY CORPORATION TABLE OF CONTENTS ARTICLE DESCRIPTION PAGE I. Definitions 2 II. Transportation Service 4 III. Pressure 6 IV. Facilities 6 V. Scheduling and Transportation Limitations 7 VI. Rates 9 VII. Term 10 VIII. Notices and Addresses 11 IX. General Conditions 12 X. Miscellaneous 12 Signatures 15 Exhibit A Exhibit B AGREEMENT FOR FIRM INTRASTATE TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA THIS AGREEMENT is made and entered into this 22nd day of December, 1997, to be effective as of the Effective Date, by and between LOUISIANA INTRASTATE GAS COMPANY L.L.C., a Louisiana limited liability company, hereinafter referred to as "Transporter" and TRANS LOUISIANA GAS COMPANY, a division of Atmos Energy Corporation, a Texas and Virginia corporation, hereinafter referred to as "Customer." WITNESSETH : WHEREAS, Customer has or will have gas available which is produced in the state of Louisiana and is capable of being delivered into Transporter's pipeline system; and WHEREAS, Customer desires that Transporter transport such gas on behalf of Customer; and WHEREAS, Transporter has the ability in its system to move gas from certain parts of Louisiana to certain other parts of Louisiana to Customer or for further transportation to Customer; and WHEREAS, Transporter and Customer are of the opinion that the transaction referred to above is an agreement for the transportation of gas that is not committed or dedicated to interstate commerce, that such gas is produced entirely within the state of Louisiana, and that such transportation will not cause either Transporter or Customer to become regulated as a "Natural Gas Company" within the meaning of the Natural Gas Act of 1938 (15 USC 717, et. seq.), or require Transporter or Customer to invoke a Hinshaw exemption pursuant to Section 1(c) of the Natural Gas Act to avoid such jurisdiction; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto covenant and agree as follows: ARTICLE I. DEFINITIONS Except as otherwise herein provided, the following words and/or terms as used in this Agreement shall have the following scope and meaning: 1.1 The term "day" shall mean a period of twenty-four (24) consecutive hours beginning and ending at 9:00 a.m. Central Clock Time. 1.2 The term "month" shall mean the period beginning at 9:00 A.M. Central Clock Time on the first day of the calendar month and ending at 9:00 A.M. Central Clock Time on the first day of the next succeeding calendar month. 1.3 The term "year" shall mean a period of three hundred sixty-five (365) consecutive days provided, however, that any such year which contains a date of February 29 shall consist of three hundred sixty-six (366) consecutive days. 1.4 The term "contract year" shall mean one-year periods beginning at 9:00 A.M. Central Clock Time on the Effective Date. 1.5 The terms "gas" and "natural gas" shall mean natural gas as produced in its natural state whether or not stored or processed prior to delivery, natural gas or any component thereof that has been previously liquefied and restored to its gaseous state prior to delivery to Customer, gas synthesized or manufactured from oil, naphtha, coal or any other material that meets the quality standards contained in this Agreement and which Transporter elects to deliver in lieu of or commingled with one or more of the types of gas described herein. 1.6 The term "MCF" shall mean one thousand (1,000) cubic feet of gas as determined on the measurement basis set forth in Article B-1 of Exhibit "B" hereto. 1.7 The terms "British thermal unit" or "Btu" shall mean the amount of heat required to raise the temperature of one pound of pure water from fifty-eight and five-tenths degrees (58.5) Fahrenheit to fifty-nine and five-tenths degrees (59.5) Fahrenheit. 1.8 The term "MMBtu" shall mean one million (1,000,000) Btu's. 1.9 The term "heating value" shall mean the gross number of British thermal units, sometimes hereinafter referred to as Btu's, produced by the combustion at constant pressure of the amount of gas saturated with water vapor which would occupy a volume of one (1) cubic foot at a temperature of sixty (60) degrees Fahrenheit, under a pressure equivalent to that of thirty (30) inches of mercury at thirty-two (32) degrees Fahrenheit and under gravitational force (acceleration 980.665 cm. per sec. per sec.) with air of the same temperature and pressure as the gas, when the products of combustion are cooled to the initial temperature of the gas and air, and when the water formed by combustion is condensed to the liquid state, and expressed at a pressure base of 15.025 pounds per square inch absolute and adjusted as delivered, provided; however, gas containing a water content not exceeding seven (7) pounds per MMcf shall be considered dry. Where a chromatograph is used instead of a calorimeter, the gross dry Btu shall be determined by analysis but shall be on the equivalent basis as above. 1.10 The term "equivalent quantity" shall mean a quantity of gas of equal heating value as determined by the product of the volumes in cubic feet and the heating value per cubic foot, minus Customer's pro rata share of the quantity of gas consumed by Transporter as compressor fuel, company use and unaccounted for, which shall not exceed 1%. 1.11 The term "Points of Delivery" shall mean those points identified on Exhibit "A" as Points of Delivery and such other points as the parties hereto may mutually agree. 1.12 The term "Points of Redelivery" shall mean those points identified on Exhibit "A" as Points of Redelivery and such other points as the parties hereto may mutually agree. 1.13 The term Effective Date shall mean July 1, 1997. 1.14 The term Sales Agreement shall mean that certain Agreement For Natural Gas Service for Distribution and Resale dated October 28, 1991, as amended by amendment of even date herewith, between Customer, as buyer, and Transporter, as seller. 1.15 The term Intrastate Storage Agreement shall mean that certain Firm Intrastate Gas Storage Agreement of even date herewith by and between Equitable Storage Company L.L.C. and Customer. 1.16 The term 311 Storage Agreement shall mean that certain Firm 311(a)(2) Gas Storage Agreement of even date herewith by and between Equitable Storage Company L.L.C. and Customer. 1.17 The term 311 Transportation Agreement shall mean that certain Agreement for Firm 311(a)(2) Transportation of Natural Gas in the State of Louisiana of even date herewith by and between Transporter and Customer. ARTICLE II. TRANSPORTATION SERVICE 2.1 Commencing on the Effective Date, Customer agrees to tender and Transporter agrees to accept at the Points of Delivery for transportation hereunder a quantity of gas each day during the term of this Agreement, scheduled pursuant to the provisions of Article V below, up to 80,000 MMBtu ( Maximum Daily Quantity ). In the event Customer exceeds 80,000 MMBtu on any given day, under the combination of this Agreement and the 311 Transportation Agreement, then the Maximum Daily Quantity under this Agreement, in combination with the Demand Quantity under the 311 Transportation Agreement, shall be increased to such higher amount for the remaining term of this Agreement. Transporter shall redeliver, or cause to be redelivered, an equivalent quantity of gas to Customer, or for Customer's account, at the Points of Redelivery. Transporter's obligation to accept gas at any single Point of Delivery and to redeliver gas at any single Point of Redelivery, to the extent specified in Exhibit "A," shall be limited to that quantity so specified in Exhibit "A" hereto attached as to each such point, or such greater quantity as Transporter in its sole discretion may accept or redeliver from time to time at such points depending on Transporter's operating requirements. 2.2 The transportation service provided hereunder shall be for intrastate natural gas only and on a firm basis; provided however, such service shall be subject to the force majeure conditions of Article B-IV of Exhibit B attached hereto and incorporated herein. Customer hereby commits to tender to Transporter for transportation hereunder volumes of natural gas approximately equal to the volumes currently physically served (both sales and transportation) by Transporter to Customer, up to the Maximum Daily Quantity. However, if Customer desires to utilize the transportation service under the 311 Transportation Agreement, it may do so and Customer and Transporter hereby agree that the volumes and payment received by Transporter thereunder shall be credited against Customer s rights and obligations hereunder. In the event amount received by Transporter under the 311 Transportation Agreement is less than the amount provided under Article VI hereof, then Customer shall pay to Transporter each month, as a transportation surcharge under this Agreement, the difference between the rates under this Agreement and the 311 Transportation Agreement times the volume transported under the 311 Transportation Agreement during such month. ARTICLE III. PRESSURE 3.1 Customer shall cause delivery of the gas at the Points of Delivery at a pressure sufficient to allow the gas to enter Transporter's system at the varying pressures that may exist on such system from time to time; provided, however, that if specified for the Points of Delivery on Exhibit "A" such pressure shall not exceed the maximum allowed delivery pressure specified for each such Point. 3.2 Transporter shall deliver, or cause to be delivered, the gas transported hereunder for the account of Customer at the Points of Redelivery at pressures that may exist in Transporter's pipeline from time to time; provided, however, that if specified for the Points of Redelivery on Exhibit "A" hereto attached, the pressure of the gas delivered by Transporter shall not exceed the maximum allowed redelivery pressure specified for each such Point. ARTICLE IV. FACILITIES 4.1 Transporter and Customer recognize that measurement and other facilities exist at the Delivery or Redelivery Points initially identified or those which may be added by amendment. Ownership of such facilities shall remain with the original owner, and operation of meters, instruments and other measurement equipment at such locations shall be in accordance with Article B-I of the General Conditions of Exhibit "B". 4.2 At Delivery and Redelivery points at which facilities do not yet exist, Transporter shall install, own, operate and maintain, or cause the same to be done, the meter, instruments, equipment, and surface leases necessary to deliver the gas under this Agreement. Installation and operation of meters, instruments and other measurement equipment shall be in accordance with Article B-I of the General Conditions of Exhibit "B" as determined by Transporter in Transporter's reasonable judgment. Transporter shall not be obligated to pay for new facilities required under this Agreement. ARTICLE V. SCHEDULING AND TRANSPORTATION LIMITATIONS 5.1 Customer shall be obligated to notify Transporter by 10:00 a.m. two (2) business days prior to each month as to the daily quantity of gas it desires to be transported during that month. Such notification may be either written or electronic and will indicate the quantity of gas Customer estimates it will deliver to Transporter at each of the Points of Delivery (except Point of Delivery Number 5, the Equitable Storage point, unless Customer knows in advance the quantity it desires to deliver at such point) as well as the quantity to be redelivered by Transporter at each of the Points of Redelivery hereunder (except Points of Redelivery Number 1, the distribution points, and Number 3, the Equitable Storage point, unless Customer knows in advance the quantity it desires to receive at such points). 5.2 Customer shall give Transporter at least twenty-four (24) hours notice prior to the commencement of any day in which Customer desires to change the quantity of gas it has scheduled to be delivered to Transporter at the Points of Delivery (except Point of Delivery Number 5, the Equitable Storage point). Transporter may waive these notice requirements upon request if in Transporter's judgment operating conditions permit such waiver. 5.3 It is the intent of the parties that gas delivered, or caused to be delivered, by Customer to Transporter and redelivered by Transporter for the account of Customer shall be as nearly as possible at uniform hourly rates and that the volume tendered at the Points of Delivery shall be equal to that taken by Customer at the Points of Redelivery. Departures from the scheduled deliveries shall be kept to the minimums permitted by the operating conditions. 5.4 Customer and Transporter agree that (i) confirmed transportation volumes under this Agreement shall be the first gas delivered to the Points of Redelivery, excluding the point with Equitable Storage Company L.L.C., (ii) confirmed transportation volumes under the 311 Transportation Agreement shall be the second gas delivered to the Points of Redelivery (Points of Delivery under the 311 Transportation Agreement), excluding the point with Equitable Storage Company L.L.C., (iii) volumes withdrawn from storage under the Intrastate Storage Agreement shall be the third gas delivered to the Points of Redelivery, and (iv) volumes withdrawn from storage under the 311 Storage Agreement shall be the fourth gas delivered to the Points of Redelivery (Points of Delivery under the 311 Transportation Agreement). 5.5 Transporter agrees to determine with Customer a method to calculate Customer s peak day and other requirements and to provide a daily tabulation (furnished within 24 hours via fax or other mutually agreeable method) of Customer s estimated natural gas requirements, transportation receipts and deliveries and storage balances. The current methodology utilized for farm taps will be maintained. Customer s gas delivered to the storage Point of Redelivery each month will be the difference between the estimates mentioned above and the actual volumes received and delivered. On any day that Customer s confirmed transportation volumes for delivery to Transporter under this Agreement and the 311 Transportation Agreement exceed the volumes actually physically received by Customer, those excess volumes will be redelivered to the storage Point of Redelivery (Point of Delivery under the 311 Transportation Agreement) on a no notice basis. Conversely, if the volumes delivered to Transporter under this Agreement and the 311 Transportation Agreement are less than the requirements of Customer, then volumes of Customer s gas will be transported from the storage Point of Delivery (Point of Receipt under the 311 Transportation Agreement) to the Points of Redelivery (Points of Delivery under the 311 Transportation Agreement) on a no notice basis. ARTICLE VI. RATES 6.1 Customer agrees to pay Transporter a demand fee each month equal to the product of $0.75 per MMBtu times the Maximum Daily Quantity applicable for such month, and for all natural gas transported hereunder as measured at the Points of Redelivery (except Point of Redelivery No. 3, ESC), a transportation fee of four cents (4) per MMBtu. 6.2 Transporter and Customer recognize that the fees per MMBtu specified in this Agreement takes into account the Louisiana Natural Gas Franchise Tax of 1% as applied to the business of Transporter represented by this Agreement. Transporter and Customer agree that if the Louisiana Natural Gas Franchise Tax is increased, or if there is levied by law an additional tax other than an income tax, after the effective date of this Agreement, which tax is levied on or measured by sales, the movement of, the value of, or the quantity of the gas delivered to Customer and which tax is payable by Transporter for the right to sell or transport gas and if Transporter lawfully pays such tax, then Customer shall reimburse Transporter for that portion of the tax paid by Transporter which is attributable under generally accepted accounting principles to that part of Transporter's business represented by this Agreement. 6.3 Customer agrees to reimburse Transporter for fifty percent (50%) of all filing and other fees in connection with this Agreement that Transporter is obligated to pay to any governmental authority having jurisdiction. Filing and other fees in connection with this Agreement shall be limited to those fees required to implement, commence and continue transportation under this Agreement. ARTICLE VII. TERM 7.1 Subject to the other provisions hereof, this Agreement shall become effective as of the Effective Date, and shall remain in force and effect for a primary term of five (5) years, and shall continue from year-to-year thereafter. This Agreement may be terminated by either party effective at the end of the fifth contract year or at the end of any subsequent contract year by giving written notice at least six (6) months prior to the end of the applicable contract year. 7.2 In the event the Louisiana Public Service Commission ( LPSC ) does not allow Customer to recover in its resale rates to its Customers the costs incurred by Customer under this Agreement, the 311 Transportation Agreement, the Intrastate Storage Agreement, the 311 Storage Agreement or the Sales Agreement, then Customer may terminate this Agreement upon thirty (30) days prior written notice to Transporter. 7.3 In the event (i) the LPSC issues an order during the term hereof which requires Customer to unbundle its sales service, or (ii) either the LPSC or market conditions demand or expect Customer to unbundle its sales service, then Customer may elect to reduce its obligation to transport hereunder pro rata to the extent Customer s system is unbundled (up to and including termination of this Agreement by Customer) upon sixty (60) days prior written notice to Transporter. For purposes hereof, unbundle shall mean the separation of sales service from transportation service and the obligation to offer to provide transportation service only to its end users. ARTICLE VIII. NOTICES AND ADDRESSES 8.1 Notices - All notices are required to be given in writing. Any correspondence provided for in this Agreement shall be deemed sufficiently given when deposited in the United States mail, postage prepaid, and addressed to the respective parties at such address or such other addresses as the parties respectively shall designate by written notice; provided however, any notice to cancel this Agreement shall be sent Certified Mail. 8.2 Addresses A. Notices and Correspondence - Until Customer is otherwise notified in writing by Transporter, notices and payments to Transporter shall be addressed to Transporter at the address set forth below or at such other address as Transporter may hereafter designate by notifying Customer in writing: Notices and Correspondence: Payments: Louisiana Intrastate Gas Louisiana Intrastate Gas Company L.L.C. Company L.L.C. 5555 San Felipe, Suite 2100 Texas Commerce Bank Houston, Texas 77056 P. O. Box 200674 Attn: Transportation and ABA No. 113000609 Exchange Department Account No. 00101815455 Houston, Texas 77216-0674 B. Payments - Customer agrees to make payment hereunder to Transporter for its account by (1) wire transfer, or (2) at the address indicated on the monthly billing, or such other address as Transporter may designate in writing to Customer from time to time. Until Transporter is otherwise notified in writing by Customer, notices and invoices to Customer shall be addressed to Customer at the address set forth below or at such other address as Customer may hereafter designate by notifying Transporter in writing: Notices, Correspondence and Invoices: Trans Louisiana Gas Company P. O. Box 650205 Dallas, Texas 75265-0205 Attn: Gas Supply Department ARTICLE IX. GENERAL CONDITIONS 9.1 This Agreement is subject to the General Conditions Applicable to Agreements for Transportation of Natural Gas in the State of Louisiana, a copy of which is attached hereto and made part hereof as Exhibit "B." ARTICLE X. MISCELLANEOUS 10.1 Successors and Assigns: This Agreement shall not be assignable by either party hereto without the prior written consent of the other, which such consent shall not be unreasonably withheld. Nothing herein shall be construed to prevent either party or any assignee from pledging all or any part of this Agreement or any benefit accruing hereunder. In the event either Transporter or Customer shall assign its interest in this Agreement it shall in the instrument of assignment cause the assignee to assume its rights and obligations under this Agreement. Except as provided above, no assignment shall relieve a party of its obligations hereunder unless the other party hereto shall consent to the same. 10.2 Louisiana Law: It is hereby agreed by and between the parties that all aspects of the Agreement, including interpretation of its provisions and any disputes arising hereunder, are to be governed solely and exclusively by Louisiana law. 10.3 Modifications: No modifications of the terms and provisions of this Agreement shall be or become effective except by the execution of a supplementary written agreement. 10.4 Intrastate Commerce: Customer and Transporter agree that as a consequence of their voluntary acts none of the gas transported hereunder will be sold or resold, transported, commingled, used or consumed so as to subject the gas or this Agreement to the jurisdiction of the Federal Energy Regulatory Commission, or successor authority, under the Natural Gas Act of 1938 (15 USC Sec. 717, et. seq.). Breach of this promise by either party shall entitle the other party to declare this Agreement terminated ipso facto by written notice to that effect to the offending party. Customer and Transporter agree that any change in applicable law which gives rise to such jurisdiction under circumstances existing at the time of the change shall not be such a cause for termination of this Agreement. 10.5 Odorization: It is specifically understood and agreed that Customer is responsible for any and all odorization that is or may be required by any statute, ordinance, rule or regulation, and that Customer shall construct, maintain and operate any facilities required for the performance of this obligation. Customer agrees that Transporter shall not be obliged to odorize the gas transported and redelivered hereunder. 10.6 Governmental Authorization: This Agreement shall be subject to all valid and applicable laws, rules and regulations either Federal, State or local. Transporter and Customer agree that they will comply with and abide by the requirements of any valid and applicable laws, rules and regulations in compliance with their respective obligations to the other hereunder. Without admitting to or acquiescing in the jurisdiction of the Commissioner of Conservation of the State of Louisiana over this Agreement pursuant to the provisions of LSA R.S. 30:555(b) or of any body either State or Federal and reserving rights with respect thereto, Transporter and Customer contract and agree that each party will, in support of any application of the other, seek pregranted approval for the abandonment of service under this Agreement at the termination of this Agreement by the Assistant Secretary of the Department of Natural Resources for the State of Louisiana, or any other body or otherwise successor, either Federal or State, that may have or assert jurisdiction over the service provided under this Agreement. Customer and Transporter confirm to each other that the cessation of service at the termination of this Agreement is an important consideration to each, and to this end, both contract and agree with the other that neither will take any action that may be construed by any regulatory official or body that has jurisdiction as a basis for requiring deliveries of gas by Transporter to Customer after the termination of this Agreement. Both agree that at all times they will take appropriate action, and cooperate with the other, to the end that delivery of gas hereunder may be abandoned at the termination of this Agreement and both agree that the termination of this Agreement, for whatever reason shall constitute authority to abandon service hereunder. 10.7 THIS AGREEMENT shall as of the Effective Date supersede and replace all previous agreements with respect to the transportation of gas between Transporter and Customer. IN WITNESS WHEREOF, this Agreement is executed effective as of the date and year first above written. WITNESS: TRANS LOUISIANA GAS COMPANY a Division of Atmos Energy Corporation By: Title: WITNESS: LOUISIANA INTRASTATE GAS COMPANY L.L.C. By: Title: EXHIBIT "A" POINTS OF DELIVERY Location Quantity MMBtu/d 1.Interconnection between Amoco Production Company and Transporter at the tailgate of the LIG Liquids Plaquemine Plant. 25,000 2.Existing interconnection between Transporter's facilities and Mobil E&P North America located in Section 24, Township 12 South, Range 1 East, Vermilion Parish, Louisiana. (1522/Kaplan Outlet) 25,000 3.Existing central point downstream of transporter's gathering facilities in the Reddell field located in Section 21, Township 4 South, Range 1 East, Evangeline Parish, La.(1118/LL&E) 10,000 4.Existing interconnection between Transporter's facilities and Amerada Hess Corporation located in Section 26, Township 11 South, Range 1 East, Vermilion Parish, Louisiana.(1871/Leleux) 25,000 5.Existing interconnection between Transporter's under facilities and Equitable Storage Company L.L.C. this Agreement in Section 43, Township 12 South, Range 5 East, and the 311 Iberia Parish, Louisiana. Agreement Combined 80,000 6.Existing interconnection between Transporter's facilities and Louisiana Resources Pipeline Company L.P. located in Section 14, Township 11 South,Range 5 East, St. Martin Parish, Louisiana. 10,000 7.Existing interconnection between Transporter's facilities and PELICO located in Section 14, Township 11 North, Range 6 West, Natchitoches Parish, Louisiana (1377-01-9/Black Lake) 10,000* Points of Delivery shall include all other points as the parties hereto may mutually agree. *Limited to months of December, January and February POINTS OF REDELIVERY Location Quantity MMBtu/d 1. Those points of connection between Transporter and Customer where gas is physically taken to serve Customer s actual gas demand for its distribution systems in the state of Louisiana. As Required 2. Interconnection between Transporter and Acadian Gas Pipeline Company located Section 3, Township 10 South, Range 2 East, Ascension Parish, Louisiana. (1660/Geismar) 10,000 3. Existing interconnection between Transporter s facilities and Equitable Storage Company L.L.C. in Section 43, Township 12 South, Range 5 East, Iberia Parish, Louisiana. 30,000 under this Agreement and the 311 Agreement Combined 4. Existing interconnection between Transporter s facilities and Louisiana Gas Pipeline Company, L.P., located in Section 15, Township 12 South, Range 15 East, St. James Parish, Louisiana. 10,000 5. Existing interconnection between Transporter s facilities and Louisiana Resources Pipeline Company L.P. located in Section 14, Township 11 South, Range 5 East, St. Martin Parish, Louisiana. Up to available displacement volume Points of Redelivery shall include all other points as the parties hereto may mutually agree. EXHIBIT "B" LOUISIANA INTRASTATE GAS COMPANY L.L.C. GENERAL CONDITIONS APPLICABLE TO AGREEMENTS FOR TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA LOUISIANA INTRASTATE GAS COMPANY L.L.C. GENERAL CONDITIONS APPLICABLE TO AGREEMENTS FOR TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA TABLE OF CONTENTS ARTICLE TITLE PAGE B-I Measurements and Tests B-1 B-II Quality B-7 B-III Billings and Payments B-8 B-IV Force Majeure B-10 B-V Default B-11 B-VI Possession and Warranty of Title B-13 B-VII Governmental Regulations B-14 GENERAL CONDITIONS ARTICLE B-I MEASUREMENTS AND TESTS 1. The measurement of gas at each Point of Delivery and Redelivery shall be accomplished in accordance with the following: (a) The unit of volumes for all purposes of measurement hereunder shall be one (1) cubic foot of gas at a temperature of sixty (60) degrees Fahrenheit and at an absolute pressure of fifteen and twenty-five thousandths (15.025) pounds per square inch absolute. The average atmospheric pressure shall be assumed to be fourteen and seven tenths (14.7) pounds per square inch at the Points of Delivery and at the Points of Redelivery. Whenever conditions of temperature and pressure differ from such standard, conversion of the volume from such conditions to the standard conditions shall be made in accordance with the Ideal Gas Laws corrected for deviation of the gas from Boyle's Law in accordance with the methods and formulas prescribed in the American Gas Association's manual for the determination of super- compressibility factors for natural gas as last amended and superseded. (b) The volume of gas transported hereunder shall be measured by an orifice meter with flange type connections installed at the Points of Delivery and at the Points of Redelivery; provided, however, that if measurement exists at a Point of Redelivery and is by a positive displacement meter, then such positive meter will be used for measurement of gas at such Point of Redelivery. Orifice meters shall be installed, operated and volumes computed in accordance with the American National Standard publication, Orifice Metering of Natural Gas, ANSI/API 2530, and in such amendments and revisions thereto and superseding publications thereof. Differential and static pressure chart cycles shall not exceed eight (8) days. (c) The temperature of the gas transported hereunder shall be determined by a recording thermometer continuously used and installed so as to record properly the temperature of the gas flowing through each meter. Temperature chart cycles shall not exceed eight (8) days. (d) The specific gravity of the gas shall be determined at the point(s) of measurement by one of the following methods, mutually acceptable to both parties: (1) by means of a properly installed recording gravitometer of standard manufacture utilizing the arithmetical average of the hourly specific gravity recorded each day for computing the quantity of gas for that day, (2) by an on line chromatograph, (3) by continuous sampling, or (4) if (1), (2) or (3) is not considered feasible, then by use of a portable specific gravity balance of standard manufacture acceptable to both parties. Such determination to be made at least once every thirty (30) days. If the recording gravitometer fails, then the gravity from the chromatograph or the continuous sampler shall be used if installed and working properly. (e) The arithmetical average of the hourly temperature when gas is flowing, the factor for specific gravity according to the latest test therefor and the corrections for deviation from Boyle's Law applicable during each metering period shall be used to make proper computations of gas volumes measured hereunder. (f) The heating value of gas, as defined in Paragraph 1.9 of Article I of this Agreement shall, at Transporter's option, be determined at each point(s) of measurement hereunder: (1) by the use of a spot sample taken during such month to be analyzed on a gas chromatograph, (2) by analysis samples from a continuous gas sampler taken by Transporter and/or its nominee by using an analytical chromatograph, (3) by a recording calorimeter installed by Transporter and/or its designee, (4) by an on line chromatograph installed by Transporter and/or its designee or (5) by application of the methods contained in the American Gas Association publication, Fuel Gas Energy Metering, Gas Measurement Committee Report No. 5, and in such amendments and revisions thereto and superseding reports thereof as recommended by such committee. The heating value however determined shall be converted to the same condition stipulated for the unit of volume in "Article B-I, Paragraph 1.(a)." If an analytical chromatograph is used, such analytical chromatograph shall be of a design and manufacture mutually agreeable to both the Customer and the Transporter. The method of Btu computation for a perfect gas shall be derived from the "Table of Physical Constants of Paraffin Hydrocarbons and Other Compounds" as published in the Gas Processors Association Bulletin 2145-84 and superseding revisions thereof. The analysis shall be complete and individual values in mol percent or fraction of each hydrocarbon compound shall be listed through CH6. The CH7 value shall include the sum of the remaining hydrocarbons in the sample and the designated value for CH7's+ shall be 50% CH7 and 50% CH8 or as determined from an extended chromatograph breakdown. If an on line chromatograph is used the appropriate CH + configuration shall be set from the program choices by an independent spot analysis, the value of which shall be used to select the program choice closest to the actual CH7 + value. The analysis shall further include the mol fraction or percent individually of additional compounds contained in chromatographically measurable quantities contained in the sample. The method to be used for chromatographic analysis shall be that contained in Gas Processors Association publication number 2261-72, GPA Method of Analysis for Natural and Similar Gaseous Mixtures by Gas Chromatography. (g) Upon mutual agreement of the parties, other types of Btu per cubic foot measuring devices may be installed, operated and Btu computed in accordance with the manufacturer instructions for same and consistent with industry-accepted practices for transmission Btu per cubic foot measurement. (h) Gas samples taken from the pipeline system for purposes of determining or deriving quantitative values that will be used in the computation of gas volume and Btu per cubic foot shall be obtained through use of a probe to be inserted sufficiently beyond the periphery of the internal pipe walls to assure that the gas being drawn for the sample is free of any liquid accumulation from the internal pipe wall. (i) If the method for determining chromatographic analysis, as set forth in the GPA publication 2261-72, is revised, both parties agree that this Agreement will be amended accordingly. (j) Transporter's and Customer's measuring and testing equipment shall be of standard type, installed, operated and maintained as necessary to measure and test gas transported hereunder. Transporter shall keep same accurate, and in good repair, and shall test once each month. Changing of meter charts, readings, calibrations, tests, repairs and adjustments of Transporter's measuring and testing equipment shall be done only by employees of Transporter, or its designated representatives. Customer, or its designated representative shall, in the presence of an employee of Transporter or Transporter's designated representative, have access to Transporter's measuring and testing equipment at any reasonable time, and shall have the right to witness tests, calibrations and adjustments thereof. All tests scheduled hereunder shall be preceded by reasonable notice to Customer. Upon request of either party hereto for a special test of any meter or auxiliary equipment, but not more often than once every three (3) months, Transporter shall promptly verify the accuracy of same; provided that the cost of such special test shall be borne by the requesting party, unless the percentage of inaccuracy found is more than two percent (2%). If, upon any test, any measuring equipment is found to be in error, such errors shall be taken into account in a practical manner in computing the deliveries. If the resultant aggregate error in the computed receipts is not more than two percent (2%), then previous receipts shall be considered accurate. All equipment shall, in any case, be adjusted at the time of test to record correctly. If, however, the resultant aggregate error in computed receipts exceeds two percent (2%) of a recording corresponding to the average hourly rate of gas flow for the period since the last preceding test, the previous recordings of such equipment shall be corrected to zero error for any period which is known definitely or agreed upon, but in case the period is not known definitely or agreed upon, such correction shall be for a period extending back one-half of the time elapsed since the date of the last test, not exceeding a correction period of sixteen (16) days. (k) If any meter or auxiliary equipment is out of service or out of repair for a period of time so that the amount of gas delivered cannot be ascertained or computed from the reading thereof, then the gas delivered during such period shall be estimated upon the basis of the best data available, using the first of the following methods which is feasible: (1) by using the registration of any check meter or meters, if installed and accurately registering; or (2) by correcting the error if the percentage of error is ascertainable by calibration tests or mathematical calculations; or (3) by estimating gas volumes on the basis of deliveries during the preceding periods under similar conditions when the equipment was registering accurately, or by other method(s) mutually acceptable to both parties. (l) Upon request of Customer, Transporter shall submit its measurement charts and records to Customer for examination, the same to be returned within thirty (30) days. Transporter's measurement charts and records for a given accounting month will be presumed correct if no written objection thereto is served on either party hereto by the other within the twelve (12) month period following any accounting month, but the same shall be retained for a twenty-four (24) month period. (m) Customer may install, operate and maintain, at its sole cost, risk and expense, but in the same manner as is required for Transporter's equipment hereunder, check measuring and testing equipment of standard type, provided that the same does not interfere with the operation of Transporter's equipment, but the measurement and testing of gas for purposes of this Agreement shall only be by Transporter's equipment. Transporter shall have the same rights with respect to said check metering and testing equipment of Customer as are granted to Customer with respect to Transporter's metering and testing equipment. (n) If it is determined prior to, or as a result of, in- service tests, experience and observation by either Customer or Transporter that pulsations exist that affect the measurement accuracy, then the operator of the facilities agrees to install and operate mechanical dampening equipment necessary to eliminate such pulsations. (o) If at any time during the term hereof a new method or technique is developed with respect to gas measurement, or the determination of the factors used in such gas measurement, such new method or technique may be substituted for the method set forth in this Section when, in Transporter's sole discretion, employing such new method or technique is advisable. Transporter shall notify Customer in writing of any such election prior to actually implementing such substitution. ARTICLE B-II QUALITY 1. The gas delivered and redelivered at each Point(s) of Delivery and Point(s) of Redelivery shall meet the following quality specification: (a) Oxygen - The oxygen content shall not exceed one percent (1%) by volume of uncombined oxygen, and the parties shall make reasonable efforts to maintain the gas free from oxygen. (b) Hydrogen Sulphide - The hydrogen sulphide content shall not exc eed one (1) grain per one hundred (100) cubic feet of gas. (c) Total Sulphur - The total sulphur content, including mercaptans and hydrogen sulphide, shall not exceed ten (10) grains per one hundred (100) cubic feet of gas. (d) Carbon Dioxide - The carbon dioxide content shall not exceed two percent (2%) by volume. (e) Liquids - The gas shall be free of water and other objectionable liquids at the temperature and pressure at which the gas is delivered and the gas shall not contain any hydrocarbons which might condense to free liquids in the distribution system under normal distribution operating conditions (20 psig and 40oF) and shall in no event contain water vapor in excess of seven (7) pounds per one million (1,000,000) cubic feet. (f) Dust, Gums and Solid Matter - The gas shall be commercially free of dust, gums, gum forming constituents and other solid matter. (g) Heating Value - The gas delivered shall contain a heating content of not less than nine hundred fifty (950) Btu s per cubic foot. (h) Temperature - The gas shall not be delivered at a temperature of less than forty degrees (40o) Fahrenheit, and not more than one hundred twenty degrees (120o) Fahrenheit. (i) Nitrogen - The nitrogen content shall not exceed three percent (3%) by volume. (j) Hydrogen - The gas shall contain no carbon monoxide, halogens or unsaturated hydrocarbons, and no more than four hundred parts per million (400ppm) of hydrogen. 2. In the event any gas delivered by Customer to Transporter at any Point of Delivery fails to meet the quality specifications set forth above, Transporter may refuse to accept receipt of such gas until Customer or Customer s supplier shall have corrected the quality deficiency. 3. In the event any gas delivered by Transporter to Customer at any Point of Redelivery fails to meet the quality specifications set forth above, Customer may refuse to accept receipt of such gas until Transporter shall have corrected the quality deficiency. ARTICLE B-III BILLINGS AND PAYMENTS 1. Billing Date - Each calendar month during the term hereof, Transporter shall render to Customer at such office as Customer has herein designated, statements showing the calculations of the monthly bill for gas transported by Transporter for Customer during the preceding month. 2. Payment Date - Not later than ten (10) days following Customer's receipt of such statement, Customer shall make payment to Transporter of amounts due Transporter at such office as Transporter has herein designated as shown by statements furnished Customer in accordance with the foregoing Paragraph. 3. Error in Bills - In the event any error is discovered in the amount billed in any statements rendered by Transporter, such error shall be adjusted promptly, but shall not be an excuse for non-payment of that part of the bill which was not in error. All statements, meter and billing, shall be considered final if not challenged within twenty-four (24) months after the date of same. If any statement shall have been paid in full and it shall be determined that a disputed part of the statement was paid in error, Transporter shall refund such amount to Customer, together with interest at the rate set forth in Paragraph 5 of this Article B-III over the period that Transporter had possession of the money, within fifteen (15) days after resolution of the dispute. 4. Access to Billing Data - Customer and Transporter shall have the right to examine the books, records and charts of the other party at all reasonable times to the extent necessary to verify the accuracy of any statement, charge or computation made pursuant to the provision of any Article of this Agreement. 5. Past Due Payments - In the event Customer fails to pay any of the amount due Transporter when the same is due, interest thereon shall accrue at a rate equal to the sum of the prime rate in effect at such time at the Citibank of New York, plus one percent (1%), not to exceed any applicable maximum lawful rate, payable for the period from the date when such amount is due until the same is paid. Continued default in payment after receipt of written notice for amounts due which are not then subject to a bona fide dispute between the parties shall entitle Transporter to suspend all further performance under this Agreement in addition to all other legal remedies. ARTICLE B-IV FORCE MAJEURE 1. If by reason of force majeure, either party hereto is rendered unable, wholly or in part, to carry out its obligations under this Agreement, other than the obligation to pay for transportation services rendered, and if such party gives notice and reasonably full particulars of such force majeure by telephone and then followed up with a written notice to the other party within a reasonable time after the occurrence of the cause relied on, the obligations of the parties, such notice having been given, so far as and to the extent that they are affected by such force majeure, shall be suspended during the continuance of any inability so caused, but for no longer period; and such cause shall so far as possible be remedied with all reasonable dispatch, except as provided for in this Section B-IV 4. hereof. 2. The term "force majeure", as used herein, shall mean any and all circumstances beyond the direct or reasonable control of either party which would make performance of this Agreement impossible or unsafe, and shall include, without limiting the foregoing, acts of God such as landslides, earthquakes, lightning, storms (including but not limited to hurricanes and hurricane warnings), crevasses, floods, washouts, epidemics; acts of public enemies including wars, riots, blockades; civil and military disturbances; insurrections, fires, explosions, freezing; arrests and restraints of government, either federal or state, civil or military; shutdowns for purposes of necessary or required repairs, relocations, or construction of facilities; any operational or mechanical failure such as breakage or accident to machinery or lines of pipe, temporary losses of supply, or failure of surface equipment or pipelines; the necessity for testing pipeline or other equipment as may be required by governmental authority or as deemed necessary by the testing party for the safe operation thereof; any failure to perform or to comply with any obligation or condition of this Agreement due to the inability to obtain necessary materials, supplies, permits, or labor; any industrial disturbance, including strikes or lockouts; or any inability to obtain necessary rights-of-way. 3. Force majeure affecting the performance hereunder by either party, however, shall not relieve such party of liability in the event of negligence or in the event of failure to use due diligence to remedy the situation and to remove the cause in an adequate manner and with all reasonable dispatch; and such causes or contingencies affecting such performance shall not relieve either party from its obligations to make payment as determined hereunder. 4. It is understood and agreed that the settlement of strikes, lockouts, or controversies with landowners involving rights-of-way shall be entirely within the discretion of the party having the difficulty and that the above requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes, lockouts, or controversies with landowners involving rights-of-way, by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the party having the difficulty. ARTICLE B-V DEFAULT It is covenanted and agreed that if either party hereto shall fail to perform any of the covenants or obligations imposed upon it under and by virtue of this Agreement, then, in such event, the other party hereto may at its option terminate this Agreement by proceeding as follows: The party claiming the default shall cause a written notice to be served by registered mail or hand delivery on the party allegedly in default, stating specifically the cause for terminating this Agreement and declaring it to be the intention of the party giving the notice to terminate the same; thereupon, the party in default shall have thirty (30) days after the service of the aforesaid notice in which to commence remedying such default or remove the cause or causes stated in the notice for terminating this Agreement, and if within said period of thirty (30) days the party in default does so remedy or remove said cause or causes, or if same cannot be remedied within a thirty (30) day period, shall commence remedial action within such thirty (30) day period and thereafter shall pursue such remedial action with due diligence to completion, then such notice shall be withdrawn and this Agreement shall continue in full force and effect. In case the party in default does not so remedy the default to remove the cause or causes within said period, then the party giving such notice shall have the option of canceling this Agreement at will, on serving written notice of such cancellation to the party in default by registered mail or hand delivery while such default is still unsatisfied. In the event Transporter and Customer cannot agree on whether or not a default has occurred or, if so, on whether or not it has been remedied or removed and suit is filed within such thirty (30) day period, then the party adjudged to be in default by final judgment shall have thirty (30) days from the date of such final judgment within which to comply therewith and thereby prevent such termination. This article shall not limit or control any specific provisin for termination or cancellation of this Agreement contained elsewhere herein. Any cancellation of this Agreement pursuant to the provisions of this article shall be without prejudice to the right of Transporter to collect any amounts then due for gas delivered prior to the time of cancellation. No waiver by either party of any one or more defaults by the other in the performance of this Agreement shall operate or be construed as a waiver of any future default or defaults, whether of a like or different character. ARTICLE B-VI POSSESSION AND WARRANTY OF TITLE 1. As between the parties to this Agreement, each party shall be in control and possession of all gas in that party's facilities. The receiving party shall have no responsibility with respect to any gas deliverable under this Agreement until such gas is received into its facilities on or account of anything which may be done, happen or arise with respect to such gas before such delivery, and the delivering party shall have no responsibility with respect to such gas after its delivery into the facilities of the other party on or account of anything which may be done, happen or arise with respect to such gas after such delivery and receipt. Nothing herein shall be deemed to relieve either the receiving party or the delivering party from responsibility for any damages or losses which may arise or occur as a result of the negligence of that party. Each of the parties hereto agrees to indemnify, defend, and hold the other party harmless from and against any and all claims, liabilities, damages, losses, costs, and expenses (including attorney s fees) incurred by the indemnified party arising from or relating to any damages, losses or injuries for which the indemnifying party is responsible pursuant to the provisions of this Section. 2. Customer hereby warrants that it has good rights to deliver, or cause to be delivered, the gas delivered hereunder and the right of Transporter to transport the same and Customer warrants that all such gas is free from all liens and adverse claims. Transporter hereby warrants that it has the right to redeliver gas to Customer and all such gas is free from all liens and adverse claims from all third parties. 3. Customer agrees to indemnify Transporter and save it harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of adverse claims of any and all persons to the gas delivered by Customer to Transporter hereunder or to all taxes, license fees or charges thereon which may be levied and assessed against Customer upon the delivery thereof to Transporter. Transporter agrees to indemnify Customer and save it harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of adverse claims of any and all persons to the gas redelivered by Transporter to Customer hereunder or, except as provided in this Agreement with respect to reimbursement of the same, to all taxes, license fees or charges imposed upon the redelivery to Customer. If any such adverse claim is asserted with respect to the gas delivered hereunder, with respect to the right to deliver or redeliver such gas, or with respect to the right to receive payment for transporting such gas, the party against whom the adverse claim is asserted shall have the right to retain any amount of money up to the amount of such claim out of the money then or thereafter payable to the other party hereunder. Such money shall be retained without interest as security for the performance of the indemnity obligations described above with respect to such adverse claim until such adverse claim has been finally determined or until the party against whom the adverse claim is asserted shall have received a bond from the other party in an amount and with a surety satisfactory to the party against whom the claim is asserted, conditioned to hold such party harmless or otherwise protect such party with respect to such claim. ARTICLE B-VII GOVERNMENTAL REGULATIONS 1. This Agreement shall be subject to all relevant, present, future, local, state and federal laws, and all rules, regulations and orders of any regulatory authority having jurisdiction. Neither party shall be held in default for failure to perform hereunder if such failure is due to good faith compliance with such party's best understanding of the requirements of any such laws, orders, rules or regulations. Customer warrants that gas and concomitant production transported hereunder has been and will be produced and handled in compliance with the requirements of the Fair Labor Standards Act of 1938, and amendments thereto, and any other applicable laws, orders, rules and regulations. END OF EXHIBIT "B" EX-10 5 Exhibit 10.2 AGREEMENT FOR FIRM 311(a)(2) TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA BETWEEN LOUISIANA INTRASTATE GAS COMPANY L.L.C. AND TRANS LOUISIANA GAS COMPANY A DIVISION OF ATMOS ENERGY CORPORATION TABLE OF CONTENTS Article Subject Page I. Definitions 2 II. Transportation Service 5 III. Facilities 7 IV. Rates 8 V. Term 10 VI. Notices and Addresses 11 VII. General Conditions 13 VIII. Miscellaneous 13 Signatures 15 Exhibit A Exhibit B AGREEMENT FOR FIRM 311(a)(2) TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA THIS AGREEMENT is made and entered into this 22nd day of December, 1997, to be effective as of the Effective Date, by and between LOUISIANA INTRASTATE GAS COMPANY L.L.C., a Louisiana limited liability company, hereinafter referred to as "Transporter" and TRANS LOUISIANA GAS COMPANY, a Division of Atmos Energy Corporation, a Texas and Virginia corporation, hereinafter referred to as "Customer." WITNESSETH: WHEREAS, Customer has or will have gas available in Louisiana which is capable of being delivered into Transporter's pipeline system; and WHEREAS, Customer desires that Transporter transport gas on its behalf on a firm basis; and WHEREAS, Transporter has the ability in its system to move gas from certain parts of Louisiana to Customer or for further transportation to Customer on a firm basis; and WHEREAS, Transporter and Customer are of the opinion that the transaction referred to above falls within Section 311(a)(2) of the Natural Gas Policy Act of 1978 (NGPA) and can be accomplished without the prior approval of the Federal Energy Regulatory Commission (FERC), and that such transaction will not cause Transporter to become regulated as a "Natural Gas Company" within the meaning of the Natural Gas Act of 1938, as subsequently amended; and WHEREAS, Transporter has on file with the FERC a Statement Regarding Firm Transportation Service under Section 311(a)(2) of the NGPA, and this Agreement is subject to such Statement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto covenant and agree as follows: ARTICLE I. DEFINITIONS Except as otherwise herein provided, the following words and/or terms as used in this Agreement shall have the following scope and meaning: 1.1 The term "day" shall mean a period of twenty-four (24) consecutive hours beginning and ending at 9:00 a.m. Central Clock Time. 1.2 The term "month" shall mean the period beginning at 9:00 A.M. Central Clock Time on the first day of the calendar month and ending at 9:00 A.M. Central Clock Time on the first day of the next succeeding calendar month. 1.3 The term "year" shall mean a period of three hundred sixty-five (365) consecutive days provided, however, that any such year which contains a date of February 29 shall consist of three hundred sixty-six (366) consecutive days. 1.4 The term "contract year" shall mean one-year periods beginning at 9:00 A.M. Central Clock Time on the Effective Date. 1.5 The terms "gas" and "natural gas" shall mean natural gas as produced in its natural state whether or not stored or processed prior to delivery, natural gas or any other component thereof that has been previously liquefied and restored to its gaseous state prior to delivery to Customer, gas synthesized or manufactured from oil, naphtha, coal or any other material that meets the quality standards contained in this Agreement and which Transporter elects to deliver in lieu of or commingled with one or more of the types of gas described herein. 1.6 The term "MCF" shall mean one thousand (1,000) cubic feet of gas as determined on the measurement basis set forth in Article B-1 of Exhibit "B" hereto. 1.7 The terms "British thermal unit" or"Btu" shall mean the amount of heat required to raise the temperature of one pound of pure water from fifty-eight and five-tenths degrees (58.5)Fahrenheit to fifty-nine and five-tenths degrees (59.5) Fahrenheit. 1.8 The term "MMBtu" shall mean one million (1,000,000) Btu's. 1.9 The term "heating value" shall mean the gross number of British thermal units, sometimes hereinafter referred to as Btu's, produced by the combustion at constant pressure of the amount of gas saturated with water vapor which would occupy a volume of one (1) cubic foot at a temperature of sixty (60) degrees Fahrenheit, under a pressure equivalent to that of thirty (30) inches of mercury at thirty-two (32) degrees Fahrenheit and under gravitational force (acceleration 980.665 cm. per sec. per sec.) with air of the same temperature and pressure as the gas, when the products of combustion are cooled to the initial temperature of the gas and air, and when the water formed by combustion is condensed to the liquid state, and expressed at a pressure base of 15.025 pounds per square inch absolute. Where a chromatograph is used instead of a calorimeter, the gross Btu shall be determined by analysis but shall be on the equivalent basis as above. 1.10 The term "equivalent quantity" shall mean a quantity of gas of equal heating value as determined by the product of the volumes in cubic feet and the heating value per cubic foot, less Customer's pro rata share of Transporter s compressor fuel and equivalents and use requirements and gas lost and unaccounted for, which shall not exceed 1%, as well as any incremental compressor fuel incurred by Transporter to compress the gas in order to receive the gas at the Points of Receipt or deliver the gas at the Points of Delivery. 1.11 The term "Points of Receipt" shall mean those points identified on Exhibit "A" as Points of Receipt and such other points as the parties hereto may mutually agree. 1.12 The term "Points of Delivery" shall mean those points identified on Exhibit "A" as Points of Delivery and such other points as the parties hereto may mutually agree. 1.13 The term "Statement of Operations" shall mean the most recent Statement of Transporter Regarding Firm Transportation under Section 311 of the NGPA then on file with the FERC, as such may change from time-to-time pursuant to subsequent filings by Transporter. 1.14 The term Effective Date shall mean July 1, 1997. 1.15 The term Sales Agreement shall mean that certain Agreement For Natural Gas Service For Distribution and Resale dated October 28, 1991, as amended by amendment of even date herewith, between Customer, as buyer, and Transporter, as seller. 1.16 The term Intrastate Storage Agreement shall mean that certain Firm Intrastate Storage Agreement of even date herewith, by and between Equitable Storage Company L.L.C. and Customer. 1.17 The term 311 Storage Agreement shall mean that certain Firm 311(a)(2) Gas Storage Agreement of even date herewith by and between Equitable Storage Company L.L.C. and Customer. 1.18 The term Intrastate Transportation Agreement shall mean that certain Agreement for Firm Intrastate Transportation of Natural Gas in the State of Louisiana of even date herewith by and between Transporter and Customer. ARTICLE II. TRANSPORTATION SERVICE 2.1 Commencing on the Effective Date and subject to the provisions of this Agreement and the Statement of Operations a. Customer may deliver or cause to be delivered to Transporter for Customer s account a volume of gas on a firm basis up to 80,000 MMBtu per day when combined with the volumes transported under the Intrastate Transportation Agreement ( Demand Quantity ). In the event Customer exceeds 80,000 MMBtu on any given day under the combination of this Agreement and the Intrastate Transportation Agreement, then the Demand Quantity shall be increased to such higher amount for the remaining term of this Agreement. b. Transporter shall redeliver or cause to be redelivered to Customer or for Customer s account on a firm basis the volume actually nominated for that day by Customer to be delivered at that Point of Delivery but not to exceed the lesser of (i) the volume specified for such Point of Delivery on Exhibit A or (ii) the cumulative total of the volumes then being delivered by Customer or for its account at all Points of Receipt. c. Transportation service shall be in accordance with this Agreement and the Statement of Operations which are expressly incorporated herein and shall be followed by Transporter and Customer. In the event of any conflict between this Agreement and the Statement of Operations, the terms and conditions in the Statement of Operations shall control. d. Customer, or any assignee of Customer, shall nominate in accordance with the Terms and Conditions of this Agreement and the Statement of Operations the volumes of gas to be delivered at the Points of Receipt (except Point of Receipt Number 10, the Equitable Storage point, unless Customer knows in advance the quantity it desires to deliver at such point) or to be received at the Points of Delivery (except Points of Delivery Number 1, the distribution points, and Number 2, the Equitable Storage point, unless Customer knows in advance the quantity it desires to receive at such points). 2.2 It is understood and agreed that upon receipt of the gas by Transporter at the Points of Receipt hereunder Transporter shall, subject to Transporter's obligation to redeliver gas as specified in Section 2.1 hereof, have the absolute and unqualified right to treat such gas as its own, including, but not by way of limitation, the right to commingle such gas, to redeliver molecules different from those received, and to treat the molecules delivered in any manner, including the right to process the same, retaining in Transporter and to those claiming under Transporter otherwise than through this Agreement, all right, title and interest to any components obtained by virtue of such processing. 2.3 Customer and Transporter agree that (i) confirmed transportation volumes under the Intrastate Transportation Agreement shall be the first gas delivered to the Points of Delivery described at Number 1 on Exhibit A , (ii) confirmed transportation volumes under this Agreement shall be the second gas delivered to the Points of Delivery described at Number 1 on Exhibit A , (iii) volumes withdrawn from storage under the Intrastate Storage Agreement shall be the third gas delivered at the Points of Delivery described at Number 1 on Exhibit A , and (iv) volumes withdrawn from storage under the 311 Storage Agreement shall be the fourth gas delivered to the Points of Delivery described at Number 1 on Exhibit A . 2.4 Transporter agrees to determine with Customer a method to calculate Customer s peak day and other requirements and to provide a daily tabulation (furnished within 24 hours via fax or other mutually agreeable method) of Customer s estimated natural gas requirements, transportation receipts and deliveries and storage balances. The current methodology utilized for farm taps will be maintained. Customer s gas delivered to the storage Point of Delivery each month will be the differences between the estimates mentioned above and the actual volumes received and delivered. On any day that Customer s confirmed transportation volume for delivery to Transporter under this Agreement and the Intrastate Transportation Agreement exceed the volumes actually physically redelivered to Customer, those excess volumes will be delivered to the storage Point of Delivery (Point of Redelivery under the Intrastate Transportation Agreement) on a no notice basis. Conversely, if the volumes delivered to Customer under this Agreement and the Intrastate Transportation Agreement are less than the requirements of Customer, volumes of Customer s gas will be transported from the storage Point of Receipt (Point of Delivery under the Intrastate Transportation Agreement) to the Points of Delivery (Point of Redelivery under the Intrastate Transportation Agreement) on a no notice basis. ARTICLE III. FACILITIES 3.1 Transporter and Customer recognize that the facilities and equipment are currently in place in order to provide the service contemplated hereunder. Transporter shall install, own, operate and maintain, or cause the same to be done, at said Points of Receipt and Delivery the meter, instruments, equipment, and surface leases necessary to deliver the gas under this Agreement. Installation and operation of meters, instruments and other measurement equipment shall be in accordance with Article B-I of the General Conditions of Exhibit "B" as determined by Transporter in Transporter's reasonable judgment. Following completion of such equipment and facilities, Transporter shall render to Customer a statement, along with appropriate supporting documentation, showing Transporter's total cost (including without limitation, labor, materials, overhead, and interest) of such surface lease, equipment and facilities including the cost of tapping Transporter's line. All indirect costs, including general overhead, and carrying costs shall be allocated consistent with accounting practices applied to projects for the sole account of Transporter. Within thirty (30) days following receipt of such statement and supporting documentation, Customer shall make payment to Transporter of Transporter's total cost of such surface leases, equipment and facilities as shown on such statement. Equipment and facilities installed by Transporter, together with any buildings erected by it for such equipment, shall be and remain Transporter's property. Transporter and Customer shall not be obligated to install facilities to provide service hereunder nor repair or replace any facilities or equipment to continue service, except with respect to metering equipment utilized for local distribution customers. ARTICLE IV. RATES 4.1 Customer shall pay to Transporter a monthly fee equal to the lesser of (i) the sum of a Charge equal to the product of $0.75 per MMBtu times the Demand Quantity applicable for such month under this Agreement, plus a Commodity Fee of four cents (4) for each MMBtu delivered during that month at the Points of Delivery (except Point of Delivery No. 2, ESC) under this Agreement, or (ii) Transporter s then effective maximum rates for firm 311(a)(2) transportation service. Customer and Transporter, as applicable, shall also make all other payments as required in the Statement of Operations. Transporter shall provide Customer with a copy of each Statement of Operations upon the filing of each such Statement with the FERC. 4.2 Transporter has the right hereunder to file from time to time with the Commissioner of Conservation of the State of Louisiana ("Commissioner") or the FERC, or both, and/or any successor thereto, whether executive, legislative or regulatory, for any change in the rate provisions prescribed in 4.1 (ii) above or the Statement of Operations. Effective as of the date such change is approved and/or allowed to become effective or otherwise allowed to go into effect, by the appropriate authority or authorities, Customer agrees to abide by the terms and provisions of the Statement of Operations as they were so changed. 4.3 Transporter and Customer recognize that the fees per MMBtu specified in this Agreement takes into account the Louisiana Natural Gas Franchise Tax of 1% as applied to the business of Transporter represented by this Agreement. Transporter and Customer agree that if the Louisiana Natural Gas Franchise Tax is increased, or if there is levied by law an additional tax, charge or fee other than an income tax, after the effective date of this Agreement, which tax, charge or fee is levied on or measured by sales, the movement of, the value of, or the quantity of the gas delivered to Customer and which tax is payable by Transporter for the right to sell or transport gas and if Transporter lawfully pays such tax, then Customer shall reimburse Transporter for that portion of the tax, charge or fee paid by Transporter which is attributable under generally accepted accounting principles to that part of Transporter's business represented by this Agreement. Customer shall be responsible for all taxes, charges and fees of whatever kind due or payable on the production or gathering of the gas and the transportation of the gas prior to the receipt of such gas by Transporter at the Points of Receipt and subsequent to the delivery of such gas by LIG at the Points of Delivery. 4.4 Customer shall have the right, at its option, to intervene in any proceeding held to give consideration to any change in the Statement of Operations to oppose any change to the Statement of Operations, and in the case of any change to the Statement of Operations becoming effective, to seek relief therefrom. 4.5 Customer agrees to reimburse Transporter for fifty percent (50%) of all filing and other fees in connection with this Agreement, that Transporter is obligated to pay to the Commissioner, the FERC or any other governmental authority having jurisdiction. Filing and other fees in connection with this Agreement shall be limited to those fees required to implement, commence and continue transportation under this Agreement. 4.6 Customer agrees to reimburse Transporter for all charges (except those occurring as a result of Transporter s negligence) that Transporter incurs from other parties in rendering service for Customer, including but not limited to penalties of any kind, imbalance cash outs, whether imposed pursuant to a transportation service agreement, operational balancing agreement or otherwise, which charges are related to the transportation service rendered to Customer by Transporter under this Agreement. ARTICLE V. TERM 5.1 This Agreement shall become effective as of the Effective Date and shall remain in full force for a term of five (5) years and for successive terms of one (1) year. This Agreement may be terminated by either party effective at the end of the fifth contract year or at the end of any subsequent contract year by giving written notice at least six (6) months prior to the end of the appropriate contract year. 5.2 In the event the Louisiana Public Service Commission ( LPSC ) does not allow Customer to recover in its resale rates to its customers the costs incurred by Customer under this Agreement, the Intrastate Transportation Agreement, the Intrastate Storage Agreement, the 311 Storage Agreement or the Sales Agreement, then Customer may terminate this Agreement upon thirty (30) days prior written notice to Transporter. 5.3 In the event (i) the LPSC issues an order during the term hereof which requires Customer to unbundle its sales service, or (ii) either the LPSC or market conditions demand or expect Customer to unbundle its sales service, then Customer may elect to reduce its obligation to transport hereunder pro rata to the extent Customer s system is unbundled (up to and including termination of this Agreement by Customer) upon sixty (60) days prior written notice to Transporter. For purposes hereof, unbundle shall mean the separation of sales service from transportation service and the obligation to offer to provide transportation service only to its end users. 5.4 Each party agrees to pursue any necessary regulatory filings with any governmental or regulatory body having jurisdiction which may be necessary to implement or continue this Agreement. 5.5 This Agreement is subject to the provisions of Subpart C - Certain Transportation by Intrastate Pipelines of Part 284- Certain Sales and Transportation of Natural Gas under the FERC's Regulations pursuant to the NGPA and the Statement of Operations. Should the FERC or any governmental body with jurisdiction in the premises impose lawful terms and conditions upon the transportation services to be rendered hereunder which shall be deemed to be materially adverse to either Transporter or Customer in their sole judgment reasonably exercised, then that party shall have the right to terminate this Agreement without further obligation to the other party except to redeliver quantities actually accepted at the Points of Delivery, to render reports of volumes transported, to make payments due for transportation services rendered, and to make payments as provided in the Statement of Operations. The party so adversely affected shall provide written notice of the attachment of any such condition and of its election to terminate this Agreement as soon as reasonably possible. ARTICLE VI. NOTICES AND ADDRESSES 6.1 Notices - All notices are required to be given in writing. Any correspondence provided for in this Agreement shall be deemed sufficiently given when deposited in the United States mail, postage prepaid, and addressed to the respective parties at such address or such other addresses as the parties respectively shall designate by written notice; provided however, any notice to cancel this Agreement shall be sent Certified Mail. 6.2 Addresses A. Notices and Correspondence - Until Customer is otherwise notified in writing by Transporter, notices and payments to Transporter shall be addressed to Transporter at the addresses set forth below or at such other addresses as Transporter may hereafter designate by notifying Customer in writing: Notices and Correspondence: Payments: Louisiana Intrastate Louisiana Intrastate Gas Co. L.L.C. Gas Co. L.L.C. 5555 San Felipe Suite 2100 Texas Commerce Bank Houston, Texas 77056 P. O. Box 200674 Attn: Transportation and ABA No. 113000609 Exchange Department Account No. 00202825455 Houston, Texas 77216-0674 B. Payments - Customer agrees to make payment hereunder to Transporter for its account by (1) wire transfer, or (2) at the address indicated on the monthly billing, or such other address as Transporter may designate in writing to Customer from time to time. Until Transporter is otherwise notified in writing by Customer, notices and invoices to Customer shall be addressed to Customer at the address set forth below or at such other address as customer may hereafter designate by notifying Transporter in writing: Notices, Correspondence and Invoices: Trans Louisiana Gas Company P. O. Box 650205 Dallas, Texas 75265-0205 Attn: Gas Supply Department ARTICLE VII. GENERAL CONDITIONS 7.1 This Agreement is subject to Transporter's General Conditions Applicable to Agreements for 311(a)(2) Transportation of Natural Gas in the State of Louisiana, a copy of which is attached hereto and made part hereof as Exhibit "B." ARTICLE VIII. MISCELLANEOUS 8.1 Modifications: No modifications of the terms and provisions of this Agreement shall be or become effective except by the execution of a supplementary written agreement. 8.2 Customer's Status: Customer represents and warrants that it is a local distribution company in the State of Louisiana and is eligible for service under Section 311(a)(2) of the NGPA. 8.3 Odorization: It is specifically understood and agreed that Customer is responsible for any and all odorization that is or may be required by any statute, ordinance, rule or regulation, and that Customer shall construct, maintain and operate any facilities required for the performance of this obligation. Customer agrees that Transporter shall not be obliged to odorize the gas transported and redelivered hereunder. 8.4 Abandonment: Without admitting to or acquiescing in the jurisdiction of the Commissioner of Conservation of the State of Louisiana over this Agreement pursuant to the provisions of LSA R.S. 30:555(b) or of any body either State or Federal and reserving rights with respect thereto, Transporter and Customer contract and agree that each party will, in support of any application of the other, seek pregranted approval for the abandonment of service under this Agreement at the termination of this Agreement by the Assistant Secretary of the Department of Natural Resources for the State of Louisiana, or any other body or otherwise successor, either Federal or State, that may have or assert jurisdiction over the service provided under this Agreement. Customer and Transporter confirm to each other that the cessation of service at the termination of this Agreement is an important consideration to each, and to this end, both contract and agree with the other that neither will take any action that may be construed by any regulatory official or body that has jurisdiction as a basis for requiring deliveries of gas by Transporter to Customer after the termination of this Agreement. Both agree that at all times they will take appropriate action, and cooperate with the other, to the end that delivery of gas hereunder may be abandoned at the termination of this Agreement and both agree that the termination of this Agreement, for whatever reason shall constitute authority to abandon service hereunder. 8.5 The Parties acknowledge that the rates and fees applicable hereunder have been discounted below what would otherwise be appropriate for the type of service to be rendered by Transporter under this Agreement due to (i) the large volume of Customer s gas to be transported hereunder, (ii) the load balancing benefits on Transporter s pipeline because of the system-wide nature of this Agreement, and (iii) the economic situation prevailing in the industry at the time this Agreement is negotiated. IN WITNESS WHEREOF, this Agreement is executed effective as of the date and year first above written. WITNESSES: /s/ Claude K. Elkins LOUISIANA INTRASTATE GAS COMPANY L.L.C. By: /s/ M. K. Tate Title: President WITNESSES: /s/ J. F. Carnahan TRANS LOUISIANA GAS COMPANY a Division of Atmos Energy Corporation By: /s/ Gordon Roy Title: Vice President EXHIBIT "A" POINTS OF RECEIPT Location Quantity MMBtu/d 1.Existing interconnection between Transporter's facilities and Tennessee Gas Pipeline Company located in Section 32, Township 19 South, Range 19 East, Terrebonne Parish, Louisiana (1025-40-6/Lirette) 10,000 2.Existing interconnection between Transporter's10,000(1)facilities and Texas Gas Transmission located in Section 22, Township 2 North, Range 1 East, Rapides Parish, Louisiana. (1764-40-3/Bayou Pompey) 10,000 (1) 3.Existing interconnection between Transporter's facilities and Texas Gas Transmission located in Section 62, Township 14 South, Range 9 East, St. Mary Parish, Louisiana. (1055-01-1/Franklin) 50,000 4.Existing interconnection between Transporter's facilities and ANR Pipeline Company located in Section 51, Township 15 South, Range 11 East, St. Mary Parish, Louisiana. (1058-01-01/Calumet) 50,000 5.Existing interconnection between Transporter's facilities and Trunkline Gas Company located in Section 136, Township 4 North, Range 3 West, Rapides Parish, Louisiana. (1376-40-3/Boyce) 10,000 6.Existing interconnection between Transporter's facilities and Trunkline Gas Company located in Section 11, Township 15 South, Range 11 East, St. Mary Parish, Louisiana. (1059-40-8/Calumet/Patterson) 50,000 7.Existing interconnection between Transporter's facilities and Texas Eastern Transmission Corporation located in Section 42, Township 6 South, Range 2 East, St. Landry Parish, Louisiana. (1778-01-3/Lawtell) 10,000 8. Existing interconnection between Transporter's facilities and Texas Eastern Transmission Corporation located in Section 15, Township 11 South, Range 13 East, Iberville Parish, Louisiana. (2031-01-9/White Castle) 10,000 9.Existing interconnection between Transporter's facilities and Columbia Gulf Transmission Company located in Section 77, Township 16 South, Range 15 East, Terrebonne Parish, Louisiana. (1063-40-5/Gibson) 50,000 10.Existing interconnection between Transporter s facilities and Equitable Storage Company L.L.C. in Section 43, Township 12 South, Range 5 East, Iberia Parish, Louisiana. (Jefferson Island) 80,000 under this Agreement and the Intrastate Transportation Agreement combined 11.Existing interconnection between Transporter s facilities and Koch Gateway Pipeline Company located in Section 4, Township 7 North, Range 11 West, Sabine Parish, Louisiana. (Many) Volume as exists from time-to-time 12.Existing interconnection between Transporter s facilities and Transcontinental Gas Pipeline Corporation located in Section 39, Township 17 South, Range 16 East, Terrebonne Parish, LA. 20,000 13.Existing interconnection between Transporter s facilities and Nautilus Pipeline Company, L.L.C. located in Section 45, Township 15 South, Range 10 East, St. Mary Parish, Louisiana 20,000 Note: (1) Texas Gas-Franklin is also Zone SL on Texas Gas and should be utilized during the months of April - November. Points of Receipt shall include all other points as the parties hereto may mutually agree. POINTS OF DELIVERY Location Quantity MMBtu/d 1. Those points of interconnection between Transporter and Customer where gas is physically taken to serve Customer s actual gas demand for its distribution systems in the state of Louisiana. As Required 2. Existing interconnection between Transporter s facilities and Equitable Storage Company L.L.C. in Section 43, Township 12 South, Range 5 East, Iberia Parish,Louisiana. (Jefferson Island) 30,000 under this Agreement and the Intrastate Transportation Agreement combined 3. Existing interconnection between Transporter's facilities and ANR Pipeline Company located in Section 51, Township 15 South, Range 11 East, St. Mary Parish, Louisiana (1058-01-01/Calumet) 20,000 4. Existing interconnection between Transporter's facilities and Transcontinental Gas Pipeline Corporation located in Section 39, Township 17 South, Range 16 East, Terrebonne Parish, Louisiana. (1062-40-9/Humphrey's) 20,000(2) 5. Existing interconnection between Transporter's facilities and Trunkline Gas Company located in Section 11, Township 15 South, Range 11 East, St. Mary Parish, Louisiana. (1059-40-8/Calumet) 20,000(2) 6. Existing interconnection between Transporter's facilities and Texas Eastern Transmission Corporation located in Section 15, Township 11 South, Range 13 East, Iberville Parish, Louisiana. (2031-01-9/White Castle) 20,000(1) 7. Existing interconnection between Transporter's facilities and Mid Louisiana Gas Company located in Section 37, Township 19 North, Range 4 East, Ouachita Parish, Louisiana. (1424-01-7/Sterlington) (3) 8. Existing interconnection between Transporter's facilities and Southern Natural Gas Company located in Section 6, Township 11 North, Range 15 West, DeSoto Parish, Louisiana. (1370-40-5/Logansport) (3) 9. Existing interconnection between Transporter s facilities and Texas Gas Transmission Corporation located in Section 31, Township 4 North, Range 1 East, Rapides Parish, Louisiana. (1439-40-5/Pineville) 10,000 (1) 10. Existing interconnection between Transporter's facilities and Texas Gas Transmission located in Section 62, Township 14 South, Range 9 East, St. Mary Parish, Louisiana. (1055-01-1/Franklin) (2) 11. Existing interconnection between Transporter's facilities and Tennessee Gas Pipeline Company located in Section 47, Township 15 South, Range 10 East, St. Mary Parish, Louisiana. (1057-40-5/Centerville) (2) 12. Existing interconnection between Transporter's facilities and Koch Gateway Pipeline Company located in Section 126, Township 13 South, Range 14 East, Assumption Parish, Louisiana. (1493-01-9/Napoleonville) (2) Notes: (1) By compression; TransLa to bear fuel expense. (2) By displacement. (3) Interconnection is currently limited, available only on an as, if and when basis. Points of Delivery shall include all other points as the parties hereto may mutually agree. EXHIBIT "B" GENERAL CONDITIONS APPLICABLE TO AGREEMENTS FOR 311(a)(2) TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA LOUISIANA INTRASTATE GAS COMPANY L.L.C. LOUISIANA INTRASTATE GAS COMPANY L.L.C. GENERAL CONDITIONS APPLICABLE TO AGREEMENTS FOR 311(a)(2) TRANSPORTATION OF NATURAL GAS IN THE STATE OF LOUISIANA TABLE OF CONTENTS ARTICLE TITLE PAGE B-I Measurements and Tests B-1 B-II Quality B-7 GENERAL CONDITIONS ARTICLE B-I MEASUREMENTS AND TESTS 1. The measurement of gas at each Point of Receipt and Delivery shall be accomplished in accordance with the following: (a) The unit of volumes for all purposes of measurement hereunder shall be one (1) cubic foot of gas at a temperature of sixty (60) degrees Fahrenheit and at an absolute pressure of fifteen and twenty-five thousandths (15.025) pounds per square inch absolute. The average atmospheric pressure shall be assumed to be fourteen and seven tenths (14.7) pounds per square inch at the Point(s) of Receipt and at the Point(s) of Delivery. Whenever conditions of temperature and pressure differ from such standard, conversion of the volume from such conditions to the standard conditions shall be made in accordance with the Ideal Gas Laws corrected for deviation of the gas from Boyle's Law in accordance with the methods and formulas prescribed in the American Gas Association's manual for the determination of supercompressibility factors for natural gas as last amended and superseded. (b) The volume of gas transported hereunder shall be measured by an orifice meter with flange type connections installed at the Points of Receipt and at the Points of Delivery; provided, however, that if measurement exists at a Point of Delivery and is by a positive displacement meter, then such meter will be used for measurement of gas delivered at such Point of Delivery. Orifice meters shall be installed, operated and volumes computed in accordance with the American National Standard publication, Orifice Metering of Natural Gas, ANSI/API 2530, and in such amendments and revisions thereto and superseding publications thereof. Differential and static pressure chart cycles shall not exceed eight (8) days. (c) The temperature of the gas transported hereunder shall be determined by a recording thermometer continuously used and installed so as to record properly the temperature of the gas flowing through each meter. Temperature chart cycles shall not exceed eight (8) days. (d) The specific gravity of the gas shall be determined at the point(s) of measurement by one of the following methods, mutually acceptable to both parties: (1) by means of a properly installed recording gravitometer of standard manufacture utilizing the arithmetical average of the hourly specific gravity recorded each day for computing the quantity of gas for that day, (2) by an on line chromatograph, (3) by continuous sampling, or (4) if (1), (2) or (3) is not considered feasible, then by use of a portable specific gravity balance of standard manufacture acceptable to both parties. Such determination to be made at least once every thirty (30) days. If the recording gravitometer fails, then the gravity from the chromatograph or the continuous sampler shall be used if installed and working properly. (e) The arithmetical average of the hourly temperature when gas is flowing, the factor for specific gravity according to the latest test therefor and the corrections for deviation from Boyle's Law applicable during each metering period shall be used to make proper computations of gas volumes measured hereunder. (f) The heating value of gas, as defined in Paragraph 1.9 of Article I of this Agreement shall, at Transporter's option, be determined at each point(s) of measurement hereunder: (1) by the use of a spot sample taken during such month to be analyzed on a gas chromatograph, (2) by analysis samples from a continuous gas sampler taken by Transporter and/or its nominee by using an analytical chromatograph, (3) by a recording calorimeter installed by Transporter and/or its designee, (4) by an on line chromatograph installed by Transporter and/or its designee or (5) by application of the methods contained in the American Gas Association publication, Fuel Gas Energy Metering, Gas Measurement Committee Report No. 5, and in such amendments and revisions thereto and superseding reports thereof as recommended by such committee. The heating value however determined shall be converted to the same condition stipulated for the unit of volume in "Article B-I, Paragraph 1.(a)." If an analytical chromatograph is used, such analytical chromatograph shall be of a design and manufacture mutually agreeable to both the Customer and the Transporter. The method of Btu computation for a perfect gas shall be derived from the "Table of Physical Constants of Paraffin Hydrocarbons and Other Compounds" as published in the Gas Processors Association Bulletin 2145-84 and superseding revisions thereof. The analysis shall be complete and individual values in mol percent or fraction of each hydrocarbon compound shall be listed through CH6. The CH7 value shall include the sum of the remaining hydrocarbons in the sample and the designated value for CH7's+ shall be 50% CH7 and 50% CH8 or as determined from an extended chromatograph breakdown. If an on line chromatograph is used the appropriate CH + configuration shall be set from the program choices by an independent spot analysis, the value of which shall be used to select the program choice closest to the actual CH7 + value. The analysis shall further include the mol fraction or percent individually of additional compounds contained in chromatographically measurable quantities contained in the sample. The method to be used for chromatographic analysis shall be that contained in Gas Processors Association publication number 2261-72, GPA Method of Analysis for Natural and Similar Gaseous Mixtures by Gas Chromatography. (g) Upon mutual agreement of the parties, other types of Btu per cubic foot measuring devices may be installed, operated and Btu computed in accordance with the manufacturer instructions for same and consistent with industry-accepted practices for transmission Btu per cubic foot measurement. (h) Gas samples taken from the pipeline system for purposes of determining or deriving quantitative values that will be used in the computation of gas volume and Btu per cubic foot shall be obtained through use of a probe to be inserted sufficiently beyond the periphery of the internal pipe walls to assure that the gas being drawn for the sample is free of any liquid accumulation from the internal pipe wall. (i) If the method for determining chromatographic analysis, as set forth in the GPA publication 2261-72, is revised, both parties agree that this Agreement will be amended accordingly. (j) Transporter shall install, own, operate and maintain standard type measuring and testing equipment necessary to measure and test gas transported hereunder and shall keep same accurate and in good repair. Transporter's measuring and testing equipment shall be tested once each month for accuracy. Changing of meter charts, readings, calibrations, tests, repairs and adjustments of Transporter's measuring and testing equipment shall be done only by employees of Transporter, or its designated representatives. Customer, or its designated representative shall, in the presence of an employee of Transporter or Transporter's designated representative, have access to Transporter's measuring and testing equipment at any reasonable time, and shall have the right to witness tests, calibrations and adjustments thereof. All tests scheduled hereunder shall be preceded by reasonable notice to Customer. Upon request of either party hereto for a special test of any meter or auxiliary equipment, but not more often than once every three (3) months, Transporter shall promptly verify the accuracy of same; provided that the cost of such special test shall be borne by the requesting party, unless the percentage of inaccuracy found is more than two percent (2%). If, upon any test, any measuring equipment is found to be in error, such errors shall be taken into account in a practical manner in computing the deliveries. If the resultant aggregate error in the computed receipts is not more than two percent (2%), then previous receipts shall be considered accurate. All equipment shall, in any case, be adjusted at the time of test to record correctly. If, however, the resultant aggregate error in computed receipts exceeds two percent (2%) of a recording corresponding to the average hourly rate of gas flow for the period since the last preceding test, the previous recordings of such equipment shall be corrected to zero error for any period which is known definitely or agreed upon, but in case the period is not known definitely or agreed upon, such correction shall be for a period extending back one-half of the time elapsed since the date of the last test, not exceeding a correction period of sixteen (16) days. (k) If any meter or auxiliary equipment is out of service or out of repair for a period of time so that the amount of gas delivered cannot be ascertained or computed from the reading thereof, then the gas delivered during such period shall be estimated upon the basis of the best data available, using the first of the following methods which is feasible: (1) by using the registration of any check meter or meters, if installed and accurately registering; or (2) by correcting the error if the percentage of error is ascertainable by calibration tests or mathematical calculations; or (3) by estimating gas volumes on the basis of deliveries during the preceding periods under similar conditions when the equipment was registering accurately, or by other method(s) mutually acceptable to both parties. (l) Upon request of Customer, Transporter shall submit its measurement charts and records to Customer for examination, the same to be returned within thirty (30) days. Transporter's measurement charts and records for a given accounting month will be presumed correct if no written objection thereto is served on either party hereto by the other within the twelve (12) month period following any accounting month, but the same shall be retained for a twenty-four (24) month period. (m) Customer may install, operate and maintain, at its sole cost, risk and expense, but in the same manner as is required for Transporter's equipment hereunder, check measuring and testing equipment of standard type, provided that the same does not interfere with the operation of Transporter's equipment, but the measurement and testing of gas for purposes of this Agreement shall only be by Transporter's equipment. Transporter shall have the same rights with respect to said check metering and testing equipment of Customer as are granted to Customer with respect to Transporter's metering and testing equipment. (n) If it is determined prior to, or as a result of, in- service tests, experience and observation by either Customer or Transporter that pulsations exist that affect the measurement accuracy, then the operator of the facilities agrees to install and operate mechanical dampening equipment necessary to eliminate such pulsations. (o) If at any time during the term hereof a new method or technique is developed with respect to gas measurement, or the determination of the factors used in such gas measurement, such new method or technique may be substituted for the method set forth in this Section when, in Transporter's sole discretion, employing such new method or technique is advisable. Transporter shall notify Customer in writing of any such election prior to actually implementing such substitution. ARTICLE B-II QUALITY 1. The gas received and delivered at each Point(s) of Receipt and Point(s) of Delivery shall meet the following quality specification: (a) Oxygen - The oxygen content shall not exceed one percent (1%) by volume of uncombined oxygen, and the parties shall make reasonable efforts to maintain the gas free from oxygen. (b) Hydrogen Sulphide - The hydrogen sulphide content shall not exceed one (1) grain per one hundred (100) cubic feet of gas. (c) Total Sulphur - The total sulphur content, including mercaptans and hydrogen sulphide, shall not exceed ten (10) grains per one hundred (100) cubic feet of gas. (d) Carbon Dioxide - The carbon dioxide content shall not exceed two percent (2%) by volume. (e) Liquids - The gas shall be free of water and other objectionable liquids at the temperature and pressure at which the gas is delivered and the gas shall not contain any hydrocarbons which might condense to free liquids in the distribution system under normal distribution operating conditions (20 psig and 40oF) and shall in no event contain water vapor in excess of seven (7) pounds per one million (1,000,000) cubic feet. (f) Dust, Gums and Solid Matter - The gas shall be commercially free of dust, gums, gum forming constituents and other solid matter. (g) Heating Value - The gas delivered shall contain a heating content of not less than nine hundred fifty (950) Btu s per cubic foot. (h) Temperature - The gas shall not be delivered at a temperature of less than forty degrees (40o) Fahrenheit, and not more than one hundred twenty degrees (120o) Fahrenheit. (i) Nitrogen - The nitrogen content shall not exceed three percent (3%) by volume. (j) Hydrogen - The gas shall contain no carbon monoxide, halogens or unsaturated hydrocarbons, and no more than four hundred parts per million (400ppm) of hydrogen. 2. In the event any gas delivered by Customer to Transporter at any Point of Receipt fails to meet the quality specifications set forth above, Transporter may refuse to accept receipt of such gas until Customer or Customer s supplier shall have corrected the quality deficiency. 3. In the event any gas delivered by Transporter to Customer at any Point of Delivery fails to meet the quality specifications set forth above, Customer may refuse to accept receipt of such gas until Transporter shall have corrected the quality deficiency. END OF EXHIBIT "B" EX-10 6 Exhibit 10.3 Firm Transportation Service Agreement Rate Schedule TF-1 between Colorado Interstate Gas Company and Greeley Gas Company, a division of Atmos Energy Corporation Dated: October 1, 1996, or the effective date authorized by the FERC for CIG s service changes filed in Docket No. RP96-190, whichever is later. Firm Transportation Service Agreement Rate Schedule TF-1 The Parties identified below, in consideration of their mutual promises, agree as follows: 1. Transporter: Colorado Interstate Gas Company 2. Shipper: Greeley Gas Company, a division of Atmos Energy Corporation 3. Applicable Tariff: Transporter's FERC Gas Tariff, First Revised Volume No. 1, as the same may be amended or superseded from time to time ( the Tariff ). 4. Changes in Rates and Terms: Transporter shall have the right to propose to the FERC changes in its rates and terms of service, and this Agreement shall be deemed to include any changes which are made effective pursuant to FERC Order or regulation or provisions of law, without prejudice to Shipper's right to protest the same. 5. Transportation Service: Transportation Service at and between Primary Point(s) of Receipt and Primary Point(s) of Delivery shall be on a firm basis. Receipt and Delivery of quantities at Secondary Point(s) of Receipt and/or Secondary Point(s) of Delivery shall be in accordance with the Tariff. 6. Points of Receipt and Delivery: Shipper agrees to Tender gas for Transportation Service, and Transporter agrees to accept Receipt Quantities at the Primary Point(s) of Receipt identified in Exhibit A. Transporter agrees to provide Transportation Service and Deliver gas to Shipper (or for Shipper's account) at the Primary Point(s) of Delivery identified in Exhibit A. 7. Rates and Surcharges: As set forth in Exhibit B. 8. Negotiated Rate Agreement: N/A 9. Peak Month MDQ: 6,121 Dth per Day. 10. Term of Agreement: Beginning: October 1, 1996, or the effective date authorized by the FERC for Transporter s service changes filed in Docket No. RP96-190, whichever is later. Extending through: September 30, 2000 11. Notices, Statements, and Bills: To Shipper: Invoices for Transportation: - 1 - Greeley Gas Company, a division of Atmos Energy Corporation P.O. Box 650205 2 Dallas, Texas 75265-0205 Attention: Gas Supply Department All Notices: Greeley Gas Company, a division of Atmos Energy Corporation P.O. Box 650205 Dallas, Texas 75265-0205 Attention: John Hack To Transporter: See Payments, Notices, Nominations, and Points of Contact sheets in the Tariff. 12. Supersedes and cancels prior Agreement: When this Agreement becomes effective, it shall supersede and cancel the following agreement between the Parties: In part, the Firm Transportation Service Agreement between Transporter and Shipper dated October 1, 1996, referred to as Transporter s Agreement No. 35024000. That portion of Agreement No. 35024000, not superseded and canceled by this Agreement, shall be superseded and canceled by Transporter s Agreement No. 33181000. 13. Adjustment to Rate Schedule TF-1 and/or General Terms and Conditions: N/A. 14. Incorporation by Reference: This Agreement in all respects shall be subject to the provisions of Rate Schedule TF-1 and to the applicable provisions of the General Terms and Conditions of the Tariff as filed with, and made effective by, the FERC as same may change from time to time (and as they may be amended pursuant to Section 13 of the Agreement). IN WITNESS WHEREOF, the parties hereto have executed this Agreement. Transporter: Shipper: Colorado Interstate Gas Company Greeley Gas Company, a Division of Atmos Energy Corporation By /s/ Thomas L. Price By Thomas L. Price Vice President (Print or type name) EXHIBIT A Firm Transportation Service Agreement between Colorado Interstate Gas Company and Greeley Gas Company, a division of Atmos Energy Corporation Dated: October 1, 1996, or the effective date authorized by the FERC for Transporter s service changes filed in Docket No. RP96- 190, whichever is later. 1. Shipper's Maximum Delivery Quantity ( MDQ ) for the following months shall be as follows: November March (Peak Month MDQ) 6,121 Dth per Day April, May, September, October 4,285 Dth per Day June August 2,142 Dth per Day Primary Point(s) of Receipt Quantity (Dth per Day) (Note 2) Primary Point(s) of November April, June Maximum Receipt (Note 1) through May, through Receipt March Sept, August Pressure October p.s.i.g. Northern System Echo Springs Master 300 300 300 850 Meter Lost Cabin 1,200 1,200 1,200 1,100 Uintah 593 593 593 300 Total Northern System 2,093 2,093 2,093 Central System Lakin Master Meter 2,277 1,240 49 220 Southern System Big Canyon 491 267 0 955(4) Greenwood Master 800 435 0 220 Meter Mocane 460 250 0 65 Total Southern System 1,751 952 0 ----- ----- ----- TOTAL 6,121 4,285 2,142 Primary Point(s) of Delivery Quantity (Dth per Day) (Note 3) Primary Point(s) of November April, June Maximum Delivery through May, through Delivery (Note 1) March Sept, August Pressure October p.s.i.g. Canon City Group (Note 5) Canon City 4,231 2,962 1,481 (Note 6) Colorado State 298 209 104 100 Penintentiary Engineering Station 5 4 2 Line 476+78 Pressure Florence City Gate 989 692 346 60 Fremont County 9 6 3 Line Industrial Park Pressure Penrose City Gate 135 95 47 60 Penrose PBS-2 129 90 45 Line Pressure Portland City Gate 35 25 12 100 Pritchett City Gate 35 25 12 150 Total Canon City Group 5,866 4,108 2,052 Total Capacity Release 4,814 3,369 1,684 Eads Group Brandon Station 28 20 10 350 Eads City Gate 207 145 72 60 Highline Taps: Neoplan (Bent County) 3 2 1 Line Pressure Penrose South (Fremont 11 8 4 Line County) Pressure The Piggery (Fremont 3 2 1 Line County) Pressure L.J. Stafford (Baca 5 4 2 Line County) Pressure Total Eads Group 257 181 90 McClave Delivery 350 245 123 500 Springfield 700 490 245 Line Pressure ----- ----- ----- TOTAL 6,121 4,285 2,142 Storage Injection 2,814 2,015 1,714 N/A NOTES: (1) Information regarding Point(s) of Receipt and Point(s) of Delivery, including legal descriptions, measuring parties, and interconnecting parties, shall be posted on Transporter's electronic bulletin board. Transporter shall update such information from time to time to include additions, deletions, or any other revisions deemed appropriate by Transporter. (2) Each Point of Receipt Quantity may be increased by an amount equal to Transporter's Fuel Reimbursement percentage. Shipper shall be responsible for providing such Fuel Reimbursement at each Point of Receipt on a pro rata basis based on the quantities received on any Day at a Point of Receipt divided by the total quantity Delivered at all Point(s) of Delivery under this Transportation Service Agreement. (3) The sum of the Delivery Quantities at Point(s) of Delivery shall be equal to or less than Shipper's MDQ. (4) Minimum pressure Shipper will deliver gas to Transporter is 350 p.s.i.g. (5) For Capacity Release purposes, the aggregate of the Canon City Group Point of Delivery Quantities is as designated (e.g., 4,814 Dth per Day for the Peak Month MDQ). To the extent that Shipper is not utilizing a portion of its remaining Point of Delivery Quantities at non-Canon City Group Points of Delivery, Shipper may nominate up to the Canon City Group total (e.g., 5,866 Dth per Day November through March), provided that total deliveries under this Agreement do not exceed the monthly MDQ (e.g., 6,121 Dth per Day November through March) unless an Authorized Overrun has been granted to Shipper by Transporter. (6) Line pressure but not less than 100 p.s.i.g. EXHIBIT B Firm Transportation Service Agreement between Colorado Interstate Gas Company and Greeley Gas Company, a division of Atmos Energy Corporation Dated: October 1, 1996, or the effective date authorized by the FERC for Transporter s service changes filed in Docket No. RP96-190, whichever is later. Primary Primary R1 Point(s) Point(s) Reser- Com- Fuel Sur- of of vation modity Term of Reimburse- charg Receipt Delivery Rate Rate Rate ment es As As (Notes (Notes Through (Note 2) (Note listed listed 1 1 and 9/30/00 3) on on and 4) 5) Exhibit Exhibit A A Secon- Secon- R1 Com- Term of Fuel Sur- dary dary Reser- modity Rate Reimburse- charg Point(s) Point(s) vation Rate ment es of of Rate Receipt Delivery All All (Note (Note Through (Note 2) (Note 1) 1) 9/30/00 3) NOTES: (1) Unless otherwise agreed by the Parties in writing, the rates for service hereunder shall be Transporter's maximum rates for service under Rate Schedule TF-1 or other superseding Rate Schedules, as such rates may be changed from time to time. (2) Fuel Reimbursement shall be as stated on Transporter's Schedule of Surcharges and Fees in the Tariff, as they may be changed from time to time, unless otherwise agreed between the Parties. (3) Surcharges, If Applicable: All applicable surcharges, unless otherwise specified, shall be the maximum surcharge rate as stated in the Schedule of Surcharges and Fees in The Tariff, as such surcharges may be changed from time to time. GQC: The Gas Quality Control Surcharge shall be assessed pursuant to Article 20 of the General Terms and Conditions as set forth in The Tariff. GRI: The GRI Surcharge shall be assessed pursuant to Article 18 of the General Terms and Conditions as set forth in The Tariff. HFS: The Hourly Flexibility Surcharge shall be assessed pursuant to Article 20 of the General Terms and Conditions as set forth in The Tariff. Order No. 636 Transition Cost Mechanism: Surcharge(s) shall be assessed pursuant to Article 21 of the General Terms and Conditions as set forth in The Tariff. ACA: The ACA Surcharge shall be assessed pursuant to Article 19 of the General Terms and Conditions as set forth in The Tariff. (4) If Shipper releases any of its capacity (i.e., becomes a Releasing Shipper under Transporter s Capacity Release Program) and the Replacement Shipper is paying more than the Releasing Shipper, Transporter shall be entitled to the difference, if any, between the reservation charge(s), including all applicable surcharges, being paid by the Replacement Shipper, and the reservation charges, including all applicable surcharges, being paid by the Releasing Shipper. (5) The Authorized Overrun Rate charged by Transporter shall be determined pursuant to the Stipulation and Agreement in Docket No. RP96-190, when applicable, while such Settlement is in effect. - B 2 - EX-10 7 Exhibit 10.4 Contract No.: 4272 FIRM TRANSPORTATION AGREEMENT THIS AGREEMENT is made, entered into and effective as of this 1st day of November, 1993, by and between East Tennessee Natural Gas Company, a Tennessee corporation hereinafter referred to as "Transporter", and the United Cities Gas Company, an Illinois corporation of the State of Tennessee, hereinafter referred to as "Shipper". Transporter and Shipper shall be referred to herein individually as "Party" and collectively as "Parties." ARTICLE I - DEFINITIONS The definitions found in Section 1 of Transporter's General Terms and Conditions are incorporated herein by reference. ARTICLE II - SCOPE OF AGREEMENT Transporter agrees to accept and receive daily, on a firm basis, at the Receipt Point(s) listed on Exhibit A attached hereto, from Shipper such quantity of gas as Shipper makes available up to the applicable Transportation Quantity stated on Exhibit A attached hereto and deliver for Shipper to the Delivery Point(s) listed on Exhibit A attached hereto an Equivalent Quantity of gas. The Rate Schedule applicable to this Agreement shall be stated on Exhibit A. ARTICLE III - RECEIPT AND DELIVERY PRESSURES Shipper shall deliver, or cause to be delivered, to Transporter the gas to be transported hereunder at pressures sufficient to deliver such gas into Transporter's system at the Receipt Point(s). Transporter shall deliver the gas to be transported hereunder to or for the account of Shipper at the pressures existing in Transporter's system at the Delivery Point(s) unless otherwise specified on Exhibit A. ARTICLE IV - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS For all gas received, transported, and delivered hereunder, the Parties agree to the quality specifications and standards for measurement as provided for in Transporter's General Terms and Conditions. Transporter shall be responsible for the operation of measurement facilities at the Delivery Point(s) and Receipt Point(s). In the event that measurement facilities are not operated by Transporter, the responsibility for operations shall be deemed to be Shipper's. ARTICLE V - FACILITIES The facilities necessary to receive, transport, and deliver gas as described herein are in place and no new facilities are anticipated to be required. ARTICLE VI - RATES FOR SERVICE 6.1 Rates and Charges - Commencing on the date of implementation of this Agreement under Section 10.1, the compensation to be paid by Shipper to Transporter shall be in accordance with Transporter's effective Rate Schedule FT-A or FT-GS, as specified on Exhibit A. Where applicable, Shipper shall also pay the Gas Research Institute surcharge and Annual Charge Adjustment surcharge as such rates nay change from time to time. 6.2 Changes in Rates and Charges - Shipper agrees that Transporter shall have the unilateral right to file with the appropriate regulatory authority and make changes effective in (a) the rates and charges stated in this Article, (b) the rates and charges applicable to service pursuant to the Rate Schedule under which this service is rendered and (c) any provisions of Transporter's General Terms and Conditions as they may be revised or replaced from time to time. Without prejudice to Shipper's right to contest such changes, Shipper agrees to pay the effective rates and charges for service rendered pursuant to this Agreement. Transporter agrees that Shipper may protest or contest the aforementioned filings, or may seek authorization from duly constituted regulatory authorities for adjustment of Transporter's existing FERC Gas Tariff as may be found necessary to assure Transporter just and reasonable rates. ARTICLE VII - RESPONSIBILITY DURING TRANSPORTATION As between the Parties hereto, it is agreed that from the time gas is delivered by Shipper to Transporter at the Receipt Point(s) and prior to delivery of such gas to or for the account of Shipper at the Delivery Point(s), Transporter shall be responsible for such gas and shall have the unqualified right to commingle such gas with other gas in its system and shall have the unqualified right to handle and treat such gas as its own. Prior to receipt of gas at Shipper's Receipt Point(s) and after delivery of gas at Shipper's Delivery Point(s), Shipper shall have sole responsibility for such gas. ARTICLE VIII - BILLINGS AND PAYMENTS Billings and payments under this Agreement shall be in accordance with Section 16 of Transporter's General Terms and Conditions as they only be revised or replaced from time to time. ARTICLE IX - RATE SCHEDULES AND GENERAL TERNS AND CONDITIONS This Agreement is subject to the effective provisions of Transporter's FT-A or FT-GS Rate Schedule, as specified in Exhibit A, and Transporter's General Terms and Conditions on file with the FERC, or other duly constituted authorities having jurisdiction, as the same may be changed or superseded from time to time in accordance with the rules and regulations of the FERC, which Rate Schedule and General Terms and Conditions are incorporated by reference and made a part hereof for all purposes. ARTICLE X - TERM OF CONTRACT 10.1 This Agreement shall be effective as of November 1, 1993, and shall remain in force and effect until November 1, 2000 ("Primary Term"); provided, however, that if the Primary Term is one year or more, then the contract shall remain in force and effect and the contract term will automatically roll-over for additional five year increments ("Secondary Term") unless Shipper, one year prior to the expiration of the Primary Term or a Secondary Term, provides written notice to Transporter of either (1) its intent to terminate the contract upon expiration of the then current term or (2) its desire to exercise its right-of-first-refusal in accord with Section 7.3 of Transporter's General Terms and Conditions. Provided further, if the FERC or other governmental body having Jurisdiction over the service rendered pursuant to this Agreement authorizes abandonment of such service, this Agreement shall terminate on the abandonment date permitted by the FERC or such other governmental body. 10.2 In addition to any other remedy Transporter may have, Transporter shall have the right to terminate this Agreement in the event Shipper fails to pay all of the amount of any bill for service rendered by Transporter hereunder when that amount is due, provided Transporter shall give Shipper and the FERC thirty days notice prior to any termination of service. Service may continue hereunder if within the thirty day notice period satisfactory assurance of payment is made in accord with Section 16 of Transporter's General Terms and Conditions. ARTICLE XI - REGULATION 11.1 This Agreement shall be subject to all applicable governmental statutes, orders, rules, and regulations and is contingent upon the receipt and continuation of all necessary regulatory approvals or authorizations upon terms acceptable to Transporter and Shipper. This Agreement shall be void and of no force and effect if any necessary regulatory approval or authorization is not so obtained or continued. All Parties hereto shall cooperate to obtain or continue all necessary approvals or authorizations, but no Party shall be liable to any other Party for failure to obtain or continue such approvals or authorizations. Further, if any governmental body having jurisdiction over the service provided for herein authorizes abandonment of each service on a date other than the Termination Date as defined in Section 10.1 herein, then the Termination Date shall nevertheless be the abandonment date so authorized. 11.2 Promptly following the execution of this Agreement, the Parties will file, or cause to be filed, and diligently prosecute, any necessary applications or notices with all necessary regulatory bodies for approval of the service provided for herein. 11.3 In the event the Parties are unable to obtain all necessary and satisfactory regulatory approvals for service prior to the expiration of two (2) years from the effective date hereof, then, prior to receipt of such regulatory approvals, either Party may terminate this Agreement by giving the other Party at least thirty (30) days prior written notice, and the respective obligations hereunder, except for the reimbursement of filing fees herein, shall be of no force and effect from and after the effective date of such termination. 11.4 The transportation service described herein shall be provided subject to the provisions of the FERC Regulations shown by Shipper on Exhibit A hereto. ARTICLE XII - ASSIGNMENTS 12.1 Either Party may assign or pledge this Agreement and all rights and obligations hereunder under the provisions of any mortgage, deed of trust, indenture or other instrument that it has executed or may execute hereafter as security for indebtedness; otherwise, Shipper shall not assign this Agreement or any of its rights and obligations hereunder, except as set forth in Section 17 of Transporter's General Terms and Conditions. 12.2 Any person or entity that shall succeed by purchase, transfer, merger, or consolidation to the properties, substantially or as an entirety, of either Party hereto shall be entitled to the rights and shall be subject to the obligations of its predecessor in interest under this Agreement. ARTICLE XIII - WARRANTIES In addition to the warranties set forth in Section 22 of Transporter's General Terms and Conditions, Shipper warrants the following: 13.1 Shipper warrants that all upstream and downstream transportation arrangements are in place, or will be in place, as of the requested effective date of service, and that it has advised the upstream and downstream transporters of the receipt and delivery points under this Agreement and any quantity limitations for each point as specified on Exhibit A attached hereto. Shipper agrees to indemnify and hold Transporter harmless for refusal to transport gas hereunder in the event any upstream or downstream transporter fails to receive or deliver gas as contemplated by this Agreement. 13.2 Shipper agrees to indemnify and hold Transporter harmless from all suit actions, debts, accounts, damages, costs, losses, and expenses (including reasonable attorneys fees) arising from or out of breach of any warranty, by the Shipper herein. 13.3 Shipper warrants that it will have title or the right to acquire title to the gas delivered to Transporter under this Agreement. 13.4 Transporter shall not be obligated to provide or continue service hereunder in the event of any breach of warranty; provided, Transporter shall give Shipper and the FERC thirty days notice prior to any termination of service. Service will continue if, within the thirty day notice period, Shipper cures the breach of warranty. ARTICLE XIV - MISCELLANEOUS 14.1 Except for changes specifically authorized pursuant to this Agreement, no modification of or supplement to the terms and conditions hereof shall be or become effective until Shipper has submitted a request for change through the TENN-SPEED 2 system and Shipper has been notified through the TENN-SPEED 2 system of Transporter's agreement to such change. 14.2 No waiver by any Party of any one or more defaults by the other in the performance of any provision of this Agreement shall operate or be construed as a waiver of any future default or defaults, whether of a like or of a different character. 14.3 Except when notice is required through the TENN-SPEED 2 system, pursuant to Transporter's FT-A or FT-GS Rate Schedule, as applicable, or pursuant to Transporter's General Terms and Conditions, any notice, request, demand, statement or bill provided for in this Agreement or any notice that either Party may desire to give to the other shall be in writing and mailed by registered mail to the post office address of the Party intended to receive the same, as the case may be, to the Party's address shown on Exhibit A hereto or to such other address as either Party shall designate by formal written notice to the other. Routine communications, including monthly statements and payments, may be mailed by either registered or ordinary mail. Notice shall be deemed given when sent. 14.4 THE INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT SHALL BE IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE OF TENNESSEE, WITHOUT REGARD TO CHOICE OF LAW DOCTRINE THAT REFERS TO THE LAWS OF ANOTHER JURISDICTION. 14.5 The Exhibit(a) attached hereto is/are incorporated herein by reference and made a part of this Agreement for all purposes. 14.6 If any provision of this Agreement is declared null and void, or voidable, by a court of competent jurisdiction, then that provision will be considered severable at Transporter's option; and if the severability option is exercised, the remaining provisions of the Agreement shall remain in full force and effect. 14.7 This Agreement supersedes and cancels the Gas Sales and Transportation Agreement(s)between Shipper and Transporter dated (not applicable) and (not applicable), respectively. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first hereinabove written. EAST TENNESSEE NATURAL GAS COMPANY BY TITLE: UNITED CITIES GAS COMPANY BY TITLE: EX-10 8 Exhibit 10.5 SERVICE PACKAGE NO. 4219 AMENDMENT NO. O GAS TRANSPORTATION AGREEMENT (For Use Under FT-A Rate Schedule) THIS AGREEMENT is made and entered into as of the 1st day of November, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a Delaware Corporation, hereinafter referred to as Transporter and UNITED CITIES GAS COMPANY, a corporation of the State of ILLINOIS, hereinafter referred to as "Shipper." Transporter and Shipper shall collectively be referred to herein as the "Parties." ARTICLE I DEFINITIONS 1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily quantity of gas which Transporter agrees to receive and transport on a firm basis, subject to Article II herein, for the account of Shipper hereunder on each day during each year during the term hereof, which shall be 80,064 dekatherms. Any limitations of the quantities to be received from each Point of Receipt and/or delivered to each Point of Delivery shall be as specified on Exhibit "A" attached hereto. 1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of the General Terms and Conditions of Transporter's FERC Gas Tariff. ARTICLE II TRANSPORTATION Transportation Service - Transporter agrees to accept and receive daily on a firm basis, at the Point(s) of Receipt from Shipper or for Shipper's account such quantity of gas as Shipper makes available up to the Transportation Quantity, and to deliver to or for the account of Shipper to the Point(s) of Delivery an Equivalent Quantity of gas. ARTICLE III POINT(S) OF RECEIPT AND DELIVERY The Primary Point(s) of Receipt and Delivery shall be those points specified on Exhibit "A" attached hereto. ARTICLE IV All facilities are in place to render the service provided for in this Agreement. ARTICLE V QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT For all gas received, transported and delivered hereunder the Parties agree to the Quality Specifications and Standards for Measurement as specified in the General Terms and Conditions of Transporter's FERC Gas Tariff Volume No. 1. To the extent that no new measurement facilities are installed to provide service hereunder, measurement operations will continue in the manner in which they have previously been handled. In the event that such facilities are not operated by Transporter or a downstream pipeline, then responsibility for operations shall be deemed to be Shipper's. ARTICLE VI RATES AND CHARGES FOR GAS TRANSPORTATION 6.1 TRANSPORTATION RATES - Commencing upon the effective date hereof, the rates, charges, and surcharges to be paid by Shipper to Transporter for the transportation service provided herein shall be in accordance with Transporter's Rate Schedule FT-A and the General Terms and Conditions of Transporter's FERC Gas Tariff. 6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter for any filing or similar fees, which have not been previously paid for by Shipper, which Transporter incurs in rendering service hereunder. 6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that Transporter shall have the unilateral right to file with the appropriate regulatory authority and make effective changes in (a) the rates and charges applicable to service pursuant to Transporter's Rate Schedule FT-A, (b) the rate schedule(s) pursuant to which service hereunder is rendered or (c) any provision of the General Terms and Conditions applicable to those rate schedules. Transporter agrees that Shipper may protest or contest the aforementioned filings, or may seek authorization from duly constituted regulatory authorities for such adjustment of Transporter's existing FERC Gas Tariff as may be found necessary to assure Transporter just and reasonable rates. ARTICLE VII BILLINGS AND PAYMENTS Transporter shall bill and Shipper shall pay all rates and charges in accordance with Articles V and VI, respectively, of the General Terms and Conditions of Transporter's FERC Gas Tariff. ARTICLE VIII GENERAL TERMS AND CONDITIONS This Agreement shall be subject to the effective provisions of Transporter's Rate Schedule FT-A and to the General Terms and Conditions incorporated therein, as the same may be changed or superseded from time to time in accordance with the rules and regulations of the FERC. ARTICLE IX REGULATION 9.1 This Agreement shall be subject to all applicable and lawful governmental statutes, orders, rules and regulations and is contingent upon the receipt and continuation of all necessary regulatory approvals or authorizations upon terms acceptable to Transporter. This Agreement shall be void and of no force and effect if any necessary regulatory approval is not so obtained or continued. All Parties hereto shall cooperate to obtain or continue all necessary approvals or authorizations, but no Party shall be liable to any other Party for failure to obtain or continue such approvals or authorizations. 9.2 The transportation service described herein shall be provided subject to Subpart G, Part 284, of the FERC Regulations. ARTICLE X RESPONSIBILITY DURING TRANSPORTATION Except as herein specified, the responsibility for gas during transportation shall be as stated in the General Terms and Conditions of Transporter's FERC Gas Tariff Volume No. 1. ARTICLE XI WARRANTIES 11.1 In addition to the warranties set forth in Article IX of the General Terms and Conditions of Transporter's FERC Gas Tariff, Shipper warrants the following: (a) Shipper warrants that all upstream and downstream transportation arrangements are in place, or will be in place as of the requested effective date of service, and that it has advised the upstream and downstream transporters of the receipt and delivery points under this Agreement and any quantity limitations for each point as specified on Exhibit "A" attached hereto. Shipper agrees to indemnify and hold Transporter harmless for refusal to transport gas hereunder in the event any upstream or downstream transporter fails to receive or deliver gas as contemplated by this Agreement. (b) Shipper agrees to indemnify and hold Transporter harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses (including reasonable attorneys fees) arising from or out of breach of any warranty by Shipper herein. 11.2 Transporter shall not be obligated to provide or continue service hereunder in the event of any breach of warranty. ARTICLE XII TERM 12.1 This Agreement shall be effective as of the 1st day of November, 1993, and shall remain in force and effect until the 1st day of November, 2000,("Primary Terms") and on a month to month basis thereafter unless terminated by either Party upon at least thirty (30) days prior written notice to the other Party; provided, however, that if the Primary Term is one year or more, then unless Shipper elects upon one year's prior written notice to Transporter to request a lesser extension term, the Agreement shall automatically extend upon the expiration of the Primary Term for a term of five years and shall automatically extend for successive five year terms thereafter unless Shipper provides notice described above in advance of the expiration of a succeeding term; provided further, if the FERC or other governmental body having jurisdiction over the service rendered pursuant to this Agreement authorizes abandonment of such service, this Agreement shall terminate on the abandonment date permitted by the FERC or such other governmental body. 12.2 Any portions of this Agreement necessary to resolve or cash-out imbalances under this Agreement as required by the General Terms and Conditions of Transporter's FERC Gas Tariff Volume No. 1, shall survive the other parts of this Agreement until such time as such balancing has been accomplished; provided, however, that Transporter notifies Shipper of such imbalance no later than twelve months after the termination of this Agreement. 12.3 This Agreement will terminate automatically upon written notice from Transporter in the event Shipper fails to pay all of the amount of any bill for service rendered by Transporter hereunder in accord with the terms and conditions of Article VI of the General Terms and Conditions of Transporter's FERC Tariff. ARTICLE XIII NOTICE Except as otherwise provided in the General Terms and Conditions applicable to this Agreement, any notice under this Agreement shall be in writing and mailed to the post office address of the Party intended to receive the same, as follows: TRANSPORTER: Tennessee Gas Pipeline Company P. O. Box 2511 Houston, Texas 77252-2511 Attention: Transportation Services SHIPPER: NOTICES: UNITED CITIES GAS COMPANY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Attention: MARC TRONZO BILLING: UNITED CITIES GAS COMPANY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Attention: MARC TRONZO or to such other address as either Party shall designate by formal written notice to the other. ARTICLE XIV ASSIGNMENTS 14.1 Either Party may assign or pledge this Agreement and all rights and obligations hereunder under the provisions of any mortgage, deed of trust, indenture, or other instrument which it has executed or may execute hereafter as security for indebtedness. Either Party may, without relieving itself of its obligation under this Agreement, assign any of its rights hereunder to a company with which it is affiliated. Otherwise, Shipper shall not assign this Agreement or any of its rights hereunder, except in accord with Article III, Section 11 of the General Terms and Conditions of Transporter's FERC Gas Tariff. 14.2 Any person which shall succeed by purchase, merger, or consolidation to the properties, substantially as an entirety, of either Party hereto shall be entitled to the rights and shall be subject to the obligations of its predecessor in interest under this Agreement. ARTICLE XV MISCELLANEOUS 15.1 The interpretation and performance of this Agreement shall be in accordance with and controlled by the laws of the State of Texas, without regard to the doctrines governing choice of law. 15.2 If any provisions of this Agreement is declared null and void, or voidable, by a court of competent jurisdiction then that provision will be considered severable at either Party's option; and if the severability option is exercised, the remaining provisions of the Agreement shall remain in full force and effect. 15.3 Unless otherwise expressly provided in this Agreement or Transporter's Gas Tariff, no modification of or supplement to the terms and provisions stated in this agreement shall be or become effective until Shipper has submitted a request for change through the TENN-SPEED 2 System and Shipper has been notified through TENN-SPEED 2 of Transporter's agreement to such change. 15.4 Exhibit "A" attached hereto is incorporated herein by reference and made a part hereof for all purposes. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first hereinabove written. TENNESSEE GAS PIPELINE COMPANY BY: UNITED CITIES GAS COMPANY BY: TITLE: DATE: EX-10 9 Exhibit 10.6 Request 0180 TRANSPORTATION - STORAGE SERVICE AGREEMENT UNDER RATE SCHEDULE TSS THIS AGREEMENT is made and entered into this 1st day of October, 1993, by and between WILLIAMS NATURAL GAS COMPANY, a Delaware corporation, having its principal office in Tulsa, Oklahoma, hereinafter referred to as "WNG," and UNITED CITIES GAS COMPANY, incorporated in the states of Virginia and Illinois, having its principal office in Brentwood, Tennessee hereinafter referred to as "Shipper." IN CONSIDERATION of the premises and of the mutual covenants and agreements herein contained, WNG and Shipper agree as follows: ARTICLE I QUANTITY 1.1 Subject to the provisions of this Agreement and of WNG's Rate Schedule TSS, WNG agrees to receive such quantities of natural gas as Shipper may cause to be tendered to WNG at the Primary Receipt Point(s) designated on Exhibit A which are selected from WNG's Master Receipt Point List, as revised from time to time, for transportation and storage on a firm basis; provided, however, that in no event shall WNG be obligated to receive on any day in excess of the Maximum Daily Quantity (MDQ) for each Primary Receipt Point or of the Maximum Daily Transportation Quantity (MDTQ) for all Primary Receipt Points within any area, all as set forth on Exhibit A. 1.2 WNG agrees to deliver and Shipper agrees to accept (or cause to be accepted) at the Primary Delivery Point(s) taken from the Master Delivery Point List and designated on Exhibit B a quantity of natural gas thermally equivalent to the quantity received by WNG for transportation and withdrawn from storage as provided in Article 1.3 hereunder less appropriate reductions for fuel and loss as provided in WNG's Rate Schedule TSS; provided, however, that WNG shall not be obligated to deliver on any day quantities in excess of the MDQ for each Primary Delivery Point or in excess of the MDTQ within any area for all Primary Delivery Points, all as set forth on Exhibit B. 1.3 Subject to the provisions of this Agreement and of WNG's Rate Schedule TSS, WNG agrees to (a) inject and store such quantities of natural gas up to the Maximum Storage Quantity (MSQ) and the Maximum Daily Injection Quantity (MDIQ) as Shipper may cause to be tendered to WNG for injection into storage, less appropriate reductions for fuel and loss, and (b) withdraw such quantities of natural gas up to Shipper's gas in storage and the Maximum Daily Withdrawal Quantity (MDWQ) reflected on Exhibit C, all on a firm basis. ARTICLE II DELIVERY POINT(S) AND DELIVERY PRESSURE 2.1 Natural gas to be delivered hereunder by WNG to or on behalf of Shipper shall be delivered at the outlet side of the measuring station(s) at or near the Delivery Point(s) designated on Exhibit B at WNG's line pressure existing at such Delivery Point(s). ARTICLE III RATE, RATE SCHEDULE AND GENERAL TERMS AND CONDITIONS 3.1 Shipper shall pay WNG each month for all service rendered hereunder the then-effective, applicable rates and charges under WNG's Rate Schedule TSS, as such rates and charges and Rate Schedule TSS may hereafter be modified, supplemented, superseded or replaced generally or as to the service hereunder. Shipper agrees that WNG shall have the unilateral right from time to time to file with the appropriate regulatory authority and make effective changes in (a) the rates and charges applicable to service hereunder, (b) the rate schedule(s) pursuant to which service hereunder is rendered, or (c) any provision of the General Terms and Conditions incorporated by reference in such rate schedule(s); provided, however, Shipper shall have the right to protest any such changes. 3.2 This Agreement in all respects is subject to the provisions of Rate Schedule TSS, or superseding rate schedule(s), and applicable provisions of the General Terms and Conditions included by reference in said Rate Schedule TSS, all of which are by reference made a part hereof. ARTICLE IV TERM 4.1 This Agreement shall become effective on the date of execution and shall continue in full force and effect for an original term until 7:00 a.m., local time on October 1, 1998; provided, however, this Agreement shall be considered as renewed and extended beyond such original term for successive five (5) year terms thereafter, unless canceled, effective at the end of the primary term or at the end of any subsequent five (5) year term, by six (6) months advance written notice by either party. 4.2 This Agreement may be suspended or terminated by WNG in the event Shipper fails to pay all of the amount of any bill rendered by WNG hereunder when that amount is due; provided, however, WNG shall give Shipper and the FERC thirty (30) days notice prior to any suspension or termination of service. Service may continue hereunder if within the thirty-day notice period satisfactory assurance of payment is made by Shipper in accord with Article 18 of the General Terms and Conditions. Suspension or termination of this Agreement shall not excuse Shippers obligation to pay all demand and other charges for the original term of the Agreement. ARTICLE V NOTICES 5.1 Unless otherwise agreed to in writing by the parties, any notice, request, demand, statement or bill respecting this Agreement shall be in writing and shall be deemed given when placed in the regular mail or certified mail, postage prepaid and addressed to the other party, or sent by overnight delivery service, or by facsimile, at the following addresses or facsimile numbers, respectively: To Shipper: Billing: UNITED CITIES GAS COMPANY 5300 Maryland Way Brentwood, TN 37027 Attn: V.P., Gas Supply Phone: 615/373-0104 Fax: 615/790-9337 Notices: UNITED CITIES GAS COMPANY 5300 Maryland Way Brentwood, TN 37027 Attn: V.P., Gas Supply Phone: 615/373-0104 Fax: 615/790-9337 To WNG: Payments: Williams Natural Gas Company P. O. Box 3288 Tulsa, OK 74101 Attention: Revenue Accounting All Notices: Williams Natural Gas Company P. O. Box 3288 Tulsa, OK 74101 Attention: Manager - Transportation Services Fax: 918/588-3108 ARTICLE VI MISCELLANEOUS 6.1 The interpretation, performance and enforcement of this Agreement shall be construed in accordance with the laws of the State of Oklahoma. 6.2 As of the date of execution of Exhibits A, B, and C attached to this Agreement, such executed exhibits shall be incorporated by reference as part of this Agreement. The parties may amend Exhibits A, B, and C by mutual agreement, which amendment shall be reflected in a revised Exhibit A, B, and C and shall be incorporated by reference as part of this Agreement. 6.3 Any Service Agreements under Rate Schedule TSS shall not cover service under both TSS-P and TSS-M. 6.4 OTHER THAN AS MAY BE SET FORTH HEREIN, WNG MAKES NO OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY. 6.5 Other Miscellaneous IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. ATTEST: WILLIAMS NATURAL GAS COMPANY By: By: Assistant Secretary Title: ATTEST/WITNESS: UNITED CITIES GAS COMPANY By: By: Title: Title: EX-10 10 Exhibit 10.7 Request 0002 TRANSPORTATION- STORAGE SERVICE AGREEMENT UNDER RATE SCHEDULE TSS THIS AGREEMENT is made and entered into this 1st day of October, 1993, by and between WILLIAMS NATURAL GAS COMPANY, a Delaware corporation, having its principal office in Tulsa, Oklahoma, hereinafter referred to as "WNG," and UNITED CITIES GAS COMPANY, incorporated in the states of Virginia and Illinois, having its principal office in Brentwood, Tennessee hereinafter referred to as "Shipper." IN CONSIDERATION of the premises and of the mutual covenants and agreements herein contained, WNG and Shipper agree as follows: ARTICLE I QUANTITY 1.1 Subject to the provisions of this Agreement and of WNG's Rate Schedule TSS, WNG agrees to receive such quantities of natural gas as Shipper may cause to be tendered to WNG at the Primary Receipt Point(s) designated on Exhibit A which are selected from WNG's Master Receipt Point List, as revised from time to time, for transportation and storage on a firm basis; provided, however, that in no event shall WNG be obligated to receive on any day in excess of the Maximum Daily Quantity (MDQ) for each Primary Receipt Point or of the Maximum Daily Transportation Quantity (MDTQ) for all Primary Receipt Points within any area, all as set forth on Exhibit A. 1.2 WNG agrees to deliver and Shipper agrees to accept (or cause to be accepted) at the Primary Delivery Point(s) taken from the Master Delivery Point List and designated on Exhibit B a quantity of natural gas thermally equivalent to the quantity received by WNG for transportation and withdrawn from storage as provided in Article 1.3 hereunder less appropriate reductions for fuel and loss as provided in WNG's Rate Schedule TSS; provided, however, that WNG shall not be obligated to deliver on any day quantities in excess of the MDQ for each Primary Delivery Point or in excess of the MDTQ within any area for all Primary Delivery Points, all as set forth on Exhibit B. 1.3 Subject to the provisions of this Agreement and of WNG's Rate Schedule TSS, WNG agrees to (a) inject and store such quantities of natural gas up to the Maximum Storage Quantity (MSQ) and the Maximum Daily Injection Quantity (MDIQ) as Shipper may cause to be tendered to WNG for injection into storage, less appropriate reductions for fuel and loss, and (b) withdraw such quantities of natural gas up to Shipper's gas in storage and the Maximum Daily Withdrawal Quantity (MDWQ) reflected on Exhibit C, all on a firm basis. ARTICLE II DELIVERY POINT(S) AND DELIVERY PRESSURE 2.1 Natural gas to be delivered hereunder by WNG to or on behalf of Shipper shall be delivered at the outlet side of the measuring station(s) at or near the Delivery Point(s) designated on Exhibit B at WNG's line pressure existing at such Delivery Point(s). ARTICLE III RATE, RATE SCHEDULE AND GENERAL TERMS AND CONDITIONS 3.1 Shipper shall pay WNG each month for all service rendered hereunder the then-effective, applicable rates and charges under WNG's Rate Schedule TSS, as such rates and charges and Rate Schedule TSS may hereafter be modified, supplemented, superseded or replaced generally or as to the service hereunder. Shipper agrees that WNG shall have the unilateral right from time to time to file with the appropriate regulatory authority and make effective changes in (a) the rates and charges applicable to service hereunder, (b) the rate schedule(s) pursuant to which service hereunder is rendered, or (c) any provision of the General Terms and Conditions incorporated by reference in such rate schedule(s); provided, however, Shipper shall have the right to protest any such changes. 3.2 This Agreement in all respects is subject to the provisions of Rate Schedule TSS, or superseding rate schedule(s), and applicable provisions of the General Terms and Conditions included by reference in said Rate Schedule TSS, all of which are by reference made a part hereof. ARTICLE IV TERM 4.1 This Agreement shall become effective on the date of execution and shall continue in full force and effect for an original term until 7:00 a.m., local time on October 1, 2013; provided, however, this Agreement shall be considered as renewed and extended beyond such original term for successive five (5) year terms thereafter, unless canceled, effective at the end of the primary term or at the end of any subsequent five (5) year term, by six (6) months advance written notice by either party. 4.2 This Agreement may be suspended or terminated by WNG in the event Shipper fails to pay all of the amount of any bill rendered by WNG hereunder when that amount is due; provided, however, WNG shall give Shipper and the FERC thirty (30) days notice prior to any suspension or termination of service. Service may continue hereunder if within the thirty-day notice period satisfactory assurance of payment is made by Shipper in accord with Article 18 of the General Terms and Conditions. Suspension or termination of this Agreement shall not excuse Shipper's obligation to pay all demand and other charges for the original term of the Agreement. ARTICLE V NOTICES 5.1 Unless otherwise agreed to in writing by the parties, any notice, request, demand, statement or bill respecting this Agreement shall be in writing and shall be deemed given when placed in the regular mail or certified mail, postage prepaid and addressed to the other party, or sent by overnight delivery service, or by facsimile, at the following addresses or facsimile numbers, respectively: To Shipper: Billing: UNITED CITIES GAS COMPANY 5300 Maryland Way Brentwood, TN 37027 Attn: V.P., Gas Supply Phone: 615/373-0104 Fax: 615/790-9337 Notices: UNITED CITIES GAS COMPANY 5300 Maryland Way Brentwood, TN 37027 Attn: V.P., Gas Supply Phone: 615/373-0104 Fax: 615/790-9337 To WNG: Payments: Williams Natural Gas Company P. O. Box 3288 Tulsa, OK 74101 Attention: Revenue Accounting All Notices: Williams Natural Gas Company P. O. Box 3288 Tulsa, OK 74101 Attention: Manager - Transportation Services Fax: 918/588-3108 ARTICLE VI MISCELLANEOUS 6.1 The interpretation, performance and enforcement of this Agreement shall be construed in accordance with the laws of the State of Oklahoma. 6.2 As of the date of execution of Exhibits A, B, and C attached to this Agreement, such executed exhibits shall be incorporated by reference as part of this Agreement. The parties may amend Exhibits A, B, and C by mutual agreement, which amendment shall be reflected in a revised Exhibit A, B, and C and shall be incorporated by reference as part of this Agreement. 6.3 Any Service Agreements under Rate Schedule TSS shall not cover service under both TSS-P and TSS-M. 6.4 OTHER THAN AS MAY BE SET FORTH HEREIN, WNG MAKES NO OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY. 6.5 Other Miscellaneous IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. ATTEST: WILLIAMS NATURAL GAS COMPANY By: By: Assistant Secretary Title: ATTEST/WITNESS: UNITED CITIES GAS COMPANY By: By: Title: Title: EX-10 11 Exhibit 10.8 Service Agreement No. 867760 Authorization: Blanket (Reservation Charge) SERVICE AGREEMENT UNDER RATE SCHEDULE FT THIS AGREEMENT, made and entered into as of this 1ST DAY OF November, 1993, by and between Southern Natural Gas Company, a Delaware corporation, hereinafter referred to as "Company", and United Cities Gas Company, a Illinois corporation, hereinafter referred to as "Shipper", WITNESSETH WHEREAS, Company is an interstate pipeline, as defined in Section 2(15) of the Natural Gas Policy Act of 1978 (NGPA); and WHEREAS, Shipper is a LDC/DISTRIBUTOR; and WHEREAS, Shipper has requested fire transportation pursuant to Rate Schedule FT of various supplies of gas for redelivery for Shipper's account and has submitted to Company a request for such transportation service in compliance with Section 2 of the General Terms and Conditions applicable to Rate Schedule FT; and WHEREAS, Company has agreed to provide Shipper with transportation service of such gas supplies in accordance with the terms and conditions of this Agreement. NOW THEREFORE, the parties hereto agree as follows: ARTICLE I TRANSPORTATION QUANTITY 1.1 Subject to the terms and provisions of this Agreement, Rate Schedule FT and the General Terms and Conditions thereto, Shipper agrees to deliver or cause to be delivered to Company at the Receipt Point(s) described in Exhibit A and Exhibit A-1 to this Agreement, and Company agrees to accept at such point(s) for transportation under this Agreement, an aggregate quantity of up to 23,444 Mcf of natural gas per day for the period of October 1 through the following March 31 and 17,998 Mcf of natural gas per day, for the period of April 1 through the following September 30 during the term of this Agreement (each such volume respectively referred to herein as "Transportation Demand," as applicable). The volume for the April - September period is subject to any Commission order addressing the mitigation issues in Docket Nos. RS92-10, et al. Company's obligation to accept gas on a firm basis at any Receipt Point is limited to the Receipt Points set out on Exhibit A and to the Maximum Daily Receipt Quantity (MDRQ) stated for each such Receipt Point. The sum of the MDDQ's for the Receipt Points on Exhibit A shall not exceed the Transportation Demand. 1.2 Subject to the terms and provisions of this Agreement, Rate Schedule FT and the General Terms and Conditions thereto, Company shall deliver a thermally equivalent quantity of gas, less the applicable fuel charge as set forth in Rate Schedule FT, to Shipper at the Delivery Point(s) described in Exhibit B and Exhibit B-1 hereto. Company's obligation to redeliver gas at any Delivery Point on a firm basis is limited to the Delivery Points specified on Exhibit B and to the Maximum Daily Delivery Quantity (MDDQ) stated for each such Delivery Point. The sum of the MDDQ's for the Delivery Points on Exhibit B shall equal the Transportation Demand. ARTICLE II CONDITIONS OF SERVICE 2.1 It is recognized that the transportation service hereunder is provided on a firm basis pursuant to, in accordance with and subject to the provisions of Company's Rate Schedule FT, and the General Terms and Conditions thereto, which are contained in Company's FERC Gas Tariff, as in effect from time to time, and which are hereby incorporated by reference. In the event of any conflict between this Agreement and Rate Schedule FT, the terms of Rate Schedule FT shall govern as to the point of conflict. Any limitation of transportation service hereunder shall be in accordance with the priorities set out in Rate Schedule FT and the General Terms and Conditions thereto. 2.2 This Agreement shall be subject to all provisions of the General Terms and Conditions applicable to Company's Rate Schedule FT as such conditions may be revised from time to time. Unless Shipper requests otherwise, Company shall provide to Shipper the filings Company makes at the Federal Energy Regulatory Commission ("Commission") of such provisions of the General Terms and Conditions or other matters relating to Rate Schedule FT. 2.3 Company shall have the right to discontinue service under this Agreement in accordance with Section 15.3 of the General Terms and Conditions hereto. 2.4 The parties hereto agree that neither party shall be liable to the other party for any special, indirect, or consequential damages (including, without limitation, loss of profits or business interruptions) arising out of or in any manner related to this Agreement. 2.5 This Agreement is subject to the provisions of Part 284 of the Commission's Regulations under the NGPA and the Natural Gas Act. Upon termination of this Agreement, Company and Shipper shall be relieved of further obligation hereunder to the other party except to complete the transportation of gas underway on the day, of termination, to comply with provisions of Section 14 of the General Terms and Conditions with respect to any imbalances accrued prior to termination of this Agreement, to render reports, and to make payment for all obligations accruing prior to the date of termination. ARTICLE III NOTICES 3.1 Except as provided in Section 8.6 herein, notices hereunder shall be given pursuant to the provisions of Section 18 of the General Terms and Conditions to the respective party at the applicable address, telephone number or facsimile machine number stated below or such other addresses, telephone numbers or facsimile machine numbers as the parties shall respectively hereafter designate in writing from time to time: Company: Notices and General Correspondence Southern Natural Gas Company Post Office Box 2563 Birmingham, Alabama 35202-2563 Attention: Transportation Services Department Telephone No.: (205) 325-7223 Facsimile Machine No.: (205) 325-7303 Dispatching Notices - Nominations/Confirmations/Scheduling Southern Natural Gas Company Post Office Box 2563 Birmingham, Alabama 35202-2563 Attention: Transportation Services Department Telephone No.: (205) 325-7223 Facsimile Machine No.: (205) 325-7303 Emergencies/24-Hour Dispatching/ Limitation and Penalty Notices Southern Natural Gas Company Post Office Box 2563 Birmingham, Alabama 35202-2563 Attention: Gas Operations Department Telephone No.: (205) 325-7308 Facsimile Machine No.: (205) 325-7375 Alternative Contacts: (1) Attention: Gas Operations Department Telephone No.: (205) 325-7305 Facsimile Machine No.: (205) 325-7375 (2) Attention: Gas Operations Department Telephone No.: (205) 325-7309 Facsimile Machine No.: (205) 325-7375 Payments Southern Natural Gas Company Post Office Box 102502 68 Annex Atlanta, Georgia 30368 Shipper: Notices ant General Correspondence RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Dispatching Notices - Nominations/Confirmations RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Dispatching Notices - Limitations RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Emergencies and 24-Bour Dispatching Contact WILLIAM OSBOBN 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Alternative Contacts: (1) MARC TRONZO 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 (2) RON MCDOWELL 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Invoices RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 ARTICLE IV TERM 4.1 Subject to the provisions hereof, this Agreement shall become effective as of the date first hereinabove written and shall be in full force and effect for a primary term through the following dates: 10/31/1998 for 2,444 Mcf per day of Transportation Demand and 12/31/2000 for 21,000 Mcf per day, of Transportation Demand and shall continue in force and effect for successive terms of 1 year each after the end of each primary term for the specified volume, unless and until cancelled with respect to the associated volume by either party giving 180 days written notice to the other party prior to the end of the specified primary term or any yearly extension thereof. ARTICLE V CONDITIONS PRECEDENT 5.1 Unless otherwise agreed to by the parties, the teems of Rate Schedule FT, and the General Terms and Conditions thereto, shall apply to the acquisition or construction of any facilities necessary to effectuate this Agreement. Other provisions of this Agreement notwithstanding, Company shall be under no obligation to commence service hereunder unless and until (1) all facilities of whatever nature, as are required to permit the receipt, measurement, transportation, and delivery of natural gas hereunder have been authorized, installed, and are in operating condition, and (2) Company, in its reasonable discretion, has determined that such service would constitute transportation of natural gas authorized under all applicable regulatory authorizations and the Commission's Regulations. ARTICLE VI REMUNERATION 6.1 Shipper shall pay Company monthly for the transportation services rendered hereunder the charges specified in Rate Schedule FT, including an, penalty and other authorized charges assessed under Rate Schedule FT and the General Terms and Conditions. Company shall notify Shipper as soon as practicable of the date services will commence hereunder, and if said date is not the first day, of the month, the Reservation Charge for the first month of service hereunder shall be adjusted to reflect only the actual number of days during said month that transportation service is available. Company may agree from time to time to discount the rate charged Shipper for services provided hereunder in accordance with the provisions of Rate Schedule FT. Said discounted charge shall be set forth on Exhibit E hereto. 6.2 The rates and charges provided for under Rate Schedule FT shall be subject to increase or decrease pursuant to any order issued by the Commission in any proceeding initiated by Company or applicable to the services performed hereunder. Shipper agrees that Company shall, without any further agreement by Shipper, have the right to change from time to time, all or any part of this Agreement, as well as all or any part of Rate Schedule FT, or the General Terms and Conditions thereto, including without limitation the right to change the rates and charges in effect hereunder, pursuant to Section 4(d) of the Natural Gas Act as may, be deemed necessary by Company in its reasonable judgment, to assure just and reasonable service and rates under the Natural Gas Act. Nothing contained herein shall prejudice the rights of Shipper to contest at any time the changes made pursuant to this Section 6.2, including the right to contest the transportation rates or charges for the services provided under this Agreement, from time to time, in any subsequent rate proceedings by Company under Section 4 of the Natural Gas Act or to file a complaint under Section 5 of the Natural Gas Act with respect to such transportation rates or charges. ARTICLE VII SPECIAL PROVISIONS 7.1 If Shipper is a seller of gas under more than one Service Agreement and requests that Company alloy it to aggregate nominations for certain Receipt Points for such Agreements, Company will allow such an arrangement under the terms and conditions set forth in this Article VII. To be eligible to aggregate gas, Shipper must comply with the provisions of Section 2.2 of the General Terms and Conditions and the terms and conditions of the Supply Pool Balancing Agreement executed by Shipper and Company pursuant thereto. 7.2 If Shipper is a purchaser of gas from seller(s) that are selling from an aggregate of Receipt Points, Shipper and its seller(s) shall execute an Agency Agreement in the format attached hereto as Exhibit D for each such seller from whom Shipper is purchasing gas. ARTICLE VIII MISCELLANEOUS 8.1 This Agreement constitutes the entire Agreement between the parties and no waiver by Company or Shipper of any default of either party under this Agreement shall operate as a waiver of any subsequent default whether of a like or different character. 8.2 The laws of the State of Alabama shall govern the validity, construction, interpretation, and effect of this Agreement. 8.3 No modification of or supplement to the terms and provisions hereof shall be or become effective except by execution of a supplementary written agreement between the parties except that in accordance with the provisions of Rate Schedule FT, and the General Terms and Conditions thereto, Receipt Points may be added to or deleted from Exhibit A and the Maximum Daily Receipt Quantity for any Receipt Point on Exhibit A may be changed upon execution by Company and Shipper of a Revised Exhibit A to reflect said change(s), and Delivery Points may be added to or deleted from Exhibit B and the Maximum Daily Delivery Quantity for any Delivery Point may be changed upon execution by Company and Shipper of a Revised Exhibit B to reflect said change(s); provided, however, that any such change to Exhibit A or Exhibit B must include corresponding changes to the existing Maximum Daily Receipt Quantities or Maximum Daily Delivery Quantities, respectively, such that the sum of the changed Maximum Daily Receipt Quantities shall not exceed the Transportation Demand and the sum of the Maximum Daily Delivery Quantities equals the Transportation Demand. 8.4 This Agreement shall bind and benefit the successors and assigns of the respective parties hereto. Subject to the provisions of Section 22 of the General Tents and Conditions applicable hereto, neither party may assign this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld; provided, however, that either party may assign or pledge this Agreement under the provisions of any mortgage, deed of trust, indenture or similar instrument. 8.5 Exhibits A, A-1, B, B-1, C, D and/or E, if applicable, attached to this Agreement constitute a part of this Agreement and are incorporated herein. 8.6 This Agreement is subject to all present and future valid laws and orders, rules, and regulations of any regulatory body of the federal or state government having or asserting jurisdiction herein. After the execution of this Agreement, each party shall make and diligently prosecute all necessary filings with federal or other governmental bodies, or both, as may be required for the initiation and continuation of the transportation service which is the subject of this Agreement and to construct and operate any facilities necessary therefor. Each party shall have the right to seek such governmental authorizations as it deems necessary, including the right to prosecute its requests or applications for such authorization in the manner it deems appropriate. Upon either party's request, the other party shall timely provide or cause to be provided to the requesting party such information and Material not within the requesting party's control and/or possession that may be required for such filings. Each party shall promptly inform the other party of any changes in the representations made by such party herein and/or in the information provided pursuant to this paragraph. Each party shall promptly provide the party with a copy of all filings, notices, approvals, and authorizations in the course of the prosecution of its filings. In the event all such necessary regulatory approvals have not been issued or have not been issued on terms and conditions acceptable to Company or Shipper within twelve (12) months from the date of the initial application therefor, then Company or Shipper may terminate this Agreement without further liability or obligation to the other party by giving written notice thereof at any time subsequent to the end of such twelve-month period, but prior to the receipt of all such acceptable approvals. Such notice will be effective as of the date it is delivered to the U. S. Mail, for delivery by certified mail, return receipt requested. 8.7 This Agreement supersedes and cancels the Service Agreement (#848970) dated 10/20/1988, between the parties hereto. IN WITNESS THEREOF, this Agreement has been executed by the parties as of the date first written above by their respective duly authorized officers. ATTEST: SOUTHERN NATURAL GAS COMPANY By Its ATTEST: UNITED CITIES GAS COMPANY By Its EX-10 12 Exhibit 10.9 Service Agreement No. 867761 Authorization: Blanket (Reservation Charge) SERVICE AGREEMENT UNDER RATE SCHEDULE FT-NN THIS AGREEMENT, made and entered into as of this 1st day, of November, 1993, by and between Southern Natural Gas Company, a Delaware corporation, hereinafter referred to as "Company", and United Cities Gas Company, a Illinois corporation, hereinafter referred to as "Shipper", WITNESSETH WHEREAS, Company is an interstate pipeline, as defined in Section 2(15) of the Natural Gas Policy Act of 1978 (NGPA); and WHEREAS, Shipper is a LDC/DISTRIBUTOR; and WHEREAS, Shipper has requested fire transportation pursuant to Rate Schedule FT-NN of various supplies of gas for redelivery for Shipper's account and has submitted to Company a request for such transportation service in compliance with Section 2 of the General Terms and Conditions applicable to Rate Schedule FT-NN; and WHEREAS, Company has agreed to provide Shipper with transportation service in accordance with the terms and conditions of this Agreement. NOW THEREFORE, the parties hereto agree as follows: ARTICLE I TRANSPORTATION QUANTITY 1.1 Subject to the terms and provisions of this Agreement, Rate Schedule FT-NN and the General Terms and Conditions thereto, Shipper agrees to deliver or cause to be delivered to Company at the Receipt Point(s) described in Exhibit A and Exhibit A-1 to this Agreement, and Company agrees to accept at such point(s) for transportation under this Agreement, an aggregate quantity of up to 21,556 Mcf of natural gas per day (Transportation Demand). Company's obligation to accept gas on a firm basis at any Receipt Point is limited to the Receipt Points set out on Exhibit A and to the Maximum Daily Receipt Quantity (MDRQ) stated for each such Receipt Point. The sum of the MDRQ's for the Receipt Points on Exhibit A shall not exceed the Transportation Demand. 1.2 Subject to the terms and provisions of this Agreement, Rate Schedule FT-NN and the General Terms and Conditions thereto, Company shall deliver a thermally equivalent Quantity of gas, less the applicable fuel charge as set forth in Rate Schedule FT-NN, to shipper at the Delivery Point(s) described in Exhibit B and Exhibit B-1 hereto. Company's obligation to redeliver gas on a firm basis at any Delivery Point is limited to the Delivery Points specified on Exhibit B and to the Maximum Daily Delivery Quantity (MDDQ) stated for each such Delivery Point. The sum of the MDDQ's for the Delivery Points on Exhibit B shall equal the Transportation Demand. ARTICLE II CONDITIONS OF SERVICE 2.1 It is recognized that the transportation service hereunder is provided on a fins basis pursuant to, in accordance with and subject to the provisions of Company's Rate Schedule FT-NN, and the General Terms and Conditions thereto, which are contained in Company's FERC Gas Tariff, as in effect from time to time, and which are hereby incorporated by reference. In the event of any conflict between this Agreement and Rate Schedule FT-NN, the terms of Rate Schedule FT-NN shall govern as to the point of conflict. Any limitation of transportation service hereunder shall be in accordance with the priorities set out in Rate Schedule FT-NN and the General Terms and Conditions thereto. 2.2 This Agreement shall be subject to all provisions of the General Terms and Conditions applicable to Company's Rate Schedule FT-NN as such conditions may be revised from time to time. Unless Shipper requests otherwise, Company shall provide to Shipper the filings Company makes at the Federal Energy Regulatory Commission ("Commission") of such provisions of the General Terms and Conditions or other matters relating to Rate Schedule FT-NN. 2.3 Company shall have the right to discontinue service under this Agreement in accordance with Section 15.3 of the General Terms and Conditions hereto. 2.4 The parties hereto agree that neither part shall be liable to the other part, for any special, indirect, or consequential damages (including, without limitation, loss of profits or business interruptions) arising out of or in any gunner related to this Agreement. 2.5 This Agreement is subject to the provisions of Part 284 of the Commission's Regulations under the NGPA and the Natural Gas Act. Upon termination of this Agreement, Company and Shipper shall be relieved of further obligation to the other party except to complete the transportation of gas underway on the day of termination, to comply with the Revisions of Section 14 of the General Terms and Conditions with respect to any imbalances accrued prior to termination of this Agreement, to render reports, and to make payment for all obligations accruing prior to the date of termination. ARTICLE III NOTICES 3.1 Except as provided in Section 8.6 herein, notices hereunder shall be given pursuant to the provisions of Section 18 of the General Terms and Conditions to the respective party at the applicable address, telephone number or facsimile machine number stated below or such other addresses, telephone numbers or facsimile machine numbers as the parties ahal1 respectively hereafter designate in writing from time to time: Company: Notices and General Correspondence Southern Natural Gas Company Post Office Box 2563 Birmingham, Alabama 35202-2563 Attention: Transportation Services Department Telephone No.: (205) 325-7223 Facsimile Machine No.: (205) 325-7303 Dispatching Notices - Nominations/Confirmations/Scheduling Southern Natural Gas Company Post Office Box 2563 Birmingham, Alabama 35202-2563 Attention: Transportation Services Department Telephone No.: (205) 325-7223 Facsimile Machine No.: (205) 325-7303 Emergencies/24-Hour Dispatching/ Limitation and Penalty Notices Southern Natural Gas Company Post Office Box 2563 Birmingham, Alabama 35202-2563 Attention: Gas Operations Department Telephone No.: (205) 325-7308 Facsimile Machine No.: (205) 325-7375 Alternative Contacts: (1) Attention: Gas Operations Department Telephone No.: (205) 325-7305 Facsimile Machine No.: (205) 325-7375 (2) Attention: Gas Operations Department Telephone No.: (205) 325-7309 Facsimile Machine No.: (205) 325-7375 Payments Southern Natural Gas Company Post Office Box 102502 68 Annex Atlanta, Georgia 30368 Shipper: Notices and General Correspondence RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Dispatching Notices - Nominations/Confirmations RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Dispatching Notices - Limitations RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Emergencies and 24-Hour Dispatching Contact WILLIAM OSBORN 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Alternative Contacts: (1) MARC TRONZO 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 (2) RON MCDOWELL 5300 MARYLAND WAY BRENTWOOD, TN 37027 Telephone No.: (615) 373-0104 Facsimile Machine No.: (615) 790-9337 Invoices RON MCDOWELL, VICE PRESIDENT - GAS SUPPLY 5300 MARYLAND WAY BRENTWOOD, TN 37027 ARTICLE IV TERM 4.1 Subject to the provisions hereof, this Agreement shall become effective as of the date first hereinabove written and shall be in full force and effect for a primary term through 10/31/1998 and shall continue and remain in force and effect for successive terms of 1 year each thereafter unless and until cancelled by either party giving 180 days written notice to the other party prior to the end of the primary term or any yearly extension thereof. ARTICLE V CONDITIONS PRECEDENT 5.1 Unless otherwise agreed to by the parties, the terms of Rate Schedule FT-NN, and the General Terms and Conditions thereto, shall apply to the acquisition or construction of any facilities necessary to effectuate this Agreement. Other provisions of this Agreement notwithstanding, Company shall be under no obligation to commence service hereunder unless and until (1) all facilities, of whatever nature, as are required to permit the receipt, measurement, transportation, and delivery of natural gas hereunder have been authorized, installed, and are in operating condition, and (2) Company, in its reasonable discretion, has determined that such service would constitute transportation of natural gas authorized under all applicable regulatory authorizations and the Commission's Regulations. ARTICLE VI REMUNERATION 6.1 Shipper shall pay Company monthly for the transportation services rendered hereunder the charges specified in Rate Schedule FT-NN, including any penalty and other authorized charges assessed under Rate Schedule FT-NN and the General Terms and Conditions. Company shall notify Shipper as soon as practicable of the date services will commence hereunder, and if said date is not the first day of the month, the Reservation Charge for the first month of service hereunder shall be adjusted to reflect only the actual number of days during said month that transportation service is available. Company may agree from time to time to discount the rates charged Shipper for services provided hereunder in accordance with the provisions of Rate Schedule FT-NN. Said discounted charges shall be set forth on Exhibit E hereto. 6.2 The rates and charges provided for under Rate Schedule FT-NN shall be subject to increase or decrease pursuant to any order issued by the Commission in any proceeding initiated by Company or applicable to the services performed hereunder. Shipper agrees that Company shall, without any further agreement by Shipper, have the right to change from time to time, all or any part of this Agreement, as well as all or any part of Rate Schedule FT-NN, or the General Terms and Conditions thereto, including without limitation the right to change the rates and charges in effect hereunder, pursuant to Section 4(d) of the Natural Gas Act as may be deemed necessary by Company, in its reasonable judgment, to assure just and reasonable service and rates under the Natural Gas Act. Nothing contained herein shall prejudice the rights of Shipper to contest at any time the changes made pursuant to this Section 6.2, including the right to contest the transportation rates or charges for the services provided under this Agreement, from time to time, in any subsequent rate proceedings by Company under Section 4 of the Natural Gas Act or to file a complaint under Section 5 of the Natural Gas Act with respect to such transportation rates or charges. ARTICLE VII SPECIAL PROVISIONS 7.1 If Shipper is a seller of gas under more than one Service Agreement and requests that Company allow it to aggregate nominations for certain Receipt Points for such Agreements, Company will allow such an arrangement under the terms and conditions set forth in this Article VII. To be eligible to aggregate gas, Shipper must comply with the provisions of Section 2.2 of the General Terms and Conditions and the terms and conditions of the Supply Pool Balancing Agreement executed by Shipper and Company pursuant thereto. 7.2 If Shipper is a purchaser of gas from seller(s) that are selling from an aggregate of Receipt Points, Shipper and its seller(s) shall execute an Agency Agreement in the format attached hereto as Exhibit D for each such seller from whom Shipper is purchasing gas. ARTICLE VIII MISCELLANEOUS 8.1 This Agreement constitutes the entire Agreement between the parties and no waiver by Company or Shipper of any default of either party under this Agreement shall operate as a waiver of an, subsequent default whether of a like or different character. 8.2 The laws of the State of Alabama shall govern the validity, construction, interpretation, and effect of this Agreement. 8.3 No modification of or supplement to the terms and provisions hereof shall be or become effective except by execution of a supplementary written agreement between the parties except that in accordance with the provisions of Rate Schedule FT-NN, and the General Terms and Conditions thereto, Receipt Points may be added to or deleted from Exhibit A and the Maximum Daily Receipt Quantity for any Receipt Point on Exhibit A may be changed upon execution by Company and Shipper of a Revised Exhibit A to reflect said change(s), and Delivery Points may be added to or deleted from Exhibit B and the Maximum Daily Delivery Quantity for any Delivery Point may be changed upon execution by Company and Shipper of a Revised Exhibit B to reflect said change(s); provided, however, that any such change to Exhibit A or Exhibit B must include corresponding changes to the existing Maximum Daily Receipt Quantities or Maximum Daily Delivery Quantities, respectively, such that the sum of the changed Maximum Daily Receipt Quantities shall not exceed the Transportation Demand and the sum of the Maximum Daily Delivery Quantities equals the Transportation Demand. 8.4 This Agreement shall bind and benefit the successors and assigns of the respective parties hereto. Subject to the provisions of Section 22 of the General Terms and Conditions applicable hereto, neither party may assign this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld; provided, however, that either party may assign or pledge this Agreement under the provisions of any mortgage, deed of trust, indenture or similar instrument. 8.5 Exhibits A, A-1, B. B-1, C' D and/or E, if applicable, attached to this Agreement constitute a part of this Agreement and are incorporated herein. 8.6 This Agreement is subject to all present and future valid laws and orders, rules, and regulations of any regulatory body of the federal or state government having or asserting jurisdiction herein. After the execution of this Agreement, each party shall make and diligently prosecute all necessary filings with federal or other governmental bodies, or both, as may be required for the initiation and continuation of the transportation service which is the subject of this Agreement and to construct and operate any facilities necessary therefor. Each party shall have the right to seek such governmental authorizations as it deems necessary, including the right to prosecute its requests or applications for such authorization in the manner it deems appropriate. Upon either party's request, the other party shall timely provide or cause to be provided to the requesting party such information and material not within the requesting party's control and/or possession that may be required for such filings. Each party shall promptly inform the other party of any changes in the representations made by such party herein and/or in the information provided pursuant to this paragraph. Each party shall promptly provide the party with a copy of all filings, notices, approvals, and authorizations in the course of the prosecution of its filings. In the event all such necessary regulatory approvals have not been issued or have not been issued on terms and conditions acceptable to Company or Shipper within twelve (12) months from the date of the initial application therefor, then Company or Shipper may terminate this Agreement without further liability or obligation to the other party by giving written notice thereof at any time subsequent to the end of such twelve-month period, but prior to the receipt of all such acceptable approvals. Such notice will be effective as of the date it is delivered to the U.S. Mail, for delivery by certified mail, return receipt requested. 8.7 This Agreement supersedes and cancels the Service Agreement (#848970} dated 10/20/1988 between the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first written above by their respective duly authorized officers. ATTEST: SOUTHERN NATURAL GAS COMPANY By Its ATTEST: UNITED CITIES GAS COMPANY By Its EX-27 13 EX 27.2 RESTATED FDS FOR FY97 QTRS
UT THIS SCHEDULE CONTAINS SUMMARY RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE PERIODS INDICATED BELOW AS RESTATED FOR A POOLING OF INTERESTS IN JULY 1997. 1,000 3-MOS 6-MOS 9-MOS SEP-30-1997 SEP-30-1997 SEP-30-1997 DEC-31-1996 MAR-31-1997 JUN-30-1997 PER-BOOK PER-BOOK PER-BOOK 778,835 794,565 813,886 0 0 0 240,372 189,291 134,843 67,676 69,448 68,140 0 0 0 1,086,883 1,053,304 1,016,869 147 147 148 243,944 246,075 247,772 92,658 115,870 105,419 336,749 362,092 353,339 0 0 0 0 0 0 311,162 309,667 306,536 117,988 87,757 78,326 0 0 0 0 0 0 15,679 15,828 15,173 0 0 0 2,465 2,419 2,373 273 287 299 302,567 275,254 260,823 1,086,883 1,053,304 1,016,869 280,624 643,261 786,974 10,849 29,624 27,500 243,807 550,594 691,831 254,656 580,218 719,331 25,968 63,043 67,643 888 3,102 3,926 26,856 66,145 71,569 8,701 17,364 25,806 18,155 48,781 45,763 0 0 0 18,155 48,781 45,763 7,375 14,789 22,221 3,172 6,341 9,427 (12,463) 56,718 120,792 .62 1.66 1.55 .62 1.66 1.55
EX-27 14 EX 27.3 RESTATED FDS FOR FY96 QTRS & YR
UT THIS SCHEDULE CONTAINS SUMMARY RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE PERIODS INDICATED BELOW AS RESTATED FOR A POOLING OF INTERESTS IN JULY 1997. 1,000 3-MOS 6-MOS 9-MOS 12-MOS SEP-30-1996 SEP-30-1996 SEP-30-1996 SEP-30-1996 DEC-31-1995 MAR-31-1996 JUN-30-1996 SEP-30-1996 PER-BOOK PER-BOOK PER-BOOK PER-BOOK 729,282 728,833 745,612 770,211 0 0 0 0 213,172 187,269 124,493 174,603 65,788 61,873 61,360 65,796 0 0 0 0 1,008,242 977,975 931,465 1,010,610 146 144 145 146 238,704 234,296 238,348 241,658 84,558 108,348 99,526 87,778 323,408 342,788 338,019 329,582 0 0 0 0 0 0 0 0 279,162 288,301 283,495 276,162 106,388 34,403 45,504 128,488 0 0 0 0 0 0 0 0 20,679 14,915 11,419 16,679 0 0 0 0 2,648 2,602 2,557 2,492 207 225 242 277 275,750 294,741 250,229 256,930 1,008,242 977,975 931,465 1,010,610 253,439 595,306 770,546 886,691 10,819 31,612 30,069 23,316 218,255 498,113 668,043 794,114 229,074 529,725 698,112 817,430 24,365 65,581 72,434 69,261 2,488 5,142 2,940 3,567 26,853 70,723 75,374 72,828 8,357 16,321 23,767 31,677 18,496 54,402 51,607 41,151 0 0 0 0 18,496 54,402 51,607 41,151 7,101 14,176 21,285 28,478 3,172 3,769 7,039 12,975 3,986 103,924 119,548 91,733 .64 1.88 1.78 1.42 .64 1.88 1.78 1.42
EX-27 15 EX 27.4 RESTATED FDS FOR YE 9/30/95
UT THIS SCHEDULE CONTAINS SUMMARY RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE YEAR ENDED SEPTEMBER 30, 1995 AS RESTATED FOR A POOLING OF INTERESTS IN JULY 1997. 1,000 YEAR SEP-30-1995 SEP-30-1995 PER-BOOK 697,287 0 144,847 58,814 0 900,948 141 230,630 73,578 304,349 0 0 294,463 65,813 0 0 16,155 0 2,620 262 217,286 900,948 749,555 16,544 677,594 694,138 55,417 3,577 58,994 30,186 28,808 0 28,808 26,197 13,599 79,143 1.06 1.06
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