As filed with the Securities and Exchange Commission on November 6, 2000 Registration No. 333-93705 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- ATMOS ENERGY CORPORATION (Exact name of registrant as specified in its charter) Texas and Virginia 75-1743247 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Louis P. Gregory 1800 Three Lincoln Centre 1800 Three Lincoln Centre 5430 LBJ Freeway 5430 LBJ Freeway Dallas, Texas 75240 Dallas, Texas 75240 (972) 934-9227 (972) 934-9227 (Address, including zip code, and (Name, address, including zip code, telephone number, including area code, and telephone number, including of registrant's principal executive offices) area code, of agent of service) The Commission is requested to mail copies of all orders, notices and communications to: Irwin F. Sentilles, III Jonathan Jewett Gibson, Dunn & Crutcher LLP Shearman & Sterling 2100 McKinney Avenue, Suite 1100 599 Lexington Avenue Dallas, Texas 75201 New York, New York 10022 (214) 698-3100 Approximate date of commencement of proposed sale to public: From time to time after this registration statement becomes effective. --------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [] ------------------ The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. ================================================================================ ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED NOVEMBER 6, 2000 PROSPECTUS [LOGO] ATMOS ENERGY CORPORATION By this prospectus, we offer up to $500,000,000 of debt securities and common stock ----------- We will provide specific terms of these securities in supplements to this prospectus. This prospectus may not be used to sell securities unless accompanied by a prospectus supplement. You should read this prospectus and the prospectus supplement carefully before you invest. ----------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ----------- This prospectus is dated , 2000 TABLE OF CONTENTS Forward-Looking Statements.................................................. 3 Atmos Energy Corporation.................................................... 3 Use of Proceeds............................................................. 7 Ratio of Earnings to Fixed Charges.......................................... 7 Securities We May Issue..................................................... 7 Prospectus Supplements...................................................... 7 Description of Debt Securities.............................................. 8 Description of Common Stock................................................. 34 Plan of Distribution........................................................ 38 Legal Matters............................................................... 40 Experts..................................................................... 40 Where You Can Find More Information......................................... 40 The terms "we", "our", and "us" refer to Atmos Energy Corporation unless the context suggests otherwise. The term "you" refers to a prospective investor. 2 FORWARD-LOOKING STATEMENTS Statements contained in this prospectus, including the documents that are incorporated by reference as set forth in "Incorporation of Certain Documents by Reference," that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933. Forward- looking statements are based on management's beliefs as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected. Important factors that could cause future results to differ include, but are not limited to: . national, regional and local economic and competitive conditions, . regulatory and business trends and decisions, . technological developments, . inflation rates, . weather conditions, and . other factors discussed in this and our other filings with the SEC. All of these factors are difficult to predict and many are beyond our control. Accordingly, while we believe 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. When used in our documents or oral presentations, the words "anticipate," "believe," "estimate," "expect," "objective," "projection," "forecast," "goal" or similar words are intended to identify forward-looking statements. 3 ATMOS ENERGY CORPORATION We distribute and sell natural gas to over one million residential, commercial, industrial, agricultural and other customers. We operate through five divisions in over 800 cities, towns and communities in service areas located in Colorado, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Missouri, Tennessee, Texas and Virginia. We also transport natural gas for others through our distribution system. We provide natural gas storage services and own natural gas storage fields in Kansas and Kentucky to supplement natural gas used by customers in Kansas, Kentucky, Tennessee and other states. We also own a 45% equity interest, and have agreed to acquire the remaining equity interest, in Woodward Marketing, L.L.C., a privately held company that provides gas marketing and energy management services to industrial customers, municipalities and local distribution companies, including our Trans Louisiana Gas Company, Western Kentucky Gas Company and United Cities Gas Company divisions. In addition, we market natural gas to industrial and agricultural customers primarily in West Texas and to industrial customers in Louisiana. History and Strategy We were organized under the laws of Texas in 1983 as Energas Company, a subsidiary of Pioneer Corporation, for the purposes of owning and operating Pioneer's natural gas distribution business in Texas. Immediately following the transfer by Pioneer to us of its gas distribution business, which Pioneer and its predecessors operated since 1906, Pioneer distributed our outstanding stock to its shareholders. In September 1988, we changed our name from Energas Company to Atmos Energy Corporation. As a result of our merger with United Cities Gas Company in July 1997, we also became incorporated in Virginia. Through the recent transactions outlined below, we have begun implementing a strategy intended to increase our presence in our larger service areas, sell our smaller, non-strategic natural gas utility operations and restructure our other operations. 4 Recent Developments In April 2000, we entered into an agreement with Citizens Communications Company to acquire the Louisiana natural gas operations of its Louisiana Gas Service Company division and its LGS Natural Gas Company subsidiary for $375 million. Louisiana Gas Service Company provides natural gas distribution service to approximately 276,000 residential and commercial customers in approximately 190 communities in southeastern and northern Louisiana, which is an area with a combined population of more than 600,000. Its service territory includes the suburban areas of metropolitan New Orleans (excluding Orleans Parish), the north shore of Lake Pontchartrain and the Monroe/West Monroe metropolitan area. LGS Natural Gas Company provides gas transportation services to industrial customers in Louisiana. Upon closing, we will become the largest natural gas distributor in Louisiana, and our national customer base will increase to approximately 1.4 million customers, making us the fifth largest pure natural gas local distribution company in the United States. The acquisition is subject to federal and state regulatory approval. In May 2000, we completed the acquisition of the Missouri natural gas distribution assets of Associated Natural Gas from a subsidiary of Southwestern Energy Corporation for $32 million. The acquisition increased our presence in Missouri by more than 48,000 customers. As part of our strategy to restructure our non-natural gas utility operations, in August 2000, we formed US Propane, LLC, a joint venture combining our propane operations with the propane operations of AGL Resources, Inc., Piedmont Natural Gas Company, Inc., and TECO Energy, Inc. US Propane then sold its propane business to Heritage Propane Partners, L.P. for approximately $181 million in cash and limited partnership units of Heritage Propane Partners and purchased all of the outstanding stock of the general partner of Heritage Propane Partners for approximately $120 million. As a result of these transactions, we own approximately 19% of US Propane and US Propane owns all of the general partnership interest and approximately 34% of the limited partnership interest in Heritage Propane Partners. Through our interest in US Propane, we indirectly own approximately 19% of the general partnership interest and approximately 6.5% of the limited partnership interest in Heritage Propane Partners. Heritage Propane Partners now has approximately 480,000 customers in 28 states, making it the fifth largest retail marketer of propane in the United States, based on gallons sold. 5 In August 2000, we entered into an agreement with Woodward Marketing, Inc. to acquire the 55% interest in Woodward Marketing, LLC that we do not own in exchange for 1,423,193 restricted shares of our common stock. The consideration is subject to an upward adjustment if our average share price does not equal $25 per share during a period immediately prior to the fifth anniversary of the completion of the acquisition or an earlier change in control, unless during the period beginning on the first anniversary of the completion of the acquisition and ending on the fifth anniversary or an earlier change in control our share price reaches $25 per share for any 30 consecutive trading-day period. The maximum additional shares that could be issued under the adjustment provision is 232,547, plus an amount to compensate for dividends paid after the completion of the acquisition. Upon the completion of the acquisition, our subsidiary's guaranty of Woodward Marketing, LLC's $100 million short-term working capital and letter of credit facility will increase from 45% to 100% of any amounts outstanding under the facility. This transaction is subject to state and federal regulatory approval. In August 2000, we entered into a $485 million short-term unsecured credit facility with an interest rate equal to the London Interbank Offered Rate, or LIBOR, plus 0.75%. The facility provides $385 million for the acquisition of the assets of Louisiana Gas Service Company and LGS Natural Gas Company, and $100 million to refinance existing debt which have interest rates ranging from 7.95% to 11.20%. We also entered into a $300 million short-term unsecured credit facility with an interest rate equal to LIBOR plus 0.625%, which replaced a $250 million short-term unsecured credit facility that had an interest rate of LIBOR plus 0.375%. The interest rate on these new credit facilities will change if our debt rating changes. The credit facilities contain covenants which set limits on our ratio of debt to total capitalization and limit our ability to make investments, pay cash dividends, incur additional indebtedness, dispose of assets and create liens. In October 2000, we entered into an agreement to sell all of our natural gas utility operations in South Carolina for approximately $5.8 million. This transaction is subject to state regulatory approval. Location of Executive Offices Our address is 1800 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240, and our telephone number is (972) 934-9227. 6 USE OF PROCEEDS Except as may be stated in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities for general corporate purposes, including acquisitions, in our business and related businesses and the repayment of indebtedness. Please refer to the section entitled "Recent Developments" for additional information about our proposed acquisitions and recent financings. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth our ratio of earnings to fixed charges for the periods indicated:. Nine Months Year ended September 30, Ended June 30, ------------------------ --------------- 1999 1998 1997 1996 1995 2000 1999 ---- ---- ---- ---- ---- ------- ------- Ratio............................... 1.53 2.94 1.95 2.82 2.31 2.78 2.73 For purposes of computing the ratio of earnings to fixed charges, earnings consists of the sum of our pretax income from continuing operations and fixed charges. Fixed charges consist of interest expense, amortization of debt discount, premium and expense, capitalized interest and a portion of lease payments considered to represent an interest factor. SECURITIES WE MAY ISSUE We may use this prospectus to offer up to $500,000,000 of: . our debt securities, and . our common stock. PROSPECTUS SUPPLEMENTS This prospectus provides you with a general description of the debt securities and common stock we may offer. Each time we offer securities, we will provide a prospectus supplement that will 7 contain specific information about the terms of the offering. The prospectus supplement may also add to or change information contained in this prospectus. If so, the prospectus supplement should be read as superseding this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the heading "Where You Can Find More Information." The prospectus supplement to be attached to the front of this prospectus will describe the terms of any debt securities that we offer, the terms of any common shares that we offer and any initial public offering price, the purchase price and net proceeds that we will receive and the other specific terms related to the offering of the securities. For more details on the terms of the securities, you should read the exhibits filed with our registration statement. DESCRIPTION OF DEBT SECURITIES We may issue debt securities from time to time in one or more distinct series. This section summarizes the material terms of the debt securities that we anticipate will be common to all series. Most of the financial and other terms of any series of debt securities that we offer and any differences from the common terms will be described in the prospectus supplement to be attached to the front of this prospectus. As used in this section, "we", "us" and "our" refer to Atmos Energy Corporation and not to its subsidiaries, unless the context otherwise requires. As required by U.S. federal law for all bonds and notes of companies that are publicly offered, a document called an "indenture" will govern any debt securities that we issue. An indenture is a contract between us and a financial institution acting as trustee on your behalf. We anticipate entering into an indenture with SunTrust Bank, which will act as trustee. The indenture will be subject to the Trust Indenture Act of 1939. The trustee has the following two main roles: . the trustee can enforce your rights against us if we default; there are some limitations on the extent to which the trustee acts on your behalf which are described later in this prospectus, and . the trustee will perform certain administrative duties for us, which include sending you interest payments and notices. 8 As this section is a summary of the material terms of the form of indenture, it does not describe every aspect of the debt securities. We urge you to read the indenture because it, and not this description, will define your rights as a holder of debt securities. For example, in this section, we use capitalized words to signify terms that are specifically defined in the form of indenture. Some of the definitions are repeated in this prospectus, but for the rest you will need to read the indenture. We have filed or will file the form of indenture, the final indenture and any supplements to it as exhibits to the registration statement that we have filed with the SEC, or as an exhibit to the annual, quarterly or other reports that we file with the SEC. See "Where You Can Find More Information," for information on how to obtain copies of the indenture and any supplements. References to the "indenture" in this prospectus mean the form of indenture we have filed as an exhibit to the registration statement relating to this offering that we have filed with the SEC. General The debt securities will be our unsecured obligations and will rank equally with all of our other unsecured and unsubordinated Indebtedness. You should read the prospectus supplement for the following terms of the series of debt securities offered by the prospectus supplement. Our board of directors will establish the following terms before issuance of the series: . the title of the debt securities, . the aggregate principal amount of the debt securities, the percentage of their principal amount at which the debt securities will be issued, and the date or dates when the principal of the debt securities will be payable or how those dates will be determined, . the interest rate or rates, which may be fixed or variable, that the debt securities will bear, if any, and how the rate or rates will be determined, . the date or dates from which any interest will accrue or how the date or dates will be determined, the date or dates on which any interest will be payable, any regular record dates for these payments or how these dates will be determined and the basis on which any interest will be calculated, if other than on the basis of a 360-day year of twelve 30- day months, 9 . the place or places, if any, other than or in addition to New York City, of payment, transfer or exchange of the debt securities, and where notices or demands to or upon us in respect of the debt securities may be served, . any optional redemption provisions, . any sinking fund or other provisions that would obligate us to repurchase or redeem the debt securities, . whether the amount of payments of principal of, any premium on, or interest on the debt securities will be determined with reference to an index, formula or other method, which could be based on one or more commodities, equity indices or other indices, and how these amounts will be determined, . any changes or additions to the events of default or our covenants with respect to the debt securities, . if not the principal amount of the debt securities, the portion of the principal amount that will be payable upon acceleration of the maturity of the debt securities or how that portion will be determined, . any changes or additions to the provisions concerning defeasance and covenant defeasance contained in the indenture that will be applicable to the debt securities, . any provisions granting special rights to the holders of the debt securities upon the occurrence of specified events, . if other than the trustee, the name of the paying agent, security registrar or transfer agent for the debt securities, . if we do not issue the debt securities in book-entry form only to be held by The Depository Trust Company, as depository, whether we will issue the debt securities in global form or fully registered form and the identity of any alternative depository, . the person to whom any interest in a debt security will be payable, if other than the registered holder at the close of business on the regular record date, . the denomination or denominations in which the debt securities will be issued, if other than denominations of $1,000 or any integral multiples, 10 . any provisions requiring us to pay Additional Amounts on the debt securities to any holder who is not a United States person in respect of any tax, assessment or governmental charge and, if so, whether we will have the option to redeem the debt securities rather than pay the Additional Amounts, and . any other material terms of the debt securities or the indenture, which may not be consistent with the terms set forth in this prospectus. For purposes of this prospectus, any reference to the payment of principal of, any premium on, or interest on the debt securities will include Additional Amounts if required by the terms of the debt securities. The indenture will not limit the amount of debt securities that we are authorized to issue from time to time. The indenture will also provide that there may be more than one trustee thereunder, each for one or more series of debt securities. If a trustee is acting under the indenture with respect to more than one series of debt securities, the debt securities for which it is acting would be treated as if issued under separate indentures. If there is more than one trustee under the indenture, the powers and trust obligations of each trustee will apply only to the debt securities of the separate series for which it is trustee. We may issue debt securities with terms different from those of debt securities already issued. Without the consent of the holders of the outstanding debt securities, we may reopen a previous issue of a series of debt securities and issue additional debt securities of that series unless the reopening was restricted when we created that series. There is no requirement that we issue debt securities in the future under the indenture, and we may use other indentures or documentation, containing different provisions in connection with future issues of other debt securities. We may issue the debt securities as "Original Issue Discount Securities", which are debt securities, including any zero-coupon debt securities, that are issued and sold at a discount from their stated principal amount. Original Issue Discount Securities provide that, upon acceleration of their 11 maturity, an amount less than their principal amount will become due and payable. We will describe the U.S. federal income tax consequences and other considerations applicable to original issue discount securities in any prospectus supplement relating to them. Holders of Debt Securities Book-Entry Holders. We will issue debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This means debt securities will be represented by one or more global securities registered in the name of a financial institution that holds them as depository on behalf of other financial institutions that participate in the depository's book-entry system. These participating institutions, in turn, hold beneficial interests in the debt securities on behalf of themselves or their customers. Under the indenture, we will recognize as a holder only the person in whose name a debt security is registered. Consequently, for debt securities issued in global form, we will recognize only the depository as the holder of the debt securities and we will make all payments on the debt securities to the depository. The depository passes along the payments it receives to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depository and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt securities. As a result, you will not own debt securities directly. Instead, you will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depository's book-entry system or holds an interest through a participant. As long as the debt securities are issued in global form, you will be an indirect holder, and not a holder, of the debt securities. Street Name Holders. In the future we may terminate a global security or issue debt securities initially in non-global form. In these cases, you may choose to hold your debt securities in your own name or in "street name." Debt securities held in street name would be registered in the name of a bank, broker or other financial institution that you choose, and you would hold only a beneficial interest in those debt securities through an account you maintain at that institution. 12 For debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose names the debt securities are registered as the holders of those debt securities, and we will make all payments on those debt securities to them. These institutions pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. If you hold debt securities in street name you will be an indirect holder, and not a holder, of those debt securities. Legal Holders. Our obligations, as well as the obligations of the trustee and those of any third parties employed by us or the trustee, run only to the legal holders of the debt securities. We do not have obligations to you if you hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether you choose to be an indirect holder of a debt security or have no choice because we are issuing the debt securities only in global form. For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depository participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend the indenture or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of the indenture) we would seek the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect holders is up to the holders. When we refer to you, we mean those who invest in the debt securities being offered by this prospectus, whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt securities in which you hold a direct or indirect interest. Special Considerations for Indirect Holders. If you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, you should check with your own institution to find out: . how it handles securities payments and notices, 13 . whether it imposes fees or charges, . how it would handle a request for the holders' consent, if ever required, . whether and how you can instruct it to send you debt securities registered in your own name so you can be a holder, if that is permitted in the future, . how it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests, and . if the debt securities are in book-entry form, how the depository's rules and procedures will affect these matters. Global Securities What is a Global Security? We will issue each debt security under the indenture in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have the same terms. We may, however, issue a global security that represents multiple debt securities that have different terms and are issued at different times. We call this kind of global security a master global security. Each debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depository. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depository for all debt securities issued in book-entry form. A global security may not be transferred to or registered in the name of anyone other than the depository or its nominee, unless special termination situations arise. We describe those situations below under "Special Situations When a Global Security Will Be Terminated." As a result of these arrangements, the depository, or its nominee, will be the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial 14 interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depository or with another institution that does. Thus, if your security is represented by a global security, you will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security. Special Considerations for Global Securities. As an indirect holder, your rights relating to a global security will be governed by the account rules of your financial institution and of the depository, as well as general laws relating to securities transfers. We do not recognize an indirect holder as a holder of debt securities and instead deal only with the depository that holds the global security. If we issue debt securities only in the form of a global security, you should be aware of the following: . you cannot cause the debt securities to be registered in your name, and cannot obtain non-global certificates for your interest in the debt securities, except in the special situations that we describe below, . you will be an indirect holder and must look to your own bank or broker for payments on the debt securities and protection of your legal rights relating to the debt securities, as we describe under "Holders of Debt Securities" above, . you may not be able to sell interests in the debt securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form, . you may not be able to pledge your interest in a global security in circumstances where certificates representing the debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective, . the depository's policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to your interest in a global security. We and the trustee have no responsibility for any aspect of the depository's actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depository in any way, 15 . DTC requires that those who purchase and sell interests in a global security within its book-entry system use immediately available funds and your broker or bank may require you to do so as well, and . financial institutions that participate in the depository's book-entry system, and through which you hold your interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the debt security. Your chain of ownership may contain more than one financial intermediary. We do not monitor and are not responsible for the actions of any of those intermediaries. Special Situations When a Global Security Will Be Terminated. In a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-global form representing the debt securities it represented. After that exchange, the choice of whether to hold the debt securities directly or in street name will be up to you. You must consult your own bank or broker to find out how to have your interests in a global security transferred on termination to your own name, so that you will be a holder. We have described the rights of holders and street name investors above under "Holders of Debt Securities." The special situations for termination of a global security are as follows: . if the depository notifies us that it is unwilling, unable or no longer qualified to continue as depository for that global security and we do not appoint another institution to act as depository within 60 days, . if we notify the trustee that we wish to terminate that global security, or . if an event of default has occurred with regard to debt securities represented by that global security and has not been cured or waived; we discuss defaults later under "Events of Default." If a global security is terminated, only the depository, and not we or the trustee, is responsible for deciding the names of the institutions in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities. 16 Covenants Limitations on Liens. We will covenant in the indenture that we will not, and will not permit any of our Restricted Subsidiaries to, create, incur, issue or assume any Indebtedness secured by any Lien on any Principal Property, or on shares of stock or Indebtedness of any Restricted Subsidiary, known as Restricted Securities, without making effective provision for the outstanding debt securities, other than any outstanding debt securities not entitled to this covenant, to be secured by the Lien equally and ratably with, or prior to, the Indebtedness and obligations secured or to be secured thereby for so long as the Indebtedness or obligations are so secured, except that the foregoing restriction will not apply to: . any Lien existing on the date of the first issuance of debt securities under the indenture, including the Liens on property or after-acquired property of ours or our Subsidiaries under the Greeley Indenture or the United Cities Indenture, or such other date as may be specified in a prospectus supplement for an applicable series of debt securities, . any Lien on any Principal Property or Restricted Securities of any person existing at the time that person is merged or consolidated with or into us or a Restricted Subsidiary, or this person becomes a Restricted Subsidiary, or arising thereafter otherwise than in connection with the borrowing of money arranged thereafter and pursuant to contractual commitments entered into prior to and not in contemplation of the person's becoming a Restricted Subsidiary, . any Lien on any Principal Property existing at the time we or a Restricted Subsidiary acquire the Principal Property, whether or not the Lien is assumed by us or the Restricted Subsidiary, provided that this Lien may not extend to any other Principal Property of ours or any Restricted Subsidiary, . any Lien on any Principal Property, including any improvements on an existing Principal Property, of ours or any Restricted Subsidiary, and any Lien on the shares of stock of a Restricted Subsidiary that was formed or is held for the purpose of acquiring and holding the Principal Property, in each case to secure all or any part of the cost of acquisition, development, operation, construction, alteration, repair or improvement of all or any part of the Principal Property, or to secure Indebtedness incurred by us or a Restricted Subsidiary 17 for the purpose of financing all or any part of that cost, provided that the Lien is created prior to, at the time of, or within 12 months after the latest of, the acquisition, completion of construction or improvement or commencement of commercial operation of that Principal Property and, provided further, that the Lien may not extend to any other Principal Property of ours or any Restricted Subsidiary, other than any currently unimproved real property on which the Principal Property has been constructed or developed or the improvement is located, . any Lien on any Principal Property or Restricted Securities to secure Indebtedness owed to us or to a Restricted Subsidiary, . any Lien in favor of a governmental body to secure advances or other payments under any contract or statute or to secure Indebtedness incurred to finance the purchase price or cost of constructing or improving the property subject to the Lien, . any Lien created in connection with a project financed with, and created to secure, Non-Recourse Indebtedness, . any Lien required to be placed on any of our property or any of the property of our Subsidiaries under the provisions of the Greeley Indenture, the United Cities Indenture or the Note Purchase Agreements, . any extension, renewal, substitution or replacement, or successive extensions, renewals, substitutions or replacements, in whole or in part, of any Lien referred to in any of the bullet points above, provided that the Indebtedness secured may not exceed the principal amount of Indebtedness that is secured at the time of the renewal or refunding, and that the renewal or refunding Lien must be limited to all or any part of the same property and improvements, shares of stock or Indebtedness that secured the Lien that was renewed or refunded, or . any Lien not permitted above securing Indebtedness that, together with the aggregate outstanding principal amount of other secured Indebtedness that would otherwise be subject to the above restrictions, excluding Indebtedness secured by Liens permitted under the above exceptions, and the Attributable Debt in respect of all Sale and Leaseback 18 Transactions, not including Attributable Debt in respect of any Sale and Leaseback Transactions described in the last two bullet points in the next succeeding paragraph, would not then exceed 15% of our Consolidated Net Tangible Assets. Limitation on Sale and Leaseback Transactions. We will covenant in the indenture that we will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction unless . we or a Restricted Subsidiary would be entitled, without securing the Outstanding Securities, to incur Indebtedness secured by a Lien on the Principal Property that is the subject of the Sale and Leaseback Transaction, . the Attributable Debt associated with the Sale and Leaseback Transaction would be in an amount permitted under the last bullet point of the preceding paragraph, . the proceeds received in respect of the Principal Property so sold and leased back at the time of entering into the Sale and Leaseback Transaction are used for our business and operations or the business and operations of any Subsidiary, or . within 12 months after the sale or transfer, an amount equal to the proceeds received in respect of the Principal Property sold and leased back at the time of entering into the Sale and Leaseback Transaction is applied to the prepayment, other than mandatory prepayment, of any Outstanding Securities or any Funded Indebtedness owed by us or a Restricted Subsidiary, other than Funded Indebtedness that is held by us or any Restricted Subsidiary or our Funded Indebtedness that is subordinate in right of payment to any Outstanding Securities. Definitions. Following are definitions of some of the terms used in the covenants described above. "Attributable Debt" means, as to any lease under which a person is at the time liable for rent, at a date that liability is to be determined, the total net amount of rent required to be paid by that person under the lease during the remaining term, excluding amounts required to be paid on account of maintenance and repairs, services, insurance, taxes, assessments, water rates and similar charges 19 and contingent rents, discounted from the respective due dates thereof at the weighted average of the rates of interest, or Yield to Maturity, in the case of Original Issue Discount Securities, borne by the then Outstanding Securities, compounded annually. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests, however designated, in stock issued by a corporation. "Consolidated Net Tangible Assets" means the aggregate amount of assets, less applicable reserves and other properly deductible items, after deducting . all current liabilities, excluding any portion thereof constituting Funded Indebtedness, and . all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on our most recent consolidated balance sheet contained in our latest quarterly or annual report filed with the SEC under the Securities Exchange Act of 1934 and computed in accordance with generally accepted accounting principles. "Funded Indebtedness" means, as applied to any person, all Indebtedness of the person maturing after, or renewable or extendible at the option of the person beyond, 12 months from the date of determination. "Greeley Indenture" means the Indenture of Mortgage and Deed of Trust, dated as of March 1, 1957, from Greeley Gas Company to U.S. Bank National Association, formerly The Central Bank and Trust Company, as Trustee, as amended and supplemented through December 1, 1993, the Indenture of Mortgage and Deed of Trust through the Tenth Supplemental Indenture by Atmos to U.S. Bank National Association, formerly The Central Bank and Trust Company, as Trustee, as amended, supplemented or otherwise modified from time to time. "Indebtedness" means obligations for money borrowed, evidenced by notes, bonds, debentures or other similar evidences of indebtedness. 20 "Lien" means any lien, mortgage, pledge, encumbrance, charge or security interest securing Indebtedness; provided, however, that the following types of transactions will not be considered, for purposes of this definition, to result in a Lien: . any acquisition by us or any Restricted Subsidiary of any property or assets subject to any reservation or exception under the terms of which any vendor, lessor or assignor creates, reserves or excepts or has created, reserved or excepted an interest in oil, gas or any other mineral in place or the proceeds of that interest, . any conveyance or assignment whereby we or any Restricted Subsidiary conveys or assigns to any person or persons an interest in oil, gas or any other mineral in place or the proceeds of that interest, . any Lien upon any property or assets either owned or leased by us or a Restricted Subsidiary or in which we or any Restricted Subsidiary owns an interest that secures for the benefit of the person or persons paying the expenses of developing or conducting operations for the recovery, storage, transportation or sale of the mineral resources of the property or assets, or property or assets with which it is unitized, the payment to the person or persons of our proportionate part or the Restricted Subsidiary's proportionate part of the development or operating expenses, . any hedging arrangements entered into in the ordinary course of business, including any obligation to deliver any mineral, commodity or asset, or . any guarantees that we make for the repayment of Indebtedness of any Subsidiary or guarantees by any Subsidiary of the repayment of Indebtedness of any entity, including Indebtedness of Woodward Marketing, L.L.C. "Non-Recourse Indebtedness" means, at any time, Indebtedness incurred after the date of the indenture by us or a Restricted Subsidiary in connection with the acquisition of property or assets by us or a Restricted Subsidiary or the financing of the construction of or improvements on property, whenever acquired, provided that, under the terms of this Indebtedness and under applicable law, the recourse at the time and thereafter of the lenders with respect to this Indebtedness is limited to the property or assets so acquired, or the construction or improvements, including Indebtedness as to 21 which a performance or completion guarantee or similar undertaking was initially applicable to the Indebtedness or the related property or assets if the guarantee or similar undertaking has been satisfied and is no longer in effect. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse Indebtedness because there is recourse to the borrower, any guarantor or any other person for (a) environmental representations, warranties or indemnities, or (b) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non- payment of rents, profits, insurance and condemnation proceeds and other sums actually received from secured assets to be paid to the lender, waste and mechanics' liens or similar matters. "Note Purchase Agreements" refers to the following note purchase agreements, as amended, supplemented or otherwise modified from time to time, between us and the following parties: . John Hancock Mutual Life Insurance Company, dated December 21, 1987, . Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans--AT&T-- John Hancock--Private Placement, dated December 21, 1987, which agreement is identical to the Hancock agreement listed above except for the parties and the amounts, . John Hancock Mutual Life Insurance Company, dated October 11, 1989, . The Variable Annuity Life Insurance Company, dated August 29, 1991, . The Variable Annuity Life Insurance Company, dated August 31, 1992, and . New York Life Insurance Company, New York Life Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company and Merit Life Insurance Company, dated November 14, 1994. "Principal Property" means any natural gas distribution property or propane property located in the United States, except any property that in the opinion of our board of directors is not of material importance to the total business conducted by us and of our consolidated Subsidiaries. "Restricted Subsidiary" means any Subsidiary the amount of Consolidated Net Tangible Assets of which constitutes more than 5% of the aggregate amount of Consolidated Net Tangible Assets of us and our Subsidiaries. 22 "Sale and Leaseback Transaction" means any arrangement with any person in which we or any Restricted Subsidiary leases any Principal Property that has been or is to be sold or transferred by us or the Restricted Subsidiary to that person, other than . a lease for a term, including renewals at the option of the lessee, of not more than three years or classified as an operating lease under generally accepted accounting principles, . leases between us and a Restricted Subsidiary or between Restricted Subsidiaries, and . leases of a Principal Property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation, of the Principal Property. "Subsidiary" of ours means . a corporation, a majority of whose Capital Stock with rights, under ordinary circumstances, to elect directors is owned, directly or indirectly, at the date of determination, by us, by one or more of our Subsidiaries or by us and one or more of our Subsidiaries, or . any other person, other than a corporation, in which at the date of determination we, one or more of our Subsidiaries or we and one or more of our Subsidiaries, directly or indirectly, have at least a majority ownership and power to direct the policies, management and affairs of that person. "United Cities Indenture" means the Indenture of Mortgage, dated as of July 15, 1959, from United Cities Gas Company to U.S. Bank Trust National Association, formerly First Trust of Illinois, National Association, and M.J. Kruger, as Trustees, as amended, supplemented or otherwise modified from time to time, the Indenture of Mortgage through the Twenty-Second Supplemental Indenture by us to U.S. Bank Trust National Association, formerly First Trust National Association, and Russell C. Bergman, as Trustees, as amended, supplemented, or otherwise modified from time to time. 23 Consolidation, Merger or Sale of Assets Under the terms of the indenture, we are generally permitted to consolidate with or merge into another entity. We are also permitted to sell or transfer our assets substantially as an entirety to another entity. However, we may not take any of these actions unless all of the following conditions are met: . the resulting entity must agree to be legally responsible for all our obligations under the debt securities and the indenture, . the transaction must not cause a default or an Event of Default, . the resulting entity must be organized under the laws of the United States or one of the states or the District of Columbia, and . we must deliver an officers' certificate and legal opinion to the trustee with respect to the transaction. In the event that we engage in one of these transactions and comply with the conditions listed above, we would be discharged from all our obligations and covenants under the indenture and all obligations under the Outstanding Securities, with the successor corporation or person succeeding to our obligations and covenants. In the event that we engage in one of these transactions, the indenture provides that, if any Principal Property or Restricted Securities would thereupon become subject to any Lien, the debt securities, other than any debt securities not entitled to the benefit of specified covenants, must be secured, as to such Principal Property or Restricted Securities, equally and ratably with, or prior to, the indebtedness or obligations that upon the occurrence of such transaction would become secured by the Lien, unless the Lien could be created under the indenture without equally and ratably securing the debt securities. Modification or Waiver There are two types of changes that we can make to the indenture and the debt securities. 24 Changes Requiring Majority Approval. First, there are changes that we cannot make to the indenture or the debt securities under the indenture without the specific written approval of the holders of not less than a majority in principal amount of all outstanding debt securities of each series affected by the change. We cannot: . change the stated maturity of the principal of, any premium on, or the interest on a debt security, . change any of our obligations to pay Additional Amounts, . reduce the amount payable upon acceleration of maturity following the default of an Indexed Indenture security or an Original Issue Discount Security, . adversely affect any right of repayment at your option, . change the place of payment of a debt security, . impair your right to sue for payment, . adversely affect any right to convert or exchange a debt security, . reduce the percentage of holders of debt securities whose consent is needed to modify or amend the indenture, . reduce the percentage of holders of debt securities whose consent is needed to waive compliance with any provisions of the indenture or to waive any defaults, and . modify any of the provisions of the indenture dealing with modification and waiver in any other respect, except to increase any percentage of consents required to amend the indenture or for any waiver or to add to the provisions that cannot be modified without the approval of each affected holder. The same majority approval would be required for us to obtain a waiver of any of our covenants in the indenture. Changes Not Requiring Approval. The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. Nor do 25 we need any approval to make any change that affects only debt securities to be issued under the indenture after the changes take effect. Further Details Concerning Voting. When taking a vote, we will use the following rules to decide how much principal amount to attribute to a debt security: . for Original Issue Discount Securities, we will use the principal amount that would be due and payable on the voting date if the maturity of the debt securities were accelerated to that date because of a default, and . for debt securities whose principal amount is not known (for example, because it is based on an index) we will use a special rule for that debt security described in the prospectus supplement. Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "Defeasance and Covenant Defeasance." Book-entry and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the debt securities or request a waiver. Events of Default You will have special rights if an Event of Default occurs as to the debt securities of your series that is not cured, as described later in this subsection. Please refer to the prospectus supplement for information about any changes to the Events of Default or our covenants, including any addition of a covenant or other provision providing event risk or similar protection. What is an Event of Default? The term "Event of Default" as to the debt securities of your series means any of the following: . we do not pay interest on a debt security of the series within 30 days of its due date, 26 . we do not pay the principal of or any premium, if any, on a debt security of the series on its due date, . we do not deposit any sinking fund payment when and as due by the terms of any debt securities requiring such payment, . we remain in breach of a covenant or agreement in the indenture, other than a covenant or agreement for the benefit of less than all of the holders of the debt securities, for 60 days after we receive written notice stating that we are in breach from the trustee or the holders of at least 25% of the principal amount of the debt securities of the series, . we or a Restricted Subsidiary of ours is in default under any matured or accelerated agreement or instrument under which we have outstanding Indebtedness for borrowed money or guarantees, which individually are in excess of $25,000,000, and we have not cured any acceleration within 15 days after we receive notice of this default from the trustee or the holders of at least 25% of the principal amount of the debt securities of the series, unless prior to the entry of judgment for the trustee, we or the Restricted Subsidiary remedy the default or the default is waived by the holders of the indebtedness, . we file for bankruptcy or other events of bankruptcy, insolvency or reorganization occur, or . any other Event of Default provided for the benefit of debt securities of the series. An Event of Default for a particular series of debt securities will not necessarily constitute an Event of Default for any other series of debt securities issued under the indenture. The trustee may withhold notice to the holders of debt securities of a particular series of any default if it considers its withholding of notice to be in the interest of the holders of that series, except that the trustee may not withhold notice of a default in the payment of the principal of, any premium on, or the interest on the debt securities. Remedies if an Event of Default Occurs. If an event of default has occurred and is continuing, the trustee or the holders of 25% in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable by notifying us, and the trustee, if the holders give notice, in writing. This is called a declaration of acceleration of maturity. 27 If the maturity of any series of debt securities is accelerated and a judgment for payment has not yet been obtained, the holders of a majority in principal amount of the debt securities of that series may cancel the acceleration upon our compliance with certain conditions. Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability. This is called an indemnity. If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default. Before you are allowed to bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interest relating to the debt securities, the following must occur: . you must give the trustee written notice that an Event of Default has occurred and remains uncured, . the holders of 25% in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action, . the trustee must not have instituted a proceeding for 60 days after receipt of the above notice and offer of indemnity, and . the holders of a majority in principal amount of the debt securities must not have given the trustee a direction inconsistent with the above notice during the 60-day period. However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date without complying with the foregoing. 28 Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than the following: . the payment of principal, any premium, interest or Additional Amounts on any debt security or related coupon, or . in respect of a covenant that under the indenture cannot be modified or amended without the consent of each holder. Each year, we will furnish the trustee with a written statement of two of our officers certifying that, to their knowledge, we are in compliance with the indenture and the debt securities, or else specifying any default. Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or cancel an acceleration. Defeasance and Covenant Defeasance Unless we provide otherwise in the applicable prospectus supplement, the provisions for full defeasance and covenant defeasance described below apply to each series of debt securities. In general, we expect these provisions to apply to each debt security that is not a floating rate or indexed debt security. Full Defeasance. If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment and other obligations on the debt securities, called "full defeasance," if we put in place the following arrangements for you to be repaid: . we must deposit in trust for the benefit of all holders of the debt securities a combination of money and obligations issued or guaranteed by the U.S. government that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates, and . we must deliver to the trustee a legal opinion confirming that there has been a change in current federal tax law or an IRS ruling that lets us make the above deposit without causing 29 you to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves at maturity. Under current federal tax law, the deposit and our legal release from the debt securities would be treated as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds are deposited in trust in exchange for your debt securities, and you would recognize gain or loss on the debt securities at the time of the deposit. If we ever did accomplish defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever become bankrupt or insolvent. If we accomplish a defeasance, we would retain only the obligations to register the transfer or exchange of the debt securities, to maintain an office or agency in respect of the debt securities and to hold moneys for payment in trust. Covenant Defeasance. Under current federal tax law, we can make the same type of deposit described above and be released from the restrictive covenants in the indenture discussed above and specified in a prospectus supplement. This is called "covenant defeasance". In that event, you would lose the protection of those covenants but would gain the protection of having money and obligations issued or guaranteed by the U.S. government set aside in trust to repay the debt securities. In order to achieve covenant defeasance, we must do the following: . deposit in trust for your benefit and the benefit of all other direct holders of the debt securities a combination of money and obligations issued or guaranteed by the U.S. government that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due date, and . deliver to the trustee a legal opinion of our counsel confirming that, under current federal income tax law, we may make the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves at maturity. 30 If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust deposit or the trustee is prevented from making payment. In fact, if one of the remaining Events of Default occurred, such as our bankruptcy, and the debt securities became immediately due and payable, there may be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall. Debt Securities Issued in Non-Global Form If the debt securities cease to be issued in global form, they will be issued: . only in fully registered form, . without interest coupons, and . unless we indicate otherwise in the prospectus supplement, in denominations of $1,000 and amounts that are multiples of $1,000. Holders may exchange their debt securities that are not in global form for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. Holders may exchange or transfer their debt securities at the office of the trustee. We will appoint the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves. Holders will not be required to pay a service charge to transfer or exchange their debt securities, but they may be required to pay for any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder's proof of legal ownership. If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts. 31 If any debt securities are redeemable and we redeem less than all those debt securities, we may stop the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any debt securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed. If a debt security is issued as a global security, only the depository will be entitled to transfer and exchange the debt security as described in this subsection, since it will be the sole holder of the debt security. Payment Mechanics Who Receives Payment? If interest is due on a debt security on an interest payment date, we will pay the interest to the person or entity in whose name the debt security is registered at the close of business on the regular record date, discussed below, relating to the interest payment date. If interest is due at maturity but on a day that is not an interest payment date, we will pay the interest to the person or entity entitled to receive the principal of the debt security. If principal or another amount besides interest is due on a debt security at maturity, we will pay the amount to the holder of the debt security against surrender of the debt security at a proper place of payment, or, in the case of a global security, in accordance with the applicable policies of the depository. Payments on Global Securities. We will make payments on a global security in accordance with the applicable policies of the depository as in effect from time to time. Under those policies, we will pay directly to the depository, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder's right to those payments will be governed by the rules and practices of the depository and its participants, as described under "What Is a Global Security?". Payments on Non-Global Securities. For a debt security in non-global form, we will pay interest that is due on an interest payment date by check mailed on the interest payment date to the holder at his or her address shown on the trustee's records as of the close of business on the regular 32 record date. We will make all other payments by check, at the paying agent described below, against surrender of the debt security. We will make all payments by check in next-day funds; for example, funds that become available on the day after the check is cashed. Alternatively, if a non-global security has a face amount of at least $1,000,000 and the holder asks us to do so, we will pay any amount that becomes due on the debt security by wire transfer of immediately available funds to an account at a bank in New York City on the due date. To request wire payment, the holder must give the paying agent appropriate transfer instructions at least five business days before the requested wire payment is due. In the case of any interest payment due on an interest payment date, the instructions must be given by the person who is the holder on the relevant regular record date. In the case of any other payment, we will make payment only after the debt security is surrendered to the paying agent. Any wire instructions, once properly given, will remain in effect unless and until new instructions are given in the manner described above. Regular Record Dates. We will pay interest to the holders listed in the trustee's records as the owners of the debt securities at the close of business on a particular day in advance of each interest payment date. We will pay interest to these holders if they are listed as the owner even if they no longer own the debt security on the interest payment date. That particular day, usually about two weeks in advance of the interest payment date, is called the "regular record date" and will be identified in the prospectus supplement. Payment When Offices Are Closed. If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments postponed to the next business day in this situation will be treated under the indenture as if they were made on the original due date. A postponement of this kind will not result in a default under any debt security or the indenture, and no interest will accrue on the postponed amount from the original due date to the next day that is a business day. Paying Agents. We may appoint one or more financial institutions to act as our paying agents, at whose designated offices debt securities in non-global form may be surrendered for payment at their maturity. We call each of those offices a paying agent. We may add, replace or terminate paying agents from time to time. We may also choose to act as our own paying agent. Initially, we 33 have appointed the trustee, at its corporate trust office in New York City, as the paying agent. We must notify you of changes in the paying agents. Book-entry and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities. The Trustee Under the Indenture We anticipate that SunTrust Bank will be trustee under the indenture. SunTrust is among the banks with which we maintain ordinary banking relationships. The trustee may resign or be removed with respect to one or more series of indenture securities and a successor trustee may be appointed to act with respect to these series. DESCRIPTION OF COMMON STOCK Our authorized capital stock consists of 100,000,000 shares of common stock, of which 31,999,121 shares were outstanding on November 2, 2000. Each of our shares of common stock is entitled to one vote on all matters voted upon by shareholders. Our shareholders do not have cumulative voting rights. Our issued and outstanding shares of common stock are fully paid and nonassessable. There are no redemption or sinking fund provisions applicable to the shares of our common stock, and such shares are not entitled to any preemptive rights. Since we are incorporated in both Texas and Virginia, we must comply with the laws of both states when issuing shares of our common stock. Holders of our shares of common stock are entitled to receive such dividends as may be declared from time to time by our board of directors from our assets legally available for the payment of dividends and, upon our liquidation, a pro rata share of all of our assets available for distribution to our shareholders. Under the provisions of some of our debt agreements, we have agreed to restrictions on the payment of cash dividends. Under these restrictions, our cumulative cash dividends paid after December 31, 1988 may not exceed the sum of our and our Subsidiaries' accumulated consolidated 34 net income for periods after December 31, 1988, plus $15,038,000. As of August 31, 2000, $57,900,000 was available for the declaration of dividends. The registrar and transfer agent for our common stock is Fleet National Bank, formerly known as BankBoston, N.A. Some provisions of our restated articles of incorporation and bylaws may be deemed to have an "anti-takeover" effect. The following summary description of these provisions is necessarily general, and we refer you to our restated articles of incorporation and bylaws for more information since their terms affect your rights as a shareholder. Classification of the Board. Our board of directors is divided into three classes, each of which consists, as nearly as may be possible, of one-third of the total number of directors constituting the entire board. There are currently 12 directors serving on the board. Each class of directors serves a three-year term. At each annual meeting of our shareholders, successors to the class of directors whose term expires at the annual meeting are elected for three-year terms. Our restated articles of incorporation prohibit cumulative voting. In general, in the absence of cumulative voting, one or more persons who hold a majority of our outstanding shares can elect all of the directors who are subject to election at any meeting of shareholders. The classification of directors could have the effect of making it more difficult for shareholders, including those holding a majority of the outstanding shares, to force an immediate change in the composition of our board. Two shareholder meetings, instead of one, generally will be required to effect a change in the control of our board. Our board believes that the longer time required to elect a majority of a classified board will help to ensure the continuity and stability of our management and policies since a majority of the directors at any given time will have had prior experience as our directors. Removal of Directors. Our restated articles of incorporation and bylaws also provide that our directors may be removed only for cause and upon the affirmative vote of the holders of at least 75% of the shares then entitled to vote at an election of directors. Fair Price Provisions. Article VII of our restated articles of incorporation provides certain "Fair Price Provisions" for our shareholders. Under Article VII, a merger, consolidation, sale of 35 assets, share exchange, recapitalization or other similar transaction, between us or a company controlled by or under common control with us and any individual, corporation or other entity which owns or controls 10% or more of our voting capital stock, would be required to satisfy the condition that the aggregate consideration per share to be received in the transaction for each class of our voting capital stock be at least equal to the highest per share price, or equivalent price for any different classes or series of stock, paid by the 10% shareholder in acquiring any of its holdings of our stock. If a proposed transaction with a 10% shareholder does not meet this condition, then the transaction must be approved by the holders of at least 75% of the outstanding shares of voting capital stock held by our shareholders other than the 10% shareholder unless a majority of the directors who were members of our board immediately prior to the time the 10% shareholder involved in the proposed transaction became a 10% shareholder have either: . expressly approved in advance the acquisition of the outstanding shares of our voting capital stock that caused the 10% shareholder to become a 10% shareholder, or . approved the transaction either in advance of or subsequent to the 10% shareholder becoming a 10% shareholder. The provisions of Article VII may not be amended, altered, changed, or repealed except by the affirmative vote of at least 75% of the votes entitled to be cast thereon at a meeting of our shareholders duly called for consideration of such amendment, alteration, change, or repeal. In addition, if there is a 10% shareholder, such action must also be approved by the affirmative vote of at least 75% of the outstanding shares of our voting capital stock held by the shareholders other than the 10% shareholder. Shareholder Proposals and Director Nominations. Our shareholders can submit shareholder proposals and nominate candidates for the board of directors if the shareholders follow the advance notice procedures described in our bylaws. Shareholder proposals must be submitted to our corporate secretary at least 60 days, but not more than 85 days, before the annual meeting. The notice must include a description of the proposal, the shareholder's name and address and the number of shares held, and all other information which would be required to be included in a proxy statement filed with the SEC if the shareholder were a 36 participant in a solicitation subject to the SEC proxy rules. To be included in our proxy statement for an annual meeting, we must receive the proposal at least 120 days prior to the anniversary of the date we mailed the proxy statement for the prior year's annual meeting. To nominate directors, shareholders must submit a written notice to our corporate secretary at least 60 days, but not more than 85 days, before a scheduled meeting. The notice must include the name and address of the shareholder and of the shareholder's nominee, the number of shares held by the shareholder, a representation that the shareholder is a holder of record of common stock entitled to vote at the meeting, and that the shareholder intends to appear in person or by proxy to nominate the persons specified in the notice, a description of any arrangements between the shareholder and the shareholder's nominee, information about the shareholder's nominee required by the SEC, and the written consent of the shareholder's nominee to serve as a director. Shareholder proposals and director nominations that are late or that do not include all required information may be rejected. This could prevent shareholders from bringing certain matters before an annual or special meeting or making nominations for directors. Shareholder Rights Plan. On November 12, 1997, our board of directors declared a dividend distribution of one right for each outstanding share of our common stock to shareholders of record at the close of business on May 10, 1998. Each right entitles the registered holder to purchase from us one share of our common stock at a purchase price of $80 per share, subject to adjustment. The description and terms of the rights are set forth in a rights agreement between us and Fleet National Bank, formerly known as BankBoston, N.A., as rights agent. Subject to exceptions specified in the rights agreement, the rights will separate from our common stock and a distribution date will occur upon the earlier of: . ten business days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of our common stock, other than as a result of repurchases of stock by us or specified inadvertent actions by institutional or other shareholders, 37 . ten business days, or such later date as our board of directors shall determine, following the commencement of a tender offer or exchange offer that would result in a person or group having acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of our common stock, or . ten business days after our board of directors shall declare any person to be an adverse person within the meaning of the rights plan. The rights expire at 5:00 P.M., Boston, Massachusetts time on May 10, 2008, unless extended prior thereto by our board or earlier if redeemed by us. The rights will not have any voting rights. The exercise price payable and the number of shares of our common stock or other securities or property issuable upon exercise of the rights are subject to adjustment from time to time to prevent dilution. We issue rights when we issue our common stock until the rights have separated from the common stock. After the rights have separated from the common stock, we may issue additional rights if the board of directors deems such issuance to be necessary or appropriate. The rights have anti-takeover effects and may cause substantial dilution to a person or entity that attempts to acquire us on terms not approved by our board of directors except pursuant to an offer conditioned upon a substantial number of rights being acquired. The rights should not interfere with any merger or other business combination approved by our board of directors because, prior to the time that the rights become exercisable or transferable, we can redeem the rights at $.01 per right. PLAN OF DISTRIBUTION We may sell the securities offered by this prospectus and the prospectus supplement as follows: . through agents, . to or through underwriters, or . directly to other purchasers. 38 We will identify any underwriters or agents and describe their compensation in a prospectus supplement. We, directly or through agents, may sell, and the underwriters may resell, the offered securities in one or more transactions, including negotiated transactions. These transactions may be: . at a fixed public offering price or prices, which may be changed, . at market prices prevailing at the time of sale, . at prices related to the prevailing market prices, or . at negotiated prices. In connection with the sale of offered securities, the underwriters or agents may receive compensation from us or from purchasers of the offered securities for whom they may act as agents. The underwriters may sell offered securities to or through dealers, who may also receive compensation from purchasers of the offered securities for whom they may act as agents. Compensation may be in the form of discounts, concessions or commissions. Underwriters, dealers and agents that participate in the distribution of the offered securities may be underwriters as defined in the Securities Act, and any discounts or commissions received by them from us and any profit on the resale of the offered securities by them may be treated as underwriting discounts and commissions under the Securities Act of 1933. We will indemnify the underwriters and agents against certain civil liabilities, including liabilities under the Securities Act of 1933. Underwriters, dealers and agents or their affiliates may engage in transactions with us or perform services for us. If we indicate in the prospectus supplement relating to a particular series or issue of offered securities, we will authorize underwriters, dealers or agents to solicit offers by institutions to purchase the offered securities from us under delayed delivery contracts providing for payment and delivery at a future date. These contracts will be subject only to those conditions that we specify in the prospectus supplement, and we will specify in the prospectus supplement the commission payable for solicitation of these contracts. 39 LEGAL MATTERS Gibson, Dunn & Crutcher LLP, Dallas, Texas, and Hunton & Williams, Richmond, Virginia, will opine for us as to the validity of the offered securities. Shearman & Sterling, New York, New York, will pass upon certain legal matters related to the offered securities for any underwriters, dealers or agents. EXPERTS Ernst & Young LLP, independent auditors, have audited the consolidated financial statements of Atmos Energy Corporation for the year ended September 30, 1999, incorporated by reference in our Annual Report on Form 10-K for the year ended September 30, 1999, as set forth in its report dated November 9, 1999. We incorporate by reference such consolidated financial statements in this prospectus in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC under the Securities Exchange Act. You may read and copy this information at the following locations of the SEC: Judiciary Plaza, Room Seven World Trade Center, Citicorp Center 1024 Suite 1300 500 West Madison 450 Fifth Street, N.W. New York, New York 10048 Street Street Suite 1400 Washington, D.C. 20549 Chicago, Illinois 60661 You can also obtain copies of this information by mail from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. 40 The SEC also maintains an Internet world wide web site that contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC. The address of that site is http://www.sec.gov. Our common stock is listed on the New York Stock Exchange and you can inspect reports, proxy statements and other information about us at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. We have filed with the SEC a registration statement on Form S-3 that registers the securities we are offering. The registration statement, including the attached exhibits and schedules, contains additional relevant information about us and the securities offered. The rules and regulations of the SEC allow us to omit certain information included in the registration statement from this prospectus. The SEC allows us to "incorporate by reference" information into this prospectus that we have filed with it. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus, except for any information that is superseded by information that is included directly in this document. This prospectus incorporates by reference the following documents that we have previously filed with the SEC and that we have not included or delivered with this document: . our Annual Report on Form 10-K for the year ended September 30, 1999, . our Quarterly Reports on Form 10-Q for the quarters ended December 31, 1999, March 31, 2000, and June 30, 2000, and . our Current Reports on Form 8-K filed with the SEC on February 22, 2000, April 18, 2000, May 8, 2000, June 13, 2000, June 22, 2000, and August 17, 2000. These documents contain important information about us, our common stock and our financial condition. We incorporate by reference additional documents that we may file with the SEC between the date of this prospectus and the date of the closing of each offering. These documents include periodic 41 reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and proxy statements. You can obtain any of the documents incorporated by reference in this document from us without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit to this prospectus. You can obtain documents incorporated by reference in this prospectus by requesting them in writing or by telephone from us at the following address or telephone number: Atmos Energy Corporation 1800 Three Lincoln Centre 5430 LBJ Freeway Dallas, Texas 75240 Attention: Louis P. Gregory (972) 934-9227 42 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- We have not authorized anyone to give any information or make any representation about us that is different from, or in addition to, that contained in this prospectus or in any of the materials that we have incorporated by reference into this document. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered by this document are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this document speaks only as of the date of this document, unless the information specifically indicates that another date applies. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- $500,000,000 ATMOS ENERGY CORPORATION [LOGO] DEBT SECURITIES AND COMMON STOCK ---------------- PROSPECTUS , 2000 ---------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution.* Securities and Exchange Commission registration fee.. $132,000 Blue Sky fees, including counsel fees................ 2,500 Printing expenses.................................... 15,000 Trustee's fees and expenses.......................... 5,000 Rating agency fees................................... 225,000 State filing fees.................................... 18,000 Accounting fees and expenses......................... 30,000 Legal fees and expenses.............................. 50,000 Miscellaneous expenses............................... 20,000 -------- Total........................................... $497,000 ======== _________________________ *All fees and expenses will be paid by us. All fees and expenses other than the SEC filing fees are estimated. Item 15. Indemnification of Directors and Officers. The Texas Business Corporation Act and the Virginia Stock Corporation Act permit, and in some cases require, corporations to indemnify directors and officers who are or have been a party or are threatened to be made a party to litigation against judgments, penalties, including excise and similar taxes, fines, settlements, and reasonable expenses under certain circumstances. Article IX of our Restated Articles of Incorporation, as amended, and Article IX of our Amended and Restated Bylaws provide for indemnification of judgments, penalties, including excise and similar taxes, fines, settlements, and reasonable expenses and the advance payment or reimbursement of such reasonable expenses to directors and officers to the fullest extent permitted by law. As authorized by Article 2.02-1 of the Texas Business Corporation Act, and Section 13.1-697 of the Virginia Stock Corporation Act, each of our directors and officers may be indemnified by us against expenses, including attorney's fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed legal proceedings in which he is involved by reason of the fact that he is or was a director or officer of ours if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. In each case, such indemnity shall be to the fullest extent authorized by the Texas Business Corporation Act and the Virginia Stock Corporation Act. If the director or officer is found liable to us, or received improper personal benefit from us, whether or not involving action in his official capacity, then indemnification will not be made. II-1 Article X of our Restated Articles of Incorporation, as amended, provides that no director shall be personally liable to us or our shareholders for monetary damages for any breach of fiduciary duty as a director except for liability . for any breach of duty of loyalty to us or our shareholders, . for an act or omission not in good faith or which involves intentional . misconduct or a knowing violation of law, . for a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office, . for an act or omission for which the liability of a director is expressly provided by statute, or . for an act related to an unlawful stock repurchase or payment of a dividend. In addition, Article IX of our Restated Articles of Incorporation, as amended, and Article IX of our Amended and Restated Bylaws require us to indemnify to the fullest extent authorized by law any person made or threatened to be made party to any action, suit or proceeding, whether criminal, civil, administrative, arbitrative or investigative, by reason of the fact that such person is or was a director or officer of ours or serves or served at our request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of any other enterprise. We maintain an officers' and directors' liability insurance policy insuring officers and directors against certain liabilities, including liabilities under the Securities Act of 1933. The effect of such policy is to indemnify such officers and directors against losses incurred by them while acting in such capacities. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Item 16. Exhibits. Exhibit Number Exhibits -------------------------------------------------------------------------------- 1.1* Form of Underwriting Agreement 2.1 Purchase and Sale Agreement, made as of April 13, 2000, by and among Citizens Utilities Company, LGS Natural Gas Company, and Atmos Energy Corporation 4.1 Form of Debt Securities Indenture between Atmos and SunTrust Bank 4.2* Form of Debt Security 4.3(a) Note Purchase Agreement, dated as of December 21, 1987, by and between the Company and John Hancock Mutual Life Insurance Company (Exhibit 10(c) of Form 8-K filed January 7, 1988 (File No. 0-11249)). II-2 Note Purchase Agreement, dated as of December 21, 1987, by and between the Company and John Hancock Charitable Trust I (Agreement is identical to Hancock Agreement listed above except as to the parties thereto). Note Purchase Agreement dated as of December 21, 1987, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement (Agreement is identical to Hancock Agreement listed above except as to the parties thereto). 4.3(b) Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 10(b)(ii) of Form 10-K for fiscal year ended September 30, 1989 (File No. 1-10042)). Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and John Hancock Charitable Trust I revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto). Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto). 4.3(c) Amendment to Note Purchase Agreement dated November 12, 1991, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 10(b)(iii) of Form 10-K for fiscal year ended September 30, 1991 (File No. 1-10042)). Amendment to Note Purchase Agreement, dated November 12, 1991, by and between the Company and John Hancock Charitable Trust I revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto). Amendment to Note Purchase Agreement, dated November 12, 1991, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment above except as to the parties thereto). II-3 4.3(d) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 4.3(d) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans -- AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto and the amounts thereof). 4.3(e) Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 4.3(e) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans -- AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above). 4.3(f) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 4.3(f) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock Amendment listed above except as to the parties thereto and the amounts thereof). 4.4(a) Note Purchase Agreement, dated as of October 11, 1989, by and between the Company and John Hancock Mutual Life Insurance Company (Exhibit 10(c) of Form 10-K for fiscal year ended September 30, 1989 (File No. 1-10042)). 4.4(b) Amendment to Note Purchase Agreement, dated as of November 12, 1991, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 10(c)(ii) of Form 10-K for fiscal year ended September 30, 1991 (File No. 1-10042)). 4.4(c) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 4.4(c) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.4(d) Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 4.4(d) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). II-4 4.4(e) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 4.4(e) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.5(a) Note Purchase Agreement, dated as of August 29, 1991, by and between the Company and The Variable Annuity Life Insurance Company (Exhibit 10(f)(i) of Form 10-K for fiscal year ended September 30, 1991 (File No. 10042)). 4.5(b) Amendment to Note Purchase Agreement, dated November 26, 1991, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 29, 1991 (Exhibit 10(f)(ii) of Form 10-K for fiscal year ended September 30, 1991 (File No. 1-10042)). 4.5(c) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 29, 1991 (Exhibit 4.5(c) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.5(d) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 29, 1991 (Exhibit 4.5(d) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.6(a) Note Purchase Agreement, dated as of August 31, 1992, by and between the Company and The Variable Annuity Life Insurance Company (Exhibit 10(f) of Form 10-K for fiscal year ended September 30, 1992 (File No. 1-10042)). 4.6(b) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and the Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 31, 1992 (Exhibit 4.6(b) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.6(c) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 31, 1992 (Exhibit 4.6(c) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.7(a) Note Purchase Agreement, dated November 14, 1994, by and among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company, and Merit Life Insurance Company (Exhibit 10.1 to Form 10-Q for quarter ended December 31, 1994 (File No. 1-10042)). 4.7(b) Amendment to Note Purchase Agreement, dated July 29, 1997, by and among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company and Merit Life Insurance Company revising Note Purchase Agreement dated November 14, 1994 (Exhibit 4.7(b) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.8 Term Credit Agreement, dated as of August 3, 2000, among the Company, Bank of America, N.A., BankOne, NA, and Societe Generale New York Branch (Exhibit 10.1 of Form 10-Q for quarter ended June 30, 2000 (File No. 1-10042)). 4.9 Revolving Credit Agreement, dated as of August 3, 2000, among the Company, Bank of America, N.A., Bank One, NA, and Societe Generale New York Branch. II-5 4.10(a) Indenture of Mortgage, dated as of July 15, 1959, from United Cities Gas Company to First Trust of Illinois, National Association, and M.J. Kruger, as Trustees, as amended and supplemented through December 1, 1992 (the Indenture of Mortgage through the 20th Supplemental Indenture) (Exhibit to Registration Statement of United Cities Gas Company on Form S-3 (File No. 33- 56983)). 4.10(b) Twenty-First Supplemental Indenture dated as of February 5, 1997 by and among United Cities Gas Company and Bank of America Illinois and First Trust National Association and Russell C. Bergman supplementing Indenture of Mortgage dated as of July 15, 1959 (Exhibit 10.7(a) of Form 10-K for the fiscal year ended September 30, 1997 (File No. 1-10042)). 4.10(c) Twenty-Second Supplemental Indenture dated as of July 29, 1997 by and among the Company and First Trust National Association and Russell C. Bergman supplementing Indenture of Mortgage dated as of July 15, 1959 (Exhibit 10.7(b) of Form 10-K for the fiscal year ended September 30, 1997 (File No. 1-10042)). 4.11(a) Form of Indenture between United Cities Gas Company and First Trust of Illinois, National Association, as Trustee dated as of November 15, 1995 (Exhibit to Registration Statement of United Cities Gas Company on Form S-3 (File No. 33-56983)). 4.11(b) First Supplemental Indenture between the Company and First Trust of Illinois, National Association, as Trustee dated as of July 29, 1997 (Exhibit 10.8(a) of Form 10-K for the fiscal year ended September 30, 1997 (File No. 1-10042)). 4.12(a) Seventh Supplemental Indenture, dated as of October 1, 1983 between Greeley Gas Company ("the Greeley Gas Division") and the Central Bank of Denver, N.A. ("Central Bank") (Exhibit 10.1 of Form 10-Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.12(b) Ninth Supplemental Indenture, dated as of April 1, 1991, between the Greeley Gas Division and Central Bank (Exhibit 10.2 of Form 10- Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.12(c) Bond Purchase Agreement, dated as of April 1, 1991, between the Greeley Gas Division and Central Bank (Exhibit 10.3 of Form 10-Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.12(d) Tenth Supplemental Indenture, dated as of December 1, 1993, between the Company and Colorado National Bank, formerly Central Bank (Exhibit 10.4 of Form 10-Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.13 Restated Articles of Incorporation, as amended, of the registrant (incorporated by reference to Exhibit 3.1 of Form 10-K for fiscal year ended September 30, 1997) (File No. 1-10042)). 4.14 Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.2 of Form 10-K for fiscal year ended September 30, 1997 (File No. 1-10042)). II-6 4.15 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4(b) of Form 10-K for the fiscal year ended September 30, 1988 (File No. 1-10042)). 5.1** Opinion of Gibson, Dunn & Crutcher LLP, Dallas, Texas, as to the validity of the securities being registered 5.2** Opinion of Hunton & Williams, Richmond, Virginia, as to the validity of the securities being registered 10.1 Asset Purchase Agreement, made and entered into as of August 7, 2000, by and among Atmos Energy Corporation, Atmos Energy Marketing, LLC, Woodward Marketing, Inc., J.D. Woodward, III, Linda Lee Woodward, James Kifer, and Rita B. Kifer 10.2 Credit Agreement, dated to be effective as of August 9, 2000, among Woodward Marketing, L.L.C., and Bank of America, N.A. 10.3 Guaranty, effective as of August 9, 2000, by Atmos Energy Marketing, LLC, in favor of Bank of America, N.A. 10.4 First Amendment to Credit Agreement and Guaranty of Atomos Energy Marketing, LLC, effective as of September 29, 2000, among Woodward Marketing, L.L.C., Bank of America, N.A., Woodward Marketing, Inc., Atmos Energy Marketing, LLC, J.D. Woodward and James Kifer 12.1 Statement of computation of ratio of earnings to fixed charges 23.1 Consent of Gibson, Dunn & Crutcher LLP, Dallas, Texas (See Exhibit 5.1) 23.2 Consent of Hunton & Williams, Richmond, Virginia (See Exhibit 5.2) 23.3 Consent of Ernst & Young LLP 24.1** Powers of Attorney 25.1** Statement of eligibility of SunTrust Bank on Form T-1 _______________________________ * To be filed by amendment hereto or pursuant to a Current Report on Form 8-K to be incorporated herein by reference. ** Previously filed. Item 17. Undertakings (a) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions described in Item 15, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-7 (c) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (c)(1)(i) and (c)(1)(ii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (d) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of II-8 section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under section 305(b)(2) of the Trust Indenture Act. SIGNATURES AND POWERS OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on November 6, 2000. ATMOS ENERGY CORPORATION By: /s/ ROBERT W. BEST ------------------------------------- Robert W. Best, Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ ROBERT W. BEST Chairman, President and Chief November 6, 2000 --------------------------------------- Executive Officer (Principal Robert W. Best Executive Officer) /s/ JOHN P. REDDY Senior Vice President and Chief November 6, 2000 --------------------------------------- Financial Officer John P. Reddy /s/ FRED E. MEISENHEIMER Vice President and Controller November 6, 2000 --------------------------------------- Fred E. Meisenheimer (Principal Accounting Officer) * Director November 6, 2000 --------------------------------------- Travis W. Bain II * Director November 6, 2000 --------------------------------------- Dan Busbee * Director November 6, 2000 --------------------------------------- Richard W. Cardin * Director November 6, 2000 --------------------------------------- Thomas J. Garland II-9 * Director November 6, 2000 --------------------------------------- Gene C. Koonce * Director November 6, 2000 --------------------------------------- Vincent J. Lewis * Director November 6, 2000 --------------------------------------- Thomas C. Meredith * Director November 6, 2000 --------------------------------------- Phillip E. Nichol * Director November 6, 2000 --------------------------------------- Carl S. Quinn * Director November 6, 2000 --------------------------------------- Charles K. Vaughan * Director November 6, 2000 --------------------------------------- Richard Ware II *By: /s/ ROBERT W. BEST November 6, 2000 --------------------------------------- Robert W. Best Attorney in fact II-10 EXHIBIT INDEX Exhibit Number Exhibits -------------------------------------------------------------------------------- 1.1* Form of Underwriting Agreement 2.1 Purchase and Sale Agreement, made as of April 13, 2000, by and among Citizens Utilities Company, LGS Natural Gas Company, and Atmos Energy Corporation. 4.1 Form of Debt Securities Indenture between Atmos and SunTrust Bank 4.2* Form of Debt Security 4.3(a) Note Purchase Agreement, dated as of December 21, 1987, by and between the Company and John Hancock Mutual Life Insurance Company (Exhibit 10(c) of Form 8-K filed January 7, 1988 (File No. 0-11249)). Note Purchase Agreement, dated as of December 21, 1987, by and between the Company and John Hancock Charitable Trust I (Agreement is identical to Hancock Agreement listed above except as to the parties thereto). Note Purchase Agreement dated as of December 21, 1987, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement (Agreement is identical to Hancock Agreement listed above except as to the parties thereto). 4.3(b) Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 10(b)(ii) of Form 10-K for fiscal year ended September 30, 1989 (File No. 1-10042)). Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and John Hancock Charitable Trust I revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto). Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto). 4.3(c) Amendment to Note Purchase Agreement dated November 12, 1991, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 10(b)(iii) of Form 10-K for fiscal year ended September 30, 1991 (File No. 1-10042)). II-11 Amendment to Note Purchase Agreement, dated November 12, 1991, by and between the Company and John Hancock Charitable Trust I revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto). Amendment to Note Purchase Agreement, dated November 12, 1991, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans -- AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment above except as to the parties thereto). 4.3(d) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 4.3(d) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans -- AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto and the amounts thereof). 4.3(e) Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 4.3(e) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans -- AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above). 4.3(f) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated December 21, 1987 (Exhibit 4.3(f) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans --AT&T -- John Hancock -- Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock Amendment listed above except as to the parties thereto and the amounts thereof). 4.4(a) Note Purchase Agreement, dated as of October 11, 1989, by and between the Company and John Hancock Mutual Life Insurance Company (Exhibit 10(c) of Form 10-K for fiscal year ended September 30, 1989 (File No. 1-10042)). II-12 4.4(b) Amendment to Note Purchase Agreement, dated as of November 12, 1991, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 10(c)(ii) of Form 10-K for fiscal year ended September 30, 1991 (File No. 1-10042)). 4.4(c) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 4.4(c) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.4(d) Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 4.4(d) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.4(e) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and John Hancock Mutual Life Insurance Company revising Note Purchase Agreement dated October 11, 1989 (Exhibit 4.4(e) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.5(a) Note Purchase Agreement, dated as of August 29, 1991, by and between the Company and The Variable Annuity Life Insurance Company (Exhibit 10(f)(i) of Form 10-K for fiscal year ended September 30, 1991 (File No. 10042)). 4.5(b) Amendment to Note Purchase Agreement, dated November 26, 1991, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 29, 1991 (Exhibit 10(f)(ii) of Form 10-K for fiscal year ended September 30, 1991 (File No. 1-10042)). 4.5(c) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 29, 1991 (Exhibit 4.5(c) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477). 4.5(d) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 29, 1991 (Exhibit 4.5(d) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477). 4.6(a) Note Purchase Agreement, dated as of August 31, 1992, by and between the Company and The Variable Annuity Life Insurance Company (Exhibit 10(f) of Form 10-K for fiscal year ended September 30, 1992 (File No. 1-10042)). 4.6(b) Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and the Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 31, 1992 (Exhibit 4.6(b) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.6(c) Amendment to Note Purchase Agreement, dated July 29, 1997, by and between the Company and The Variable Annuity Life Insurance Company revising Note Purchase Agreement dated August 31, 1992 (Exhibit 4.6(c) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.7(a) Note Purchase Agreement, dated November 14, 1994, by and among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company, and Merit Life Insurance Company (Exhibit 10.1 to Form 10-Q for quarter ended December 31, 1994 (File No. 1-10042)). II-13 4.7(b) Amendment to Note Purchase Agreement, dated July 29, 1997, by and among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company and Merit Life Insurance Company revising Note Purchase Agreement dated November 14, 1994 (Exhibit 4.7(b) to Registration Statement on Form S-3 filed April 20, 1998 (File No. 333-50477)). 4.8 Term Credit Agreement, dated as of August 3, 2000, among the Company, Bank of America, N.A., BankOne, NA, and Societe Generale New York Branch (Exhibit 10.1 of Form 10-Q for quarter ended June 30, 2000 (File No. 1-10042)). 4.9 Revolving Credit Agreement, dated as of August 3, 2000, among the Company, Bank of America, N.A., Bank One, NA, and Societe Generale New York Branch. 4.10(a) Indenture of Mortgage, dated as of July 15, 1959, from United Cities Gas Company to First Trust of Illinois, National Association, and M.J. Kruger, as Trustees, as amended and supplemented through December 1, 1992 (the Indenture of Mortgage through the 20th Supplemental Indenture) (Exhibit to Registration Statement of United Cities Gas Company on Form S-3 (File No. 33- 56983)). 4.10(b) Twenty-First Supplemental Indenture dated as of February 5, 1997 by and among United Cities Gas Company and Bank of America Illinois and First Trust National Association and Russell C. Bergman supplementing Indenture of Mortgage dated as of July 15, 1959 (Exhibit 10.7(a) of Form 10-K for the fiscal year ended September 30, 1997 (File No. 1-10042)). 4.10(c) Twenty-Second Supplemental Indenture dated as of July 29, 1997 by and among the Company and First Trust National Association and Russell C. Bergman supplementing Indenture of Mortgage dated as of July 15, 1959 (Exhibit 10.7(b) of Form 10-K for the fiscal year ended September 30, 1997 (File No. 1-10042)). 4.11(a) Form of Indenture between United Cities Gas Company and First Trust of Illinois, National Association, as Trustee dated as of November 15, 1995 (Exhibit to Registration Statement of United Cities Gas Company on Form S-3 (File No. 33-56983)). 4.11(b) First Supplemental Indenture between the Company and First Trust of Illinois, National Association, as Trustee dated as of July 29, 1997 (Exhibit 10.8(a) of Form 10-K for the fiscal year ended September 30, 1997 (File No. 1-10042)). 4.12(a) Seventh Supplemental Indenture, dated as of October 1, 1983 between Greeley Gas Company ("the Greeley Gas Division") and the Central Bank of Denver, N.A. ("Central Bank") (Exhibit 10.1 of Form 10-Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.12(b) Ninth Supplemental Indenture, dated as of April 1, 1991, between the Greeley Gas Division and Central Bank (Exhibit 10.2 of Form 10- Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.12(c) Bond Purchase Agreement, dated as of April 1, 1991, between the Greeley Gas Division and Central Bank (Exhibit 10.3 of Form 10-Q for quarter ended June 30, 1994 (File No. 1-10042)). II-14 4.12(d) Tenth Supplemental Indenture, dated as of December 1, 1993, between the Company and Colorado National Bank, formerly Central Bank (Exhibit 10.4 of Form 10-Q for quarter ended June 30, 1994 (File No. 1-10042)). 4.13 Restated Articles of Incorporation, as amended, of the registrant (incorporated by reference to Exhibit 3.1 of Form 10-K for fiscal year ended September 30, 1997) (File No. 1-10042)). 4.14 Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.2 of Form 10-K for fiscal year ended September 30, 1997 (File No. 1-10042)). 4.15 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4(b) of Form 10-K for the fiscal year ended September 30, 1988 (File No. 1-10042)). 5.1** Opinion of Gibson, Dunn & Crutcher LLP, Dallas, Texas, as to the validity of the securities being registered 5.2** Opinion of Hunton & Williams, Richmond, Virginia, as to the validity of the securities being registered 10.1 Asset Purchase Agreement, made and entered into as of August 7, 2000, by and among Atmos Energy Corporation, Atmos Energy Marketing, LLC, Woodward Marketing, Inc., J. D. Woodward, III, Linda Lee Woodward, James Kifer, and Rita B. Kifer. 10.2 Credit Agreement, dated to be effective as of August 9, 2000, among Woodward Marketing, L.L.C., and Bank of America, N.A. 10.3 Guaranty, effective as of August 9, 2000, by Atmos Energy Marketing, LLC, in favor of Bank of America, N.A. 10.4 First Amendment to Credit Agreement and Guaranty of Atomos Energy Marketing, LLC, effective as of September 29, 2000, among Woodward Marketing, L.L.C., Bank of America, N.A., Woodward Marketing, Inc., Atmos Energy Marketing, LLC, J.D. Woodward and James Kifer 12.1 Statement of computation of ratio of earnings to fixed charges 23.1 Consent of Gibson, Dunn & Crutcher LLP, Dallas, Texas (See Exhibit 5.1) 23.2 Consent of Hunton & Williams, Richmond, Virginia (See Exhibit 5.2) 23.3 Consent of Ernst & Young LLP 24.1** Powers of Attorney 25.1** Statement of eligibility of SunTrust Bank on Form T-1 _______________________________ * To be filed by amendment hereto or pursuant to a Current Report on Form 8-K to be incorporated herein by reference. ** Previously filed. II-15 EX-2.1 2 0002.txt PURCHASE AND SALE AGREEMENT EXHIBIT 2.1 PURCHASE AND SALE AGREEMENT (LOUISIANA GAS OPERATIONS) among CITIZENS UTILITIES COMPANY, LGS NATURAL GAS COMPANY and ATMOS ENERGY CORPORATION Dated as of April 13, 2000 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1 Section 1.1 Certain Defined Terms................................................ 1 Section 1.2 Other Defined Terms.................................................. 9 ARTICLE II PURCHASE AND SALE 10 Section 2.1 Purchase and Sale of LGSN Assets..................................... 10 Section 2.2 Purchase and Sale of Division Assets................................. 10 Section 2.3 Assumed Liabilities.................................................. 10 Section 2.4 Retained Liabilities................................................. 11 Section 2.5 Condition on Assignment or Assumption of Contracts and Rights........ 12 ARTICLE III PURCHASE PRICE 12 Section 3.1 Purchase Price....................................................... 12 Section 3.2 Calculation of Purchase Price........................................ 13 Section 3.3 Prorations and Adjustments as of the Closing Date.................... 14 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 14 Section 4.1 Organization, Existence and Qualification............................ 15 Section 4.2 Authority Relative to this Agreement and Binding Effect.............. 15 Section 4.3 Governmental and other Required Consents............................. 15 Section 4.4 Availability of Funds................................................ 15 Section 4.5 Filings.............................................................. 15 Section 4.6 Brokers.............................................................. 16 Section 4.7 Independent Investigation............................................ 16 Section 4.8 Public Utility Holding Company Status; Regulation as a Public Utility 16 Section 4.9 Buyer's Financial Statements......................................... 16 ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS 16 Section 5.1 Organization, Existence and Qualification............................ 17 Section 5.2 Authority Relative to this Agreement and Binding Effect.............. 17 Section 5.3 Governmental and Other Required Consents............................. 17 Section 5.4 Filings.............................................................. 18 Section 5.5 Title to Assets; Encumbrances........................................ 18 Section 5.6 Financial Statements................................................. 18 Section 5.7 Compliance with Legal Requirements; Governmental Permits; Business Practices.................................................. 19 Section 5.8 Legal Proceedings; Outstanding Orders................................ 20 Section 5.9 Taxes................................................................ 20 Section 5.10 Intellectual Property................................................ 20 Section 5.11 Y2K Compliance....................................................... 21 Section 5.12 Material Contracts................................................... 21 Section 5.13 Employee Benefit Matters............................................. 21 Section 5.14 Environmental Matters................................................ 23 Section 5.15 Labor Matters........................................................ 25 Section 5.16 State Regulatory Matters............................................. 25 Section 5.17 Public Utility Holding Company Status; Regulation as a Public Utility 26 Section 5.18 Brokers.............................................................. 26 Section 5.19 Insurance............................................................ 26 i Section 5.20 Disclaimer........................................................... 26 ARTICLE VI COVENANTS 26 Section 6.1 Covenants of Sellers................................................. 26 Section 6.2 Covenants of Buyer................................................... 30 Section 6.3 Governmental Filings................................................. 31 Section 6.4 Citizens Marks....................................................... 31 Section 6.5 Transition Plan...................................................... 32 Section 6.7 Schedule of Easements and Interests.................................. 32 Section 6.8 Rhodes Security...................................................... 32 Section 6.9 Certain Proceedings.................................................. 33 Section 6.10 Buyer's Insurance.................................................... 33 ARTICLE VII CONDITIONS PRECEDENT 33 Section 7.1 Sellers' Conditions Precedent to Closing............................. 33 Section 7.2 Buyer's Conditions Precedent to Closing.............................. 34 ARTICLE VIII CLOSING 36 Section 8.1 Closing.............................................................. 36 ARTICLE IX TERMINATION 37 Section 9.1 Termination Rights................................................... 37 Section 9.2 Limitation on Right to Terminate: Effect of Termination.............. 38 ARTICLE X EMPLOYEE MATTERS 38 Section 10.1 Employment of Transferred Employees.................................. 38 Section 10.2 Intentionally Omitted................................................ 39 Section 10.3 Cessation of Participation in Sellers' Plans; Bonuses................ 39 Section 10.4 Similarity of Benefit Packages....................................... 39 Section 10.5 Defined Benefit Pension Plan......................................... 39 Section 10.6 401(k) Plan.......................................................... 40 Section 10.7 Welfare Benefits..................................................... 41 Section 10.8 Flexible Spending Accounts........................................... 42 Section 10.9 Employment Agreements................................................ 42 Section 10.10 Vacation/Time Off.................................................... 42 Section 10.11 Severance............................................................ 42 Section 10.12 Health Care Continuation Coverage.................................... 42 ARTICLE XI TAX MATTERS 43 Section 11.1 Purchase Price allocation............................................ 43 Section 11.2 Cooperation with Respect to Like-Kind Exchange....................... 44 Section 11.3 Transaction Taxes.................................................... 44 Section 11.4 Clearance Certificates............................................... 45 ARTICLE XII ENVIRONMENTAL MATTERS 45 Section 12.1 Environmental Due Diligence.......................................... 45 ARTICLE XIII INDEMNIFICATION 47 Section 13.1 Indemnification by Sellers........................................... 47 Section 13.2 Indemnification by Buyer............................................. 47 Section 13.3 Limitations on Liability............................................. 48 Section 13.4 Claims Procedure..................................................... 51 Section 13.5 Exclusive Remedy..................................................... 53 Section 13.6 Indemnification for Negligence....................................... 53 ii ARTICLE XIV GENERAL PROVISIONS 53 Section 14.1 Expenses............................................................. 53 Section 14.2 Notices.............................................................. 53 Section 14.3 Assignment........................................................... 55 Section 14.4 Successor Bound...................................................... 55 Section 14.5 Governing Law........................................................ 55 Section 14.6 Dispute Resolution................................................... 56 Section 14.7 Cooperation.......................................................... 57 Section 14.8 Construction of Agreement............................................ 57 Section 14.9 Publicity............................................................ 58 Section 14.10 Waiver............................................................... 58 Section 14.11 Parties in Interest.................................................. 58 Section 14.12 Section and Paragraph Headings....................................... 58 Section 14.13 Amendment............................................................ 58 Section 14.14 Entire Agreement..................................................... 58 Section 14.15 Counterparts......................................................... 59 Section 14.16 Severability......................................................... 59 iii LIST OF EXHIBITS* Exhibit 6.7 Form of Substitute Agreement Exhibit 7.1(g) Form of Buyer's Opinion of Counsel Exhibit 7.2(g) Form of Sellers' Opinion of Counsel LIST OF SCHEDULES* Schedule 1.1(a) Certain Assets Schedule 1.1(b) Certain Excluded Assets Schedule 4.3 Buyer's Governmental Approvals Schedule 5.2 Sellers' Authority Schedule 5.3 Sellers' Governmental and Other Required Consents Schedule 5.5 Encumbrances; Owned Real Property Schedule 5.6(a) Financial Statements Schedule 5.6(b) Certain Liabilities Schedule 5.6(c) Certain Changes Schedule 5.7 Compliance with Legal Requirements; Governmental Permits Schedule 5.8 Legal Proceedings; Outstanding Orders Schedule 5.9 Taxes Schedule 5.10 Intellectual Property Schedule 5.12 Material Contracts Schedule 5.13 Employee Matters Schedule 5.14 Environmental Matters Schedule 5.15 Labor Matters Schedule 5.16 State Regulatory Matters Schedule 5.19 Sellers' Insurance Schedule 6.1 Conduct of Business Prior to Closing Date Schedule 6.2(c) Citizens' Guarantees and Surety Instruments Schedule 10.7 Retirees and "Grandfathered Employees" Schedule 10.11 Severance Benefits * Exhibits and Schedules are not filed herewith. Atmos Energy Corporation hereby agrees to furnish supplementally a copy of any Exhibit or Schedule to the Commission upon request. iv PURCHASE AND SALE AGREEMENT (LOUISIANA GAS OPERATIONS) This PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the 13th day of April, 2000, by and among CITIZENS UTILITIES COMPANY, a Delaware corporation ("Citizens"), LGS NATURAL GAS COMPANY, a Louisiana corporation ("LGSN" and, together with Citizens, "Sellers"), and ATMOS ENERGY CORPORATION, a Texas and Virginia corporation ("Buyer"). Capitalized terms used herein shall have the meanings ascribed to them in Article I, unless otherwise provided. W I T N E S S E T H: WHEREAS, Citizens own all of the Division Assets and LGSN owns all of the LGSN Assets; and WHEREAS, Buyer desires to purchase, and Sellers desire to sell, the Division Assets and the LGSN Assets, subject in all respects to the provisions of this Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Certain Defined Terms. For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "Affiliates" or "Affiliated Entities" -- entities shall be deemed "Affiliated" as to each other to the extent (i) one of the entities directly or indirectly controls the other, or the direct or indirect control of one of the entities is exercised by the officers, directors, stockholders, or partners of the other entity (whether or not such persons exercise such control in their capacities as officers, directors, stockholders, or partners) or (ii) is deemed to be an Affiliate under existing statutes or regulations of the SEC. "Assets" -- means, collectively, all of the Division Assets and all of the LGSN Assets, including the following (except to the extent included among the Excluded Assets): (a) the Real Property described in Schedule 5.5, and all buildings, structures and other improvements, fixtures and fittings located on such Real Property, and all Easements, appurtenances and other interests owned or held by a Seller and necessary for or relating to the Business (including all gas pipes and pipelines, and all facilities used for storing and delivering natural gas or propane); (b) all inventories of natural gas, propane and other fuels, and all supplies, materials and critical spares held by a Seller for use in connection with the Business and located on, in storage for, or in transit to the Real Property on the Closing Date; (c) all machinery, equipment, tools, vehicles, furniture and other tangible personal property used in connection with the Business, including the items of tangible personal property listed on Schedule 1.1(a); and all warranties, guarantees, and service and replacement programs of manufacturers, service providers or other vendors relating thereto, in each case to the extent that the same are transferable; (d) all Contracts relating to the Business; (e) the franchises, ordinances or similar agreements listed on Schedule 1.1(a) with respect to Citizens' authority to distribute natural gas and all other licenses, permits and authorizations held by a Seller and relating to the Business, in each case to the extent the same are assignable; (f) originals or copies of all records, books, operating records, operating, safety and maintenance manuals, engineering design plans, blueprints and as-built plans, specifications, procedures and similar items of Citizens or LGSN relating to the Assets, including all books of account, customer lists, billing records and other customer correspondence relating to the Business, records relating to the Transferred Employees (to the extent such transfer is not prohibited by any Legal Requirement), all regulatory filings and all other books and records relating to the rates and services provided by Citizens or LGSN in connection with the operation of the Business; (g) all rights or choses in action arising out of occurrences before or after the Closing Date and related to any of the Assets, including all related claims, credits, rights of recovery and set-off and other similar contractual rights (other than with respect to rights to insurance and condemnation proceeds described in clause (h)), as to third parties held by or in favor of a Seller; provided, however, that notwithstanding the foregoing provisions of this clause (g), to the extent that a Seller pays or discharges a liability related to the Business or any of the Assets that is related to such right or chose in action (whether by reason of indemnification under this Agreement or otherwise), Buyer will reassign or reconvey to such Seller such right or chose in action to the extent that such right or chose in action relates to a recovery of amounts paid to Buyer; (h) all rights to insurance and condemnation proceeds outstanding on the Closing Date to the extent relating to the damage, destruction, taking or other impairment of the Assets which damage, destruction, taking or other impairment occurs on or prior to the Closing, but only to the extent of any proceeds remaining after any repair or replacement of the affected Assets; and (i) all accounts receivable (including rights to earned but unbilled revenue) and prepayments, in each case attributable exclusively to the Business and accrued or outstanding on the Closing Date. 2 "Business" -- means collectively: (a) the regulated natural gas distribution business conducted by Citizens within the State of Louisiana through its Louisiana Gas Service division; (b) the nonregulated natural gas transportation and sales business conducted by Citizens within the State of Louisiana through its LGS Intrastate Company division; (c) the nonregulated natural gas supply, storage and transmission activities conducted by LGSN within the State of Louisiana; and (d) the provision of related services and products and the engagement in related activities by Citizens, through its Louisiana Gas Service division and its LGS Intrastate Company division, and by LGSN, in each case within the State of Louisiana. "Claim Notice" -- means a written notice of a claim given by a party seeking indemnification pursuant to the terms of this Agreement that specifies in reasonable detail the nature of the Losses and the estimated amount of such Losses. "Confidentiality Agreement" -- means the confidentiality agreement dated October 20, 1999, between Buyer and Citizens. "Consent" -- any approval, consent, ratification, waiver, or other authorization from any Person. "Contract" -- any agreement, contract, document, instrument, obligation, promise or undertaking (whether written or oral) that is legally binding, including Easements. "Division Assets" -- all of the assets, property and interests of every type and description, real, personal or mixed, tangible and intangible, of Citizens and relating primarily to the Business as engaged in by Citizens through the Louisiana Gas Service (also known as LGS Gas) division of Citizens or the LGS Intrastate Company division of Citizens, other than the Excluded Assets. "Easements"-- means all easements, servitudes, rights of way, permits, licenses, and other ways of necessity, whether or not of record. "Encumbrance" -- any charge, adverse claim, lien, mortgage, pledge, security interest, imperfection in title, limitation, Easement, restriction or other encumbrance of any kind. "Environmental Law"-- any Order or Legal Requirement, and any judicial and administrative interpretation thereof and related policies, guidelines and standards, relating to pollution or protection of the environment and natural resources, including those relating to (a) emissions, discharges, Releases or threatened Releases of Hazardous Material into the environment (including ambient air, surface water, groundwater or land), and (b) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Material, each as in effect as of the date of determination. 3 "Environmental Liability" -- means any liability, responsibility or obligation arising out of or relating to: (a) the presence of any Hazardous Material in the fixtures, structures, soils, groundwater, surface water or air on, under or about or emanating from the assets and properties currently or formerly used, operated, owned, leased, controlled, possessed, occupied or maintained by a Person, and any such Hazardous Material emanating to adjoining or other properties; (b) the use, generation, production, manufacture, treatment, storage, disposal, Release, threatened Release, discharge, spillage, loss, seepage or filtration of Hazardous Materials by a Person or its employees, agents or contractors from, on, under or about the assets or properties currently or formerly used, operated, owned, leased, controlled, possessed, occupied or maintained by such Person or the presence therein or thereunder of any underground or above-ground tanks for the storage of fuel oil, gasoline and/or other petroleum products or by-products or other Hazardous Material; (c) the violation or noncompliance or alleged violation or noncompliance by a Person or its employees, agents or contractors of any Environmental Law arising from or related to its or their conduct, actions or operations or the former or current use, operation, ownership, lease, possession, control, occupancy, maintenance or condition of any of such Person's former or current assets or properties; (d) the failure by a Person or its employees, agents, or contractors to have obtained or maintained in effect any certificate, permit or authorization required by any Environmental Law as a result of its or their conduct, actions or operations or the use, operation, ownership, lease, control, possession, occupancy, maintenance or condition of such Person's assets or properties; (e) any and all Proceedings arising out of any of the above-described matters, including Proceedings by Governmental Bodies for enforcement, cleanup, removal, treatment, response, remedial or other actions or damages and Proceedings by any third Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief; and (f) any and all remedial work and other corrective action (including investigation or monitoring of site conditions, or any clean-up, containment, restoration or removal) taken by, or the costs of which are imposed upon, a Person arising from any of the above-described matters. "ERISA" - the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and regulations and rules issued pursuant to that act or any successor law. "ERISA Affiliate" -- any corporation or trade or business (whether or not incorporated) which is, as of the date of this Agreement or at any time within the six years preceding the date hereof would be treated as a single employer under IRC Section 414. "Excluded Assets" -- means the following assets of Citizens or LGSN, each of which shall be excluded from the Assets, and not acquired by Buyer, at Closing: 4 (a) assets that Citizens uses in both the Business and in Citizens' other gas, electric, communications or water businesses that are described generally in Schedule 1.1(b), and Contracts regarding the procurement of services or goods by Citizens for use in such other businesses; (b) cash and cash equivalents in transit, in hand or in bank accounts; (c) except as otherwise set forth in Article X, assets attributable to or related to a Benefit Plan of Citizens; (d) the stock record and minute books of Citizens and LGSN, all records prepared in connection with the sale of the Business (including bids received from third parties and analysis relating to the Business), and duplicate copies of all books and records transferred to Buyer; (e) assets disposed of by Citizens or LGSN after the date of this Agreement to the extent such dispositions are not prohibited by this Agreement; (f) except to the extent set forth in Section 3.3, rights to refunds of Taxes payable with respect to the Business, assets, properties or operations of Citizens, LGSN or any member of any affiliated group of which either of them is a member; (g) accounts owing, by and among Citizens, LGSN and their Affiliates; (h) all deferred Tax assets; (i) any insurance policy, bond, letter of credit or other similar item, any cash surrender value in regard thereto, and all rights to insurance or condemnation proceeds except to the extent provided in clause (h) in the definition of Assets set forth in Section 1.1; (j) the Citizens Marks; (k) the capital stock of LGSN; and (l) the other assets listed on Schedule 1.1(b). "Final Order" -- an action by a Governmental Body as to which: (a) no request for stay of the action is pending, no such stay is in effect and if any time period is permitted by statute or regulation for filing any request for such stay, such time period has passed; (b) no petition for rehearing, reconsideration or application for review of the action is pending and the time for filing any such petition or application has passed; (c) such Governmental Body does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, or a request for stay by a court of the Governmental Body's action is pending or in effect and the deadline for filing any such appeal or request has passed. "GAAP" -- generally accepted United States accounting principles, applied on a consistent basis. 5 "General Order" - means any Order applicable generally to Persons engaged in a business similar to the Business. "General Proceeding" - means any Proceeding that is reasonably expected to result only in a General Order. "Governmental Body" -- any of the following that possesses competent jurisdiction: (a) foreign, federal, state, county, parish, local, municipal or other governmental body; (b) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal); or (c) any governmental body entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or Tax authority or power of any nature. "Hazardous Materials" -- any waste or other chemical, material or substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, toxic, or a pollutant or a contaminant, or words of similar import, under or pursuant to any Environmental Law, including any admixture or solution thereof, and specifically including oil, natural gas, petroleum and all derivatives thereof or synthetic substitutes therefor, asbestos or asbestos-containing materials, any flammable substances or explosives, any radioactive materials, any toxic wastes of substances, urea formaldehyde foam insulation, toluene or polychlorinated biphenyls. "HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any successor law, and regulations and rules issued by the U.S. Department of Justice or the Federal Trade Commission pursuant to that act or any successor law. "IRC" - the Internal Revenue Code of 1986, as amended. "IRS" -- the Internal Revenue Service or any successor agency. "Knowledge" -- means, (i) with respect to Sellers, the actual knowledge of Citizens' Chief Financial Officer; President, Citizens Public Services; or the Vice President and General Manager of Louisiana Gas Services, or their respective successor, after reasonable investigation required for the transactions contemplated hereby, and (ii) with respect to Buyer, the actual knowledge of Buyer's Chief Financial Officer; Executive Vice President of Utility Operations; or Vice President and Treasurer, or their respective successor, after reasonable investigation required for the transactions contemplated hereby; provided that no party shall be required to perform an environmental assessment for purposes of this definition. "Legal Requirement" -- any federal, state, county, parish, local, municipal, foreign, international, multinational, or other administrative Order, constitution, law, ordinance, adopted code, principle of common law, regulation, rule, directive, approval, notice, tariff, franchise agreement, statute or treaty. 6 "LGSN Assets" -- means all of the assets, property and interests of every type and description, real, personal or mixed, tangible and intangible, of LGSN, other than the Excluded Assets. "Losses" -- shall mean all claims, losses, liabilities, damages, causes of action, costs and expenses (including, involving theories of negligence or strict liability and including court costs and reasonable attorneys' fees and disbursements in connection therewith), whether or not involving a third party claim. "LPSC" - shall mean the Louisiana Public Service Commission. "Material Adverse Effect" -- an occurrence or condition that has a material adverse effect on the Business, the Assets, or the liabilities, operations, financial condition or results of operations of the Business. In each instance, whether an occurrence has a material adverse effect will be determined after taking into account the totality of the facts and circumstances relating to such occurrence or condition, or to its effect, including mitigating factors such as insurance, rate or other regulatory relief and third party contribution obligations. For purposes of this Agreement, an occurrence or condition will not constitute a Material Adverse Effect if it arises from general business, economic, or financial market conditions; from conditions generally affecting the industries in which the Business competes; or from the transactions contemplated by this Agreement. "Material Contract" -- a Contract relating primarily to the Business and involving a total commitment by or to any party thereto of at least $100,000 on an annual basis and which cannot be terminated by Citizens or LGSN with notice of ninety (90) days or less without penalty to Citizens or LGSN. "Order" -- any award, decision, injunction, judgment, order (including any rule-making order), writ, decree, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, other Governmental Body, or by any arbitrator, each of which possesses competent jurisdiction. "Organizational Documents" -- the articles or certificate of incorporation and the bylaws of a corporation or the comparable organizational and governing documents of other Persons. "Permitted Encumbrances" -- means any of the following: (a) mechanics', carriers', workers' and other similar liens arising in the ordinary course of business and which in the aggregate are not substantial in amount and do not interfere with the present use of the Assets to which they apply; (b) liens for current Taxes and assessments not yet due and payable; (c) with respect to any parcel of owned Real Property or Easements, all nonmonetary Encumbrances (whether or not the same are recorded) that do not and will not materially interfere with the operation of that portion of the Business currently conducted on such real property or result in any absence, loss or reversion of, or inability to transfer, title or any termination of the right of use with respect thereto; 7 (d) all applicable zoning ordinances and land use restrictions; (e) with respect to any Asset which consists of a leasehold or other possessory interest in real property, all Encumbrances, covenants, imperfections in title, Easements, restrictions and other title matters (whether or not the same are recorded) to which the underlying fee estate in such real property is subject that do not currently interfere materially with the operation of that portion of the Business currently conducted on such property; and (f) any other Encumbrances affecting the Assets that are disclosed in Schedule 5.5. "Person" -- any individual, corporation (including any nonprofit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or Governmental Body. "Proceeding" -- any claim, action, arbitration, hearing, noticed investigation, litigation, suit or other proceeding commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator. "PUHCA" - the Public Utility Holding Company Act of 1935, as amended, or any successor law, and regulations and rules issued by the SEC pursuant to that act or any successor law. "Real Property" -- all real property owned or leased by Citizens or LGSN in the operation of the Business, together with all interests in real property (including Easements) used or held for use by Citizens or LGSN in the operation of the Business. "Related Documents" -- any Contract provided for in this Agreement to be entered into by one or more of the parties hereto in connection with the transactions contemplated by this Agreement. "Release" -- any presence, emission, dispersal, disposal, spilling, leaking, emitting, discharging, depositing, pumping, pouring, escaping, leaching, dumping, releasing or migration into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or in, into or from any facility, including the movement of any Hazardous Materials through the air, soil, surface water, groundwater or property. "Representative" -- with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors. "Rhodes Investigation" - means the Proceeding of the LPSC relating to LPSC Docket No. U-23812, In Re: An investigation into the allegation filed by the plaintiffs against the defendants in case No. 532-058 in the 24th JDC. "Rhodes Lawsuit" -- means the Proceeding styled "The Rhodes Company, Inc. et al. v. Citizens Utilities Company, et al., Case No. 532-058", filed in the 24th JDC, Jefferson Parish, 8 Louisiana, and any additional claims made or brought by any other claimant or class of claimants that alleges claims in respect of the conduct that is the subject matter of such Proceeding, whether in the periods covered by such Proceeding or in other periods. "Rhodes Proceedings" -- means the Rhodes Lawsuit and the Rhodes Investigation. "SEC" -- the United States Securities and Exchange Commission or any successor agency. "Tax" -- any federal, state, local or foreign tax (including any income tax, capital gains tax, value-added tax, sales and use tax, franchise tax, payroll tax, withholding tax or property tax, ad valorem tax, transfer tax, profits tax, license tax, lease tax, service or use tax, employment tax, excise tax, severance tax, stamp tax, occupation tax, windfall profits tax, utility tax or gross receipts tax), levy, assessment, tariff, duty (including any customs duty), deficiency, franchise fee or payment, any liability in respect of any tax as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, or other fee or payment, and any related charge or amount (including any fine, penalty, interest or addition to tax), imposed, assessed or collected by or under the authority of any Governmental Body. "Tax Return" -- any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax. "Threatened" -- a claim, dispute, or other matter will be deemed to have been "Threatened" if any demand or statement has been made, or any notice has been given, and either Seller has Knowledge of the same. Section 1.2 Other Defined Terms. In addition to the terms defined in Section 1.1, certain other terms are defined elsewhere in this Agreement as indicated below and, whenever such terms are used in this Agreement, they shall have their respective defined meanings. Term Section ---- ------- Act 4.10 Active Employees 10.1 Antitrust Authorities 6.3(a) Assumed Liabilities 2.3 Balance Sheet 5.6(a) Buyer Indemnitees 13.1 Buyer's Pension Plan 10.5(b) Buyer Welfare Plans 10.7(a) CERCLA 5.14(e) Citizens Preamble Citizens Marks 6.4 Citizens' Pension Plan 10.5 Closing 8.1 Closing Date 8.1 9 Employee Plans 5.13(a) Environmental Data 12.1(c) Estimated Purchase Price 3.3(a) Financial Statements 5.6(a) LGSN Preamble Purchase Price 3.1 Retained Liabilities 2.4 Sellers Indemnitees 13.2 Sellers' 401(k) Plan 10.6(a) Sellers Welfare Plan 10.7(a) Sellers Preamble Transaction Taxes 11.3 Transferred Employee 10.1 ARTICLE II PURCHASE AND SALE Section 2.1 Purchase and Sale of LGSN Assets. Upon the terms and subject to the conditions contained herein, at the Closing, LGSN shall sell, transfer, and deliver to Buyer, and Buyer shall purchase and accept delivery from LGSN, all of the LGSN Assets free and clear of all Encumbrances other than Permitted Encumbrances. Section 2.2 Purchase and Sale of Division Assets. Upon the terms and subject to the conditions contained herein, at the Closing, Citizens shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase and accept delivery from Citizens, all of the Division Assets free and clear of all Encumbrances other than Permitted Encumbrances. Section 2.3 Assumed Liabilities. In further consideration for the sale of the Division Assets and the LGSN Assets, at the Closing, Buyer will assume and agree to pay, perform and discharge when due, all liabilities and obligations relating to or arising from the following: (a) Performance of (i) the Contracts listed on Schedule 5.12, (ii) the Contracts that have been entered into in the ordinary course of the Business that are not required to be listed on Schedule 5.12 by the express terms of Section 5.12 or other Contracts inadvertently omitted from Schedule 5.12 entered into in the ordinary course of the business to the extent that the performance of such contract is reflected in the financial performance of the Business as of the date hereof, (iii) the Contracts that are entered into in the ordinary course of the Business after the date hereof in accordance with this Agreement and (iv) franchises, licenses, permits, authorizations, ordinances and similar agreements listed on Schedule 1.1(a) or held in the ordinary course of the Business to the extent included among the Assets (except that Buyer shall not assume any liabilities or obligations for any breach, default or violation by, or payment obligations of, Citizens or LGSN under any such Contract, franchise, license, permit, ordinance or similar agreement occurring or arising or accruing on or prior to the Closing Date); (b) Customer advances, customer deposits and construction advances, unperformed customer service obligations, Easement relocation obligations, and continuation of construction work in progress and other capital expenditure projects, in each case relating to the 10 Business, arising in the ordinary course of business consistent with past practices and outstanding on or arising after the Closing Date (except that Buyer shall not assume any liabilities or obligations for any breach or default by Citizens or LGSN with respect to any such matters); (c) Items addressed in Section 3.1(a) or (b) to the extent resulting in a decrease in the Purchase Price; and (d) All accounts payable of Sellers relating to the Business, other than payable to a Seller or any of its Affiliates, and outstanding as of the Closing Date. The liabilities, responsibilities and obligations to be assumed by Buyer pursuant to this Section 2.3 are hereinafter collectively referred to as the "Assumed Liabilities." Notwithstanding anything in this Section 2.3 to the contrary, "Assumed Liabilities" shall not include any liabilities, responsibilities or obligations expressly stated to be Retained Liabilities pursuant to Section 2.4. Section 2.4 Retained Liabilities. Buyer shall not assume and at the Closing Sellers shall retain, be responsible for and pay, perform and discharge when due, all of the liabilities and obligations relating to or arising from the following (collectively referred to herein as the "Retained Liabilities"): (a) any indebtedness for money borrowed by Citizens or LGSN (including items due to a Seller or its Affiliates) other than payment obligations arising after the Closing Date (i) under any equipment lease listed in Part VIII of Schedule 5.12, (ii) under any line extension Contracts or similar construction arrangements and (iii) in respect of customer deposits or advances, it being understood and agreed that such leases, Contracts, deposits, advances and similar arrangements do not create indebtedness for money borrowed; (b) Taxes of Citizens or LGSN or any of their Affiliates; (c) Excluded Assets; (d) Non-Transferred Employees, the Employee Plans and the Employee Agreements (except in each case to the extent otherwise provided in Article X) and any breach or default by, or obligations of, Citizens or LGSN with respect to any Transferred Employee occurring, arising or accruing on or prior to the Closing Date or occurring, arising or accruing with respect to any event which occurred on or prior to the Closing Date (except to the extent any such obligation becomes the obligation of Buyer in accordance with Article X); (e) the Proceedings listed on Schedule 5.8 and all other Proceedings, other than General Proceedings, involving Citizens or LGSN, the Assets or the Business based on conduct (including Citizens' or LGSN's performance under any Contract included among the Assets), action, facts, circumstances or conditions existing, arising or occurring on or before the Closing Date; (f) Environmental Liabilities with respect to any action, fact, circumstance or condition to the extent existing, arising or occurring on or before the Closing Date other than with respect to the existence of non-friable asbestos and asbestos-containing materials (to the extent the 11 same do not violate existing Environmental Law) and any post-Closing activity that disturbs asbestos or asbestos-containing materials; (g) any obligation or liability owing to either Seller or any of their Affiliates; and (h) all other liabilities or obligations, whether known or unknown, accrued or contingent, of Citizens or LGSN relating to or arising from the ownership or use of the Assets or the operation or conduct of the Business by Citizens or LGSN (or their predecessors in interest) on or before the Closing Date that is not an Assumed Liability or that becomes the responsibility of Buyer as provided in Article X. Section 2.5 Condition on Assignment or Assumption of Contracts and Rights. Any transfer or assignment to Buyer by a Seller of any property or property rights or any Contract which requires the Consent of any third party shall be made subject to such Consent being obtained. If such Consent is not obtained, or if an attempted assignment thereof would be ineffective or would affect the rights of a Seller thereunder so that Buyer would not in fact receive all such rights, such Seller will cooperate with Buyer in any arrangement reasonably designed to provide for Buyer, at Buyer's cost (to the extent commercially reasonable), the benefits under any such Contract including, enforcement for the benefit of Buyer of any and all rights of such Seller against a third party thereto arising out of the breach or cancellation by such third party or otherwise. To the extent that Buyer does receive the benefits of any such Contract pursuant to the preceding sentence, such Contract shall be a Contract deemed to have been assigned or transferred to Buyer pursuant to Section 2.3. Notwithstanding the foregoing, the provision under this Section 2.5 of benefits of any Contract identified with an asterisk on Schedule 5.3 shall not satisfy the condition required by Section 7.2 (d) for the receipt of a Consent with respect thereto, unless such condition is expressly waived by Buyer. ARTICLE III PURCHASE PRICE Section 3.1 Purchase Price. Subject to the terms and conditions of this Agreement, the aggregate purchase price for the LGSN Assets and the Division Assets (the "Purchase Price") shall be an amount equal to $375,000,000 in cash (representing the sum of the purchase price for the LGSN Assets of $19,237,500 and the purchase price for the Division Assets of $355,762,500), as adjusted in accordance with the provisions of this Section 3.1 and with such adjustments determined pursuant to Section 3.2. (a) Such amount will be decreased by the aggregate amount of all capitalized lease obligations under the equipment lease listed as item 2 in Part VIII of Schedule 5.12 or any other capitalized lease. (b) Such amount will be decreased or increased, as appropriate, by an aggregate amount equal to the total amount payable to or by Buyer pursuant to Section 3.3. Section 3.2 Calculation of Purchase Price. 12 (a) The portion of the Purchase Price apportioned to the LGSN Assets shall be adjusted as provided in clauses (a) and (b) of Section 3.1 to the extent such adjustments relate to LGSN, and the portion of the Purchase Price apportioned to the Division Assets shall be adjusted as provided in clauses (a) and (b) of Section 3.1 to the extent such adjustments relate to the portion of the Business conducted with the Division Assets. Any of the items included in clauses (a) and (b) of Section 3.1 that cannot be calculated in a timely fashion as of the Closing Date shall be estimated by Sellers in good faith based upon the account balance of such item at the end of the month for which Sellers' books are closed next preceding the Closing Date, with such adjustments as may be appropriate to reflect changes in such account balance occurring between such month-end and the Closing Date. Any such estimated amounts shall be set forth in a certificate of Sellers delivered to Buyer at least five (5) business days prior to the Closing Date, which certificate shall set forth an estimate of the Purchase Price (the "Estimated Purchase Price"), including such estimated amounts and shall be accompanied by reasonably detailed supporting documentation. (b) Within one hundred twenty (120) days after the Closing Date, Sellers shall notify Buyer of the actual amount as recorded on Sellers' books and records for the Business of any items that were estimated in arriving at the Estimated Purchase Price, as well as the prorations and adjustments required to be made under Section 3.3. Buyer may dispute any amount so determined by Sellers, by written notice to Sellers within forty-five (45) days after receipt of Sellers' notice. If Buyer does not so dispute any item, the party owing the difference between the Estimated Purchase Price and the Purchase Price shall pay such difference to the other party within ten (10) days after the expiration of such forty-five (45) day period, plus interest at 8.25% per annum on such amount from the Closing Date to (but not including) the date of payment. If Buyer disputes the actual amount of any item, the undisputed amount plus interest at 8.25% per annum on such amount from the Closing Date to (but not including) the date of payment shall be paid promptly by the owing party. If such dispute cannot be resolved within sixty (60) days after the giving of Buyer's notice that there exists a disputed amount, then a nationally recognized independent accounting firm mutually agreeable to Buyer and Citizens shall, upon written notice from either Buyer or Citizens, resolve such dispute within sixty (60) days after receipt of such notice. The fees and expenses of such independent accounting firm shall be allocated between Buyer and Sellers so that Sellers' share of such fees and expenses shall be in the same proportion that the aggregate amount of such remaining disputed amounts so submitted by Buyer to such accounting firm that is unsuccessfully disputed by Buyer (as finally determined by such accounting firm) bears to the total amount of such remaining disputed amounts so submitted by Buyer to such accounting firm. Any determination by such independent accounting firm shall be binding and conclusive upon the parties without further appeal therefrom. Within ten (10) days after the independent accounting firm shall have resolved such dispute, the party owing the determined amount shall pay such determined amount to the other party, plus interest at 8.25% per annum on such determined amount from the Closing Date to (but not including) the date of payment. Section 3.3 Prorations and Adjustments as of the Closing Date. (a) Buyer and Sellers agree that the following items relating to the Assets and the Business shall be adjusted and allocated as of the Closing Date, with Sellers to be responsible for and to receive the benefit of the same for the period through and including the Closing Date and Buyer to be responsible for and to receive the benefit of the same after the Closing Date; 13 (i) real and personal property taxes, assessments and annual registration fees; (ii) water, sewer and other similar types of taxes, and installments on special benefit assessments and regulatory assessments; (iii) electric, gas, telephone and other utility charges; (iv) expenses relating to Transferred Employees, including payroll expenses, payroll Taxes, reimbursable employee business expenses and the financial cost of the accrued vacation time of the Transferred Employees; (v) rents under leases transferred to or assumed by Buyer to the extent not included in the accounts payable of the Business; (vi) charges under maintenance, service and other Contracts and fees under licenses transferred to or assumed by Buyer to the extent not included in the accounts payable of the Business; (vii) deposits of Citizens or LGSN to the extent transferable to Buyer; (viii) prepaid expenses and prepayments, and accrued expenses to the extent not included in the accounts payable of the Business; (ix) sales, franchise, gross receipts and other similar Taxes based upon revenues; and (x) petty cash. (b) The items listed in Section 3.3(a) above shall be estimated item by item by Sellers and reflected on the certificate and supporting documentation to be delivered to Buyer pursuant to Section 3.2(a) and finally determined in accordance with Section 3.2(b). ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers as follows: Section 4.1 Organization, Existence and Qualification. Buyer is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Texas and the Commonwealth of Virginia, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, to perform its obligations under all Contracts to which it is a party, and to execute and deliver this Agreement and the Related Documents to which Buyer is a party. Buyer is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state in which the failure to be so qualified or in good standing would materially adversely affect the business or 14 properties of Buyer. Buyer is, or by Closing will be, duly qualified and in good standing as a foreign corporation licensed to do business in the State of Louisiana. Section 4.2 Authority Relative to this Agreement and Binding Effect. The execution, delivery and performance of this Agreement and the Related Documents by Buyer have been duly authorized by Buyer's Board of Directors, which constitutes all necessary corporate action required on the part of Buyer for such authorizations. The execution, delivery and performance of this Agreement and the Related Documents by Buyer will not result in (a) any conflict with or breach or violation of or default under the Organizational Documents of Buyer, or (b) a violation or breach of any term or provision of, or constitute a default or accelerate the performance required under, any indenture, mortgage, deed of trust, security agreement, loan agreement, or Contract to which Buyer is a party or by which its assets are bound, or (c) a violation of any Order of any Governmental Body. This Agreement constitutes, and the Related Documents to be executed by Buyer when executed and delivered will constitute, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by (i) bankruptcy or similar laws from time to time in effect affecting the enforcement of creditors' rights generally or (ii) the availability of equitable remedies generally. Section 4.3 Governmental and other Required Consents. Except for those Consents described in Schedule 4.3 and except as set forth in Schedule 5.3 to the extent (but only to the extent) applicable to Buyer, no Consent of any Governmental Body or third Person is required to be obtained by Buyer in connection with the execution and delivery by Buyer of this Agreement or the Related Documents or the consummation of the transactions contemplated by this Agreement or the Related Documents. Section 4.4 Availability of Funds. Buyer has available, and will have available on the Closing Date, or has written commitments from responsible financial institutions to provide, sufficient funds to enable it to consummate the transactions contemplated by this Agreement. Section 4.5 Filings. No statement furnished by Buyer for inclusion in any filing with any Governmental Body in connection with obtaining such Governmental Body's Consent for the consummation of the transactions contemplated by this Agreement will contain, as of the date such information is so provided, any untrue statement of a material fact or will omit to state, as of the date such information is so provided, any material fact which is necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. Section 4.6 Brokers. Except for S.G. Barr Devlin, no broker or finder has acted for or on behalf of Buyer or any Affiliate of Buyer in connection with this Agreement or the transactions contemplated by this Agreement. No broker or finder is entitled to any brokerage or finder's fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of Buyer or any Affiliate of Buyer for which a Seller or any Affiliate of a Seller has or will have any liability or obligations (contingent or otherwise). Section 4.7 Independent Investigation. Buyer is knowledgeable about the businesses engaged in by Citizens through its LGS and LGS Intrastate Company divisions and by LGSN and of the usual and customary practices of companies engaged in businesses similar to such businesses and has had access to the Assets, the officers and employees of Sellers, and the books, 15 records and files of Sellers relating to the Business, the Assets and LGSN. In making the decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has relied solely on the basis of its own independent due diligence investigation of the Business and upon the representations and warranties made herein or in any other document or instrument delivered by Sellers pursuant hereto. Section 4.8 Public Utility Holding Company Status; Regulation as a Public Utility. Buyer is a "public utility company" (as such term is defined in PUHCA). Neither Buyer nor any of its Affiliates is a "holding company" of a "public utility company" or of a "holding company," within the meaning of such terms in PUHCA, and Buyer is not a "subsidiary" or an "affiliate" of a "holding company" within the meaning of the PUHCA. Section 4.9 Buyer's Financial Statements. Buyer has heretofore delivered to Sellers complete and correct copies of the following: (a) its annual report to shareholders of its most recently ended fiscal year, (b) its Annual Report on Form 10-K for the same fiscal year, as filed with the SEC, (c) its proxy statement relating to its most recent Annual Meeting of Shareholders and (d) its quarterly reports on Form 10-Q for any fiscal quarters ended after the fiscal year described in clause (a). The consolidated financial statements of Buyer contained therein were prepared in accordance with GAAP applied on a consistent basis, except for changes concurred in by Buyer's accountants and disclosed in said financial statements, throughout the periods specified, and present fairly in all material respects the financial condition and results of operations of the businesses of Buyer as of the dates thereof and for the periods then ended (subject, in the case of unaudited financial statements, to normal year-end adjustments and the omission of footnote disclosure). ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS Sellers jointly and severally represent and warrant to Buyer as follows: Section 5.1 Organization, Existence and Qualification. (a) Citizens is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct the Business as it is now being conducted, to own or use the Division Assets, to perform its obligations under all Contracts to which it is a party, and to execute and deliver this Agreement and the Related Documents to which Citizens is a party. Citizens is duly qualified to do business as a foreign corporation and is in good standing under the laws of the State of Louisiana and each other state in which the failure to be so qualified or in good standing would have a Material Adverse Effect. (b) LGSN is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana. LGSN is the only Affiliate of Citizens engaged in the Business. LGSN has all the requisite corporate power and corporate authority to own the LGSN Assets which it purports to own and to own, lease, and operate its portion of the Business as and in the place where such business is now conducted and where such LGSN Assets are now owned or leased or operated. Except for LGSN's 18.6% membership interest in Pine Pipeline Acquisition Company, L.L.C., LGSN does not own any equity or ownership interest of any other Person and has 16 no subsidiaries. The LGSN Assets purported to be owned by LGSN and the portion of the Business conducted by LGSN are located and conducted only in the State of Louisiana and LGSN is not required to be qualified to do business as a foreign corporation in any other state as a result of its ownership of the LGSN Assets or its conduct of the portion of the Business conducted by LGSN. Section 5.2 Authority Relative to this Agreement and Binding Effect. The execution, delivery and performance of this Agreement and the Related Documents by Sellers have been duly authorized by all requisite corporate action. Except as set forth in Schedule 5.2, the execution, delivery and performance of this Agreement and the Related Documents by Sellers will not result in (a) any conflict with or breach or violation of or default under the Organizational Documents of Citizens or LGSN, (b) a violation or breach of any term or provision of, or constitute a default or accelerate the performance required under, any indenture, mortgage, deed of trust, security agreement, loan agreement, or other Contract listed or that would be required to be listed in Schedule 5.12 if in existence on the date hereof to which Citizens or LGSN is a party or by which any of the Assets are bound, or (c) a violation of any Order of any Governmental Body. This Agreement constitutes and the Related Documents to be executed by Sellers when executed and delivered will constitute valid and binding obligations of Sellers, enforceable against Sellers in accordance with their terms, except as enforceability may be limited by (i) bankruptcy or similar laws from time to time in effect affecting the enforcement of creditors' rights generally or (ii) the availability of equitable remedies generally. Section 5.3 Governmental and Other Required Consents. Except as set forth in Schedule 5.3, no material Consent of any Governmental Body, and no Consent of any other third Person under any Contract listed or that would be required to be listed in Schedule 5.12 if in existence on the date hereof, is required to be obtained by Citizens or LGSN in connection with the execution and delivery by Sellers of this Agreement or the Related Documents or the consummation by Sellers of the transactions contemplated by this Agreement or the Related Documents. Section 5.4 Filings. No statement furnished by Sellers for inclusion in any filing with any Governmental Body in connection with obtaining such Governmental Body's Consent for the consummation of the transactions contemplated by this Agreement will contain, as of the date such information is so provided, any untrue statement of a material fact or will omit to state, as of the date such information is so provided, any material fact which is necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. Section 5.5 Title to Assets; Encumbrances. (a) Except as set forth in Schedule 5.5, Citizens has good and valid title to the Division Assets and LGSN has good and valid title to the LGSN Assets, including in each case those reflected in the 1999 Financial Statements, except, in each case, with respect to Assets disposed of since December 31, 1999 in the ordinary course of business consistent with past practice or otherwise disposed of in accordance with this Agreement and except for any Permitted Encumbrances. None of the Assets is subject to any Encumbrance except Permitted Encumbrances. Schedule 5.5 lists each material parcel of Real Property owned in fee simple that is a part of the Assets. Except as set forth in Schedule 5.5, Citizens or LGSN owns or possesses all material Easements necessary to conduct the Business as now being conducted without any known conflict with the rights of others. Citizens or LGSN enjoys peaceful and undisturbed possession under all 17 material real property leases included in the Assets, neither Citizens nor LGSN is in default, in any material respect, under any of such leases, and all such leases are valid and subsisting and in full force and effect. (b) The Assets, when taken together with the Excluded Assets, include all assets and properties that are necessary for the supply and servicing of the customers of the Business in accordance with the historical supply and service standards of Sellers. The tangible assets included in the Assets, when taken as a whole, are in good operating condition, reasonable wear and tear excepted, and are adequate for the use to which they are being put in the conduct of the Business. (c) No condemnation, expropriation, eminent domain or similar Proceeding is pending or, to the Knowledge of Sellers, Threatened with respect to the Real Property or the Easements. Sellers are in compliance, in all material respects, with all Easements and similar realty interests benefiting or encumbering the Real Property. The Real Property, and all improvements thereon, do not violate, in any material respect, any applicable zoning, construction code or other restriction of any Governmental Body. Section 5.6 Financial Statements. (a) Schedule 5.6(a) sets forth the unaudited balance sheets for the Business as of December 31, 1998 and December 31, 1999 (the "Balance Sheets") and unaudited statements of income of the Business for the respective years then ended (collectively, the "Financial Statements"). Except as set forth in Schedule 5.6(a), the Financial Statements have been prepared on a pre-tax basis in accordance, in all material respects, with the books and records of Sellers and GAAP applied on a basis consistent with prior periods. Except as set forth in Schedule 5.6(a), the Balance Sheets present fairly in all material respects the financial condition of the Business as of their respective dates and the income statements included in the Financial Statements present fairly in all material respects the results of operations of the Business for the respective periods covered thereby. The books and records of Sellers from which the Financial Statements were prepared were complete and accurate in all material respects at the time of such preparation. The 1999 Financial Statements are presented on a consolidated pro-forma basis as described therein and the 1998 Financial Statements are presented on a property-level pro-forma basis as described therein. (b) There are no material liabilities or obligations (whether known or unknown and whether absolute, accrued, contingent or otherwise) of the Business or of Citizens or LGSN arising out of or relating to the Business or the Assets, except (i) Retained Liabilities, (ii) liabilities and obligations reflected in the Balance Sheet as of December 31, 1999, (iii) liabilities and obligations arising since December 31, 1999, in the ordinary course of business consistent with past practice that are not material or that arise under any Contract (including as a result of this Agreement) or Legal Requirement (and as to which Legal Requirement Sellers are in compliance in all material respects), (iv) liabilities and obligations relating to or arising from matters disclosed in Schedule 5.6(b) or another Schedule hereto, (v) those liabilities and obligations that are the subject of Article X, and (vi) those liabilities, which, if outstanding as of the Closing Date, would result in a decrease to the Purchase Price in accordance with Section 3.1(b). (c) Except as set forth in Schedule 5.6(c), since December 31, 1999, (i) the Business has been operated only in the ordinary course consistent with past practice, except for 18 actions taken in connection with the contemplated sale of the Business and this Agreement, which have not been materially adverse to the Business, and except for conversion to the SAP financial reporting system, (ii) neither Citizens nor LGSN has experienced any material damage, destruction or loss (whether or not covered by insurance) with respect to the Business or the Assets, (iii) neither Citizens nor LGSN has been materially affected by any material adverse Order issued by any Governmental Body since such date with respect to the Business other than General Orders or any material adverse change in the amount or structure of rates or tariffs applicable to the Business, (iv) Sellers have not changed their accounting policies or their collection or payment procedures or practices with respect to their accounts receivable or their accounts payable, and (v) there has been no fact, circumstance or event existing or occurring which, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect. Section 5.7 Compliance with Legal Requirements; Governmental Permits; Business Practices. Except as set forth in Schedule 5.7: (a) neither Citizens nor LGSN is in violation, in any material respect, of any Legal Requirement or Order that is applicable to it, to the conduct or operation of the Business, or to the ownership or use of any of the Assets; and (b) Citizens or LGSN possesses all material franchises, permits, licenses, and authorizations from Governmental Bodies required by any applicable Legal Requirement or Order necessary to permit the operation of the Business in the manner in which it is currently being conducted by Citizens or LGSN. Neither Citizens, LGSN nor, to the Knowledge of Sellers, any Affiliate thereof has directly or indirectly given or agreed to give any gift or similar benefit to any customer, subcontractor, supplier, government employee, or other Person who was or is in a possible position to help or hinder Citizens or LGSN with respect to the Business, which gift or benefit could reasonably be expected to (i) subject Citizens, LGSN or the Business or the Assets to any damages or penalties in any civil or criminal Proceeding, or (ii) have, individually or in the aggregate, a Material Adverse Effect. Section 5.8 Legal Proceedings; Outstanding Orders. Except as set forth in Schedule 5.8, there is no pending or Threatened Proceeding (a) that has been commenced against or affecting either Seller (with respect to the Business or the Assets) other than General Proceedings, or (b) as of the date of this Agreement, that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, the transactions contemplated hereby. No Proceeding listed in Schedule 5.8 is reasonably likely to have a Material Adverse Effect; provided that no representation or warranty is made in this sentence with respect to the Proceedings set forth in items I.5 or I.23 in Schedule 5.8. Except as disclosed on Schedule 5.8, there is no outstanding material Order against either Seller which relates to or arises out of the conduct of the Business or the ownership, condition or operation of the Business or the Assets, other than any Orders relating to rates, tariffs and similar matters arising in the ordinary course of business (as to which there is no allegation of a violation) and other than any General Order. Section 5.9 Taxes. Each of Citizens and LGSN has filed all Tax Returns required to be filed by Citizens or LGSN or requests for extensions to file such Tax Returns have been timely filed, such Tax Returns are complete and correct in all material respects, and Citizens or LGSN has paid and discharged or made adequate provision for all Taxes and no other Taxes are payable by Citizens or LGSN with respect to items or periods covered by such Tax Returns. There are no pending or, to Sellers' Knowledge, Threatened audits or other examinations relating to any Tax matters, and no deficiencies have been asserted or, to Sellers' Knowledge, Threatened to be asserted, except as set forth in Schedule 5.9. There are no Tax liens on the Assets. As of the date of this Agreement, 19 neither Citizens nor LGSN has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Tax or the filing of any Tax Return except as set forth in Schedule 5.9. None of the Assets (i) secures any debt the interest on which is tax-exempt under Section 103 of the Code, (ii) is "tax-exempt use property" within the meaning of Section 168(h) of the Code, (iii) is "tax-exempt bond financing property" within the meaning of Section 168(g)(5) of the Code, (iv) is "limited use property" within the meaning of Revenue Procedure 76-30, or (v) is required to be treated as being owned by any other Person pursuant to the provisions of former section 168(f)(8) of the Code. Section 5.10 Intellectual Property. Schedule 5.10 lists all patents, trademarks, service marks and copyrights owned by Citizens or LGSN, and all material third party intellectual property in each case used or held for use by Citizens or LGSN primarily in the operation of the Business other than the Excluded Assets. Citizens or LGSN either (a) owns all right, title, and interest in such intellectual property without any obligation to make any license, royalty or other payment with respect thereto, including, to the Knowledge of Sellers, any license, royalty or other payment resulting from any infringement of any third party rights, or (b) has the right to use pursuant to license, sublicense, agreement, or permission all such intellectual property necessary for the operation of the Business or the Assets. Except as set forth on Schedule 5.10, such ownership rights or rights to use each item of such intellectual property are valid and in full force and effect and are not subject to any maintenance fees, due within one year of the date hereof, and, except for any such intellectual property that is included among the Excluded Assets, will be owned or available for use in the Business on identical terms and conditions immediately subsequent to the Closing hereunder. Sellers have no Knowledge of (i) any infringement or claimed infringement by Citizens or LGSN of any patent, trademark, service mark, copyright or other intellectual property of others or (ii) any infringement of any patent, trademark, service mark, copyright or other intellectual property owned by or under license to Citizens or LGSN. Section 5.11 Y2K Compliance. The information technology systems used by Citizens and LGSN with respect to the Business are designed to be used during and after the calendar year 2000, and will operate during such time period, without error relating to the date data, specifically including any error relating to, or the product of, date data which represents or references different centuries or more than one century, except to the extent any failure to operate or any such error would not result in a Material Adverse Effect. Section 5.12 Material Contracts; Customers. (a) Except for (i) Contracts listed in Schedule 5.12, (ii) Easements, line extension Contracts and similar construction arrangements and (iii) Contracts included among the Excluded Assets, as of the date hereof, neither Citizens nor LGSN is a party to any Contract (1) which is a gas supply, transportation or storage agreement relating to the Business involving a minimal annual payment by any party thereto of more than $100,000, (2) the loss of which would have a Material Adverse Effect, (3) pursuant to which Citizens (with respect to the Business) or LGSN is subject to take-or-pay obligations with respect to gas purchases or gas marketing, (4) which constitutes a lease of material Real Property; (5) which restricts the operation of the Business or the Assets, (6) which constitutes a guarantee or similar arrangement other than surety instruments issued in the ordinary course of business, or (7) which otherwise constitutes a Material Contract. Except as disclosed in Schedule 5.12, each of the Contracts listed on Schedule 5.12 and each line extension Contract and 20 similar construction arrangement constitutes a valid and binding obligation of Citizens or LGSN and, to the Knowledge of Sellers, constitutes a valid and binding obligation of the other parties thereto, is in full force and effect, and, subject to obtaining any required Consent of the other parties thereto (as set forth on Schedule 5.3 with respect to the Contracts listed on Schedule 5.12), may be transferred to the Buyer pursuant to this Agreement and will continue in full force and effect thereafter, in each case without breaching the terms thereof or resulting in the forfeiture or impairment of any rights thereunder. Neither Seller has given to or received from any other party to any of such Contracts or arrangements any notice or other written communication regarding any actual or alleged material breach of or default under any of such Contracts or arrangements that has not been withdrawn, settled or otherwise resolved. Sellers have made available to Buyer copies, which were accurate and complete as of the date so made available, of all Contracts listed on Schedule 5.12. (b) Neither Seller has been involved in any material controversy with any group of similarly situated customers of the Business or with any material suppliers of gas or transportation for the Business during the last three (3) years. Section 5.13 Employee Benefit Matters. (a) Schedule 5.13 lists (i) each "employee benefit plan," as such term is defined in Section 3(3) of ERISA, and any related trust or other funding arrangement, which is covered by any provision of ERISA and which is maintained by Citizens or LGSN for the benefit of the Active Employees or former employees of the Business, or for which Citizens or LGSN has any potential liability ("Employee Benefit Plan"); (ii) each other fringe benefit plan, policy or arrangement, including any related trust or other funding arrangement, currently maintained by Citizens for the benefit of Active Employees or former employees of the Business, which provides for pension, profit-sharing, retirement, deferred compensation, bonuses, severance, incentive compensation, stock purchase, stock options, change in control, disability, medical, dental, life or other employee insurance coverage or similar employee benefits (collectively, together with the Employee Benefit Plans, "Employee Plans"); and (iii) each collective bargaining, union or other employee association agreement, employment, managerial advisory, and consulting agreement, employee confidentiality agreement, and all other material agreements, policies, or arrangements maintained by Citizens or LGSN for the Active Employees or former employees of the Business (collectively, "Employee Agreements"). Citizens has made available to Buyer copies, which were accurate and complete as of the date so made available, of all such documents and (if applicable) summary plan descriptions with respect to such Employee Plans and Employee Agreements, or summary description(s) of any Employee Plans and Employee Agreements, not otherwise in writing. In addition, Citizens has delivered to Buyer, or will deliver to Buyer within 30 days of the date of this Agreement: (i) all employment manuals and policies relating to Employee Plans, Employee Agreements or other employment practices; and (ii) with respect to Citizens' Pension Plan and Citizens' 401(k) Plan, the most recent IRS determination letter for each such Plan. 21 (b) Except as set forth in Schedule 5.13: (i) Other than claims for benefits submitted by participants or beneficiaries, no claim against, or legal proceeding involving Citizens' 401(k) Plan or any Employee Plan is pending or, to Sellers' Knowledge, is threatened. (ii) Neither Citizens, nor LGSN, nor any ERISA Affiliate of Citizens or LGSN has ceased operations at any facility or has withdrawn from any Employee Benefit Plan subject to Title IV of ERISA ("Title IV Plan") in a manner that would subject Citizens or LGSN to liability under ERISA (S)4062(e), (S)4063 or (S)4064. (iii) Neither Citizens, nor LGSN, nor any ERISA Affiliate of Citizens or LGSN has filed a notice of intent to terminate any Title IV Plan or has adopted any amendment to treat any Title IV Plan as terminated, and the PBGC has not instituted proceedings to treat any Title IV Plan as terminated, where such termination could result in potential liability to Buyer. No event has occurred or circumstance exists that may constitute grounds under ERISA (S)4042 for the termination of, or the appointment of a trustee to administer, any Employee Plan. (iv) No funding deficiency exists with respect to any Employee Plan. (v) Neither Citizens nor LGSN has Knowledge of any facts or circumstances that may give rise to any liability of Buyer to the PBGC under Title IV of ERISA. (vi) Neither Citizens nor LGSN nor any ERISA Affiliate of Citizens or LGSN has withdrawn from any Employee Benefit Plan within the meaning given in ERISA (S)3(37)(A) ("Multi-Employer Plan") with respect to which there is any outstanding liability as of the date of this Agreement. No event has occurred or circumstances exists that presents a risk of the occurrence of any withdrawal from, or the participation, termination, reorganization, or insolvency of, any Multi- Employer Plan that could result in any liability of Buyer to a Multi-Employer Plan. (vii) Except to the extent required under ERISA (S)601 et seq. and IRC (S)4980B and except with respect to post-retirement benefits for Retirees and "grandfathered employees" as defined in Section 10.7(b), neither Citizens nor LGSN provides health or welfare benefits for any retired or former employee of the Business or is obligated to provide health or welfare benefits to any active employee of the Business following such employee's retirement or other termination of service. (viii) Except with respect to post-retirement medical, dental and life insurance benefits for the LGS Retirees and "grandfathered employees" as defined in Section 10.7(b), Citizens has the right to modify and terminate such post-retirement benefits to retirees with respect to both retired and active employees of the Business. (ix) Except with respect to post-retirement medical, dental and life insurance benefits for the LGS Retirees and "grandfathered employees" as defined in Section 10.7(b), no commitment or representation has been made by Seller or any of its Affiliates to any Person with regard to any plan providing post retirement medical, dental, or life insurance benefits or 22 Employee Agreement that was not in accordance with such plan or Employee Agreement and that could have a material adverse economic consequence to Buyer. (c) Citizens' Pension Plan and Citizens' 401(k) Plan are the only Employee Benefit Plans which are intended to be qualified under Section 401(a) of the IRC. (d) To the Knowledge of Citizens, each Employee Benefit Plan has been established and administered in all material respects in accordance with the terms of ERISA and the applicable provisions of the IRC. (e) LGSN does not employ and has not at any time since its acquisition by Citizens employed any employees or maintained, sponsored or contributed to any Employee Plans. (f) The LPSC Rate Orders applicable to the Business authorize the recovery of costs associated with retiree medical, dental and life insurance benefits referred to in Section 10.7(b) hereof for the retirees of the Business and Transferred Employees who are "grandfathered employees" as described in Section 10.7(b) on a "pay-as-you-go" method. True and complete copy of such Orders have been previously provided by Citizens to Buyer. Section 5.14 Environmental Matters. (a) Citizens and LGSN hold, and are in compliance in all material respects with, all permits, licenses and governmental authorizations required for the conduct of the Business or the operation of the Assets under applicable Environmental Laws, and Citizens and LGSN are otherwise in compliance, in all material respects, with applicable Environmental Laws with respect to the Business and the Assets. (b) Except as listed in Schedule 5.14, neither Citizens nor LGSN has received any notice, demand, letter, claim or request for information alleging that either Citizens or LGSN is in violation of or subject to liability under any Environmental Law arising out of Citizens' or LGSN's ownership, use or operation of the Assets or the operation of the Business, which has not been resolved or, if resolved, as to which any material obligation or liability remains outstanding. (c) Except as listed in Schedule 5.14, there are no Proceedings pending or Threatened with respect to Citizens' or LGSN's compliance with Environmental Laws and relating to the Business or the Assets. (d) Except as listed in Schedule 5.14, neither Citizens nor LGSN has received any written notice from any Governmental Body that it does not have all certificates, permits and authorizations required by any Environmental Law for its ownership, use or operation of the Assets or the operation of the Business which has not been resolved or, if resolved, as to which any material obligation or liability remains outstanding. (e) To Sellers' Knowledge, Citizens has delivered to Buyer copies of all environmental assessments, audits, studies and other environmental reports in Sellers' possession or reasonably available to either Seller relating to the Real Property or any of the other Assets or which concern the existence or possible existence of Hazardous Materials on, under or adjacent to any of 23 the Real Property or relating to potential Environmental Liability of Citizens or LGSN in connection with the Business or the Assets. Except as set forth in Schedule 5.14, no environmental remediation of any Release is occurring on any Real Property included in the Assets nor has Citizens or LGSN issued a request for proposal or otherwise asked an environmental remediation contractor to begin plans for any such environmental remediation. Except as set forth in Schedule 5.14, to Sellers' Knowledge, there have been no Releases on any Real Property included in the Assets that could reasonably be expected to have a Material Adverse Effect. (f) Except as set forth in Schedule 5.14, none of the Real Property is (i) situated in a federal "Superfund" site or, to Sellers' Knowledge, in any federal "Superfund" study area designated under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), or (ii) to Sellers' Knowledge, situated in any site or study area designated under any state statute comparable to CERCLA. (g) Neither Citizens nor LGSN has entered into or agreed to any Order, and is not subject to any outstanding Order other than a General Order relating to compliance with or liability under any Environmental Law relating to the Business or the Assets. Neither Citizens nor LGSN is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law relating to the Business or the Assets, except customary environmental indemnity arrangements contained in the Contracts described in Parts I, II, IV through VII and XII of Schedule 5.12. (h) To Sellers' Knowledge, the Real Property (including soils, groundwater, surface water, buildings and other structures) is not contaminated, in any material respect, with any Hazardous Materials, it being understood and agreed that, for purposes of this Section 5.14(h), Hazardous Materials shall not include non-friable asbestos or asbestos-containing materials. (i) To Sellers' Knowledge, there are no circumstances or conditions involving the Business or the Assets that could reasonably be expected to result in any material claims, liability, investigations, costs or restrictions on the ownership, operation, use or transfer of any of the Real Property pursuant to any Environmental Law other than with respect to any activity after the date hereof that disturbs asbestos or asbestos-containing materials that causes them to become friable or the removal of asbestos or asbestos-containing materials in connection with any renovation or structural change to any Asset after the date hereof. Section 5.15 Labor Matters. Schedule 5.15 lists with respect to the Business any labor disputes that have arisen during the three (3) year period ending on the date hereof through the grievance and arbitration procedure of any collective bargaining agreements, any Proceedings that are presently pending or have been resolved during the three (3) year period ending on the date hereof through the National Labor Relations Board, and any labor matters that are presently pending or have been resolved during the three (3) year period ending on the date hereof through any court with competent jurisdiction over labor matters. Except to the extent set forth in Schedule 5.8 or in Schedule 5.15, (a) Citizens and LGSN are in compliance, in all material respects, with all Legal Requirements applicable to the Active Employees respecting employment and employment practices, terms and conditions of employment and wages and hours; (b) neither Citizens nor LGSN has received notice of any pending or Threatened unfair labor practice complaint against it before the National Labor Relations Board with respect to any of the Active Employees; (c) neither Citizens nor 24 LGSN has received written notice of any representation petition or other question concerning representation respecting the Active Employees pending or Threatened to be filed with the National Labor Relations Board; and (d) no arbitration proceeding arising out of or under any collective bargaining agreement is pending or Threatened against Citizens or LGSN. No Active Employee is covered by a collective bargaining agreement. Section 5.16 State Regulatory Matters. (a) Schedule 5.16 reflects all of the currently pending rate filings relating to the Business heretofore made by Citizens or LGSN before state regulatory commissions and each other currently pending material Proceeding of such state regulatory commissions, other than any currently pending General Proceeding. (b) All currently effective material filings relating to the Business heretofore made by Sellers with state regulatory commissions were made in compliance in all material respects with Legal Requirements then applicable thereto and the information contained therein was true and correct in all material respects as of the respective dates of such filings. Section 5.17 Public Utility Holding Company Status; Regulation as a Public Utility. Citizens is a "public utility company," but is not a "holding company", a "subsidiary of a public utility," an "affiliate of a public utility company" or "an affiliate of a holding company." LGSN is not a "public utility company," a "holding company" or an "affiliate of a holding company." LGSN is a "subsidiary" and an "affiliate" of Citizens, a public utility company, but neither of such relationships requires the registration of Citizens or LGSN as a holding company under PUHCA. LGSN is not a "subsidiary" or an "affiliate" of any "public utility company" other than Citizens. Terms in quotations have the same meaning as such terms in PUHCA. Section 5.18 Brokers. Except for Morgan Stanley & Co. Incorporated, no broker or finder has acted for or on behalf of Citizens or LGSN or any of their Affiliates in connection with this Agreement or the transactions contemplated by this Agreement. No broker or finder is entitled to any brokerage or finder's fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of Citizens or LGSN or any of their Affiliates for which Buyer or LGSN has or will have any liabilities or obligations (contingent or otherwise). Section 5.19 Insurance. Schedule 5.19 identifies each material insurance casualty and property policy of Citizens or LGSN relating to the Business or the Assets. All such insurance is sufficient to comply with all regulatory and contractual requirements relating to the Business or the Assets. Neither Citizens nor LGSN has received any refusal of coverage or notice of cancellation or non-renewal with respect to any such insurance. Section 5.20 Disclaimer. Except as otherwise expressly set forth in this Agreement or in any other document or instrument delivered by Sellers pursuant hereto, Sellers expressly disclaim any representations or warranties of any kind or nature, express or implied, as to the condition, value or quality of the assets or properties currently or formerly used, operated, owned, leased, controlled, possessed, occupied or maintained by Citizens or LGSN, and, except as so otherwise set forth, Sellers SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR 25 PURPOSE WITH RESPECT TO SUCH ASSETS OR PROPERTIES, OR ANY PART THEREOF, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT. ARTICLE VI COVENANTS Section 6.1 Covenants of Sellers. Sellers jointly agree to observe and perform the following covenants and agreements: (a) Conduct of the Business Prior to the Closing Date. During the ------------------------------------------------- period from the date hereof to the Closing Date, Sellers will operate the Assets and the Business in the usual, regular and ordinary course consistent with past practice and will use all commercially reasonable efforts to (i) preserve intact the Business and preserve the goodwill and relationships with customers, suppliers and others having business dealings with the Business, (ii) maintain the properties, machinery and equipment included in the Assets in sufficient operating condition and repair (subject to retirements in the ordinary course of business consistent with past practice) to enable Buyer to use them as they have been used in conduct of the Business, and (iii) conduct the Business in such manner that the representations and warranties of Sellers contained herein to the extent relating to the Business or the Assets shall be true and correct in all material respects as of the Closing Date as if made on the Closing Date, except for representations and warranties made as of, or in respect of, only a specified date or period, and except to the extent expressly permitted by the next sentence hereof. Without limiting the generality of the foregoing, with respect to the Business, except (i) as contemplated in this Agreement or in Schedule 6.1, (ii) as required by any Legal Requirement or Order or (iii) as otherwise expressly consented to in writing by Buyer prior to the Closing, Sellers will: (1) Not make or permit any material change in the general nature of the Business; (2) Not enter into any material transaction or Contract that would be required to be described on Schedule 5.12 if in existence on the date hereof, other than (a) pursuant to the Capital Budget, (b) the purchase of gas in accordance with the Asset Management Plan described in item II.2 of Schedule 5.8 (the "Asset Management Plan") or (c) in the ordinary course of business consistent with past practices provided Buyer has consented thereto in writing, which consent shall not be unreasonably withheld or delayed; (3) Not purchase, sell, lease, dispose of or otherwise transfer or make any Contract for the purchase, sale, lease, disposition or transfer of, any material Assets other than (a) pursuant to the Capital Budget, (b) the purchase of gas in accordance with the Asset Management Plan or (c) in the ordinary course of business consistent with past practices provided Buyer has consented thereto in writing, which consent shall not be unreasonably withheld or delayed; (4) Not subject any of the Assets to Encumbrances (other than Permitted Encumbrances); 26 (5) Not hire any new employee unless such employee is a bona fide ---- ---- replacement for either a presently-filled position or a vacancy in an authorized position with the Business; (6) Comply in all material respects with all applicable material Legal Requirements and Orders, including those relating to the filing of reports and the payment of Taxes due to be paid prior to the Closing, other than those contested in good faith; (7) Except in the ordinary course of business consistent with past practice or in accordance with the terms of any existing Contract or Employee Plan, not grant any material increase or change in total compensation or benefits to any of the Transferred Employees; not enter into any employment, severance or similar Contract with any Person or amend any such existing Contracts to increase any amounts payable thereunder or benefits provided thereunder; and not enter into any collective bargaining agreement; (8) Not terminate any Material Contract or any other Contract described on Schedule 5.12 except in the case of a breach of such Contract by the other party thereto; (9) Not create, incur, assume, guarantee or otherwise become liable with respect to any indebtedness for money borrowed or capitalized lease other than in the ordinary course of business consistent with past practice (it being understood and agreed that customer advances, customer deposits and construction advances do not create indebtedness for money borrowed), except pursuant to advances made by Citizens to LGSN or the Business; (10) Not make any material change in the levels of storage inventory customarily maintained by Citizens or LGSN with respect to the Business and taking into account seasonal demands and the requirements of the Asset Management Plan, including pursuant to the Contract described as item I.4 in Schedule 5.12; or (11) Not change accounting policies or collection or payment procedures or practices with respect to accounts receivable or accounts payable. (b) Access to the Business, Assets and Records; Updating Information. ---------------------------------------------------------------- (1) From and after the date hereof and until the Closing Date, Sellers shall (A) permit Buyer and its Representatives to have, on reasonable notice and at reasonable times, reasonable access to all books, papers and records to the extent that they reasonably relate to the ownership, operation, obligations and liabilities of the Business and the Assets; provided, however, that such access shall not unreasonably interfere with the operation of the Business; and provided, further, that Buyer hereby agrees to defend, indemnify and hold harmless Sellers from and against all Losses arising out of or relating to the negligence or willful misconduct of Buyer or its Representatives in connection with Buyer's access provided pursuant to this Section 6.1(b)(1); (B) furnish the Buyer with such financial and operating data and other information with respect to the Business as the Buyer may from time to time reasonably request; and (C) furnish the Buyer a copy of each material report, schedule or other document filed or received by either Seller with respect to the Business with any Governmental Body. Without limiting the application of the Confidentiality Agreement, all 27 documents or information furnished by either Seller hereunder shall be subject to the Confidentiality Agreement. (2) Sellers will notify Buyer as promptly as practicable of any significant change in the ordinary course of business for the Business and of any material Proceedings (Threatened or pending) involving or affecting the Business or the transactions contemplated by this Agreement, and shall use reasonable efforts to keep Buyer fully informed of such events. (3) From and after the Closing, so long as any books, records and files retained by Sellers relating to the Assets remain in existence and available, Buyer (at its expense) shall have the right upon prior notice to inspect and to make copies thereof at any time during business hours for any proper purpose, including the preparation of Tax returns. For a period of seven (7) years following the Closing Date, Sellers shall use reasonable efforts not to destroy or allow the destruction of any such books, records and files without first offering in writing to deliver them to Buyer (at Buyer's expense). (c) Consents. Sellers will use commercially reasonable efforts to -------- obtain all necessary Consents from any Person required under any Contract applicable to the Business in connection with the consummation of the transactions contemplated hereby; provided that nothing in this Section 6.1(c) shall require any material payment or the incurrence of any material obligation. (d) Use of Certain Information. Except as required by applicable -------------------------- Legal Requirements, unless otherwise agreed to in writing by Buyer, for a period commencing on the Closing Date and terminating five (5) years after such date, Sellers shall (i) keep all information relating to the Business or the Assets and all information contained in the Assets (including all information with respect to the identities, purchasing history and natural gas requirements of the customers of the Business) confidential and not disclose or reveal any such information to any Person other than Sellers' Representatives who are actively and directly participating in the transactions contemplated hereby or who otherwise need to know such information for such purpose and to cause those Persons and each of their Affiliates to observe the terms of this Section 6.1(d) and (ii) not to use, or permit any Affiliate to use, such information for any other purpose, including the marketing or sale of unregulated natural gas to customers of the Business. Sellers shall continue to hold all such information according to the same internal security procedures and with the same degree of care regarding its secrecy and confidentiality as currently applicable thereto. Sellers shall notify Buyer of any unauthorized disclosure of any such information to third parties that it discovers and shall endeavor to prevent any further such disclosures. Sellers shall be responsible for any breach of the terms of this Section 6.1(d) by either Seller or any Sellers' Representatives or any of their Affiliates. After the Closing Date, in the event that a Seller is requested pursuant to, or required by, applicable Legal Requirements to disclose any such information, or any other information concerning the Business or the Assets, or the transactions contemplated hereby, such Seller shall provide Buyer with prompt notice of such request or requirement in order to enable Buyer to seek an appropriate protective order or other remedy, to consult with such Seller with respect to taking steps to resist or narrow the scope of the request or legal process (it being understood that any such efforts to seek a protective order or other remedy or to resist or narrow the scope of such request or legal process shall be at the sole cost and expense of Buyer), or to waive compliance, in whole or in part, with the terms of this Section 6.1(d). Such Seller agrees not to oppose any action by Buyer to obtain 28 any such protective order or other appropriate remedy after the Closing Date. In the event that no such protective order or other remedy is obtained, or that Buyer waives compliance with the terms of this Section 6.1(d), such Seller shall furnish only that portion of such information which such Seller is advised by its counsel is legally required. In any such event such Seller shall use its commercially reasonable efforts to ensure that all such information that is so disclosed will be accorded confidential treatment. Sellers acknowledge and agree that Buyer shall be entitled, in addition to all other remedies, to injunctive relief and specific performance of this Section 6.1(d). (e) Certain Financial Statements. Sellers shall furnish to ---------------------------- Buyer, at Buyer's expense, the following financial statements for the Business: (i) audited consolidated balance sheets as at December 31, 1999 (or such later calendar year-end date as may be required to be filed by Buyer by Regulation S-X under the Securities Act of 1933, as amended) and related consolidated statements of income and cash flows for the years then ended and (ii) any unaudited interim consolidated financial statements (including balance sheet and statements of income and cash flows) for such later interim period as may be required by Regulation S-X. Such financial statements shall: (x) be prepared in accordance with the books and records of Sellers relating to the Business; (y) be prepared in accordance with generally accepted accounting principles consistently applied (subject, in the case of unaudited financial statements, to the omission of footnote disclosure) and the requirements of Regulation S-X; and (z) fairly present, in all material respects, the financial condition and the results of operations and cash flows for the Business as at the dates thereof and for the fiscal periods covered thereby. Buyer shall specify to Sellers such statements that Buyer will so require. Sellers shall provide such statements to Buyer within 90 days following such request; provided that if Closing occurs after December 31, 2000, Sellers will provide such statements within 60 days after the Closing. Sellers shall cooperate to provide such statements earlier to the extent reasonably practicable if Buyer shall so request. Section 6.2 Covenants of Buyer. Buyer covenants and agrees to observe and perform the following covenants and agreements: (a) Consents. Buyer will use its commercially reasonable -------- efforts to assist Sellers in obtaining all necessary Consents from any Person required under any Contract applicable to the Business in connection with the consummation of the transactions contemplated hereby; provided that, nothing in this Section 6.2(a) shall require any material payment or the incurrence of any material obligation. (b) Access to Information. After Closing, Buyer will, and will --------------------- cause its Representatives to, afford to Sellers, including their Representatives, reasonable access to all books, records, files and documents related to the Business in order to permit Sellers to prepare and file their Tax Returns and to prepare for and participate in any investigation with respect thereto, to prepare for and participate in any other investigation and defend any Proceedings relating to or involving either Citizens, LGSN or the Business for which Sellers may be responsible, to discharge their obligations under this Agreement and the other Related Documents to which they are a party and for other reasonable purposes and will afford Sellers reasonable assistance in connection therewith. Buyer will cause such records to be maintained for not less than seven (7) years from the Closing Date and will not dispose of such records without first offering in writing to deliver them to Sellers; provided, however, that in the event that Buyer transfers all or a portion of the Business to any third party during such period, Buyer may transfer to such third party all or a portion of the 29 books, records, files and documents related thereof, provided such third party transferee expressly assumes in writing the obligations of Buyer under this Section 6.2(b). In addition, after the Closing Date, at Sellers' request, Buyer shall make available to Sellers and their Affiliates, employees, representatives and agents, those employees of Buyer requested by Sellers in connection with any Proceeding, including to provide testimony, to be deposed, to act as witnesses and to assist counsel; provided, however, that (x) such access to such employees shall not unreasonably interfere with the normal conduct of the operations of Buyer and (y) Sellers shall reimburse Buyer for the allocated time charges of such employees and the out-of-pocket costs reasonably incurred by Buyer in making such employees available to Sellers. (c) Citizens Guarantees and Surety Instruments. Buyer shall ------------------------------------------ use its reasonable efforts to assist Sellers in obtaining full and complete releases on the guarantees, letters of credit, bonds and other surety instruments listed in Schedule 6.2(c). For purposes of this Section 6.2(c), reasonable efforts shall include: (i) Buyer's assumption of the Contracts on the terms set forth in this Agreement; and (ii) an obligation on the part of Buyer to provide (A) a guaranty, letter of credit, bond or other surety instrument at Closing in lieu of any surety instrument provided by Citizens to any beneficiary in connection with the Business or the activities of LGSN or (B) if such beneficiary refuses to accept such replacement surety instrument from Buyer, a specific indemnity from Buyer to Citizens in respect of Citizens' surety instrument. Section 6.3 Governmental Filings. (a) HSR Act Filing. Buyer and Citizens shall comply promptly -------------- with the notice and reporting requirements of the HSR Act. Buyer and Citizens shall comply substantially with any additional requests for information, including requests for production of documents and production of witnesses for interviews or depositions, made by the Antitrust Division of the United States Department of Justice, the United States Federal Trade Commission or the antitrust or competition law authorities of any other jurisdiction (the "Antitrust Authorities"). Buyer and Citizens shall each exercise its commercially reasonable efforts, and each shall cooperate fully with the other to prevent the entry in any Proceeding brought by an Antitrust Authority or any Governmental Body which would prohibit, make unlawful or delay the consummation of the transactions contemplated by this Agreement. (b) Other Regulatory Filings. Buyer and Sellers will, as soon as ------------------------ reasonably practicable following the execution of this Agreement, prepare and file with each Governmental Body requests for such Consents as may be necessary for the transfer of the Assets in accordance with, or as contemplated by, the terms of this Agreement (including using commercially reasonable efforts to prepare and file a joint application, in a mutually acceptable form, with the LPSC by June 1, 2000). Buyer and Sellers will use commercially reasonable efforts to diligently pursue such Consents and will cooperate with each other in seeking such Consents. To this end, the parties agree to make available the personnel and other resources of their respective organizations in order to accomplish actions reasonably required by them to obtain all such Consents. A request in the parties joint application for a rate moratorium or for consent to amortize Buyer's acquisition premium account shall be deemed not to be inconsistent with the parties commercially reasonable efforts. (c) Efforts. Nothing contained in this Section 6.3 shall require ------- Sellers or Buyer to institute or defend any legal or administrative Proceeding, make any material payment or incur any 30 economic burden, dispose of any material asset or business or suffer any material detriment, including any change in the applicable rates or tariffs of the Business or the imposition of any other materially adverse term or condition on the Business or the Assets. Section 6.4 Citizens Marks. Buyer acknowledges and agrees that, as between Buyer and Citizens, Citizens has the absolute and exclusive proprietary right to all names, marks, trade names, trademarks and corporate symbols and logos incorporating "Citizens", and "CZN" (collectively, the "Citizens Marks"), all rights to which and the goodwill represented thereby and pertaining thereto are being retained by Citizens. Within four (4) months after the Closing Date, Buyer shall cease using any Citizens Mark and shall remove from the Assets any and all Citizens Marks. Thereafter, Buyer shall not use, any Citizens Mark in connection with the sale of any products or services or otherwise in the conduct of its businesses. In the event that Buyer breaches this Section 6.4, Citizens shall be entitled to specific performance of this Section 6.4 and to injunctive relief against further violations, as well as any other remedies at law or in equity available to Citizens. Section 6.5 Transition Plan. Within thirty (30) days after the execution date of this Agreement, Buyer shall deliver to Citizens a list of its proposed representatives to a joint transition team, which shall include expertise from various functional specialties associated or involved in providing billing, payroll and other support services provided to the Business by any automated or manual process using facilities or employees that are not included among the Assets or Transferred Employees. Citizens will add its representatives to such team within fifteen (15) days after receipt of Buyer's list. Such team will be responsible for preparing as soon as reasonably practicable after the execution date of this Agreement and at least sixty (60) days prior to the Closing Date, and timely implementing, a transition plan which will identify and describe substantially all of the various transition activities that the parties will cause to occur before and after the Closing and any other transfer of control matters that any party reasonably believes should be addressed in such transition plan. Transition services to be supplied by Citizens under such transition plan shall be priced in accordance with inter- company transfer practices consistent with those historically used for the Business for a reasonable transition period not to exceed 120 days after the Closing Date. If requested by any party, the terms and conditions governing such transition activities will be more fully set forth in a Transition Agreement reasonably satisfactory to the parties. Buyer and Citizens shall use their commercially reasonable efforts to cause their Representatives on such transition team to cooperate in good faith and take all reasonable steps necessary to develop a mutually acceptable transition plan by no later than 120 days after the date of this Agreement. Section 6.6 Substitute Agreement. In the event that Sellers, after using their best commercially reasonable effects, are unable to obtain each of the Consents identified as items IV.F.1 through IV.F.5 of Schedule 5.3 within 120 days after the date of this Agreement, then promptly upon notice from Sellers to Buyer, Citizens and Buyer will enter into a substitute agreement relating to the sale by Citizens of the Division Assets and the capital stock of LGSN substantially in the form attached as Exhibit 6.6 hereto. Section 6.7 Schedule of Easements and Interests. Within 180 days following the date of this Agreement (but in no event later than 60 days prior to the Closing Date), Citizens shall deliver to Buyer a schedule, to be identified as Schedule 6.7, which sets forth all Easements and ownership interests in Real Property included in the Assets, together with such title descriptions, recorded and unrecorded acts, and other information as shall be customary in the State of Louisiana to identify and 31 convey such Easements and ownership interests. All material Easements that, as a condition to their assignment, require Consent from the grantor thereof, shall be so designated on Schedule 6.7. Section 6.8 Rhodes Security. If at any time Sellers shall have any financial obligation or liability with respect to the Rhodes Proceedings, whether due to any Order of the LPSC or an appeal therefrom, that is materially more than that which is secured by a bond, other surety instrument or other collateral (including a standby letter of credit) previously provided by Citizens (or if no such collateral has been previously provided), Citizens shall promptly deliver to Buyer (or the appropriate Governmental Body, if required) a bond, other surety instrument or other collateral reasonably acceptable to Buyer (or, if agreement is not reached as to the form or substance of such bond or surety instrument, Citizens shall deliver to Buyer a standby letter of credit from Citibank, N.A., or other financial institution reasonably acceptable to Buyer) fully securing in all material respects the unsecured amount of such obligation or liability. If at any time any bond, other security instrument or other collateral held by Buyer in respect of the Rhodes Proceedings shall be materially in excess of the amount of such obligation or liability, Buyer shall cooperate with Citizens in reducing the amount of such collateral to the extent of such excess, including the release of a surety instrument previously delivered to Buyer in exchange for a substitute surety instrument in the amount of such reduced obligation or liability. Section 6.9 Certain Proceedings. Sellers shall defend the Proceedings described in items II.2 and II.3 of Schedule 5.16 at their own expense, with counsel of their own choosing. Sellers shall promptly and diligently pursue to a settlement or prosecute to a final conclusion the Proceeding described in item II.2 of Schedule 5.16. Prior to Closing, Buyer shall have the right to intervene, at Buyer's expense, in the Proceedings listed in items II.2 and II.3 of Schedule 5.16 to protect its interests as the prospective buyer of the Business, including any resolution of such Proceedings that Buyer believes may adversely affect the Business or the Assets after the Closing. If either Proceeding listed in items II.2 and II.3 of Schedule 5.16 continues after the Closing, Buyer shall take over the prosecution of such Proceeding, provided that Sellers may continue to participate in such Proceeding, at Sellers' expense, to protect their interests as the former operators of the Business with the right to appeal either directly or through Buyer any decision adverse to Sellers. Section 6.10 Buyer's Insurance. Buyer shall deliver at Closing a schedule that identifies each material casualty and property insurance policy of Buyer applicable to its business in Louisiana. ARTICLE VII CONDITIONS PRECEDENT Section 7.1 Sellers' Conditions Precedent to Closing. The obligation of Sellers to consummate the transactions contemplated by this Agreement shall be subject to fulfillment at or prior to the Closing of the following conditions: (a) Representations and Warranties True as of the Closing Date. ---------------------------------------------------------- Buyer's representations and warranties in this Agreement shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Closing Date as if made on the Closing Date, subject to changes expressly contemplated and permitted by this Agreement, except that representations and warranties made as of, or in respect of, 32 only a specified date or period shall be true and correct in all material respects as of, or in respect of, such date or period. (b) Compliance with Agreements. The covenants, agreements and -------------------------- conditions required by this Agreement to be performed and complied with by Buyer shall have been performed and complied with in all material respects prior to or at the Closing Date. (c) Certificate. Buyer shall execute and deliver to Sellers a ----------- certificate of an authorized officer of Buyer, dated the Closing Date, stating that the conditions specified in Sections 7.1(a) and 7.1(b) have been satisfied. (d) Governmental Approvals and Other Consents; Rhodes ------------------------------------------------- Investigation. ------------- The LPSC shall have issued an Order approving the transactions contemplated hereby, the terms and conditions of such Order shall not be materially adverse to Citizens in the context of the transactions contemplated herein, and such Order shall have become a Final Order. Sellers also shall have obtained all other Consents of Governmental Bodies and other Persons which are required in order to consummate the transactions contemplated hereby and to transfer the Assets to Buyer without incurring material liability under any Legal Requirement, Order or Contract. The Rhodes Investigation shall have been resolved pursuant to an Order by the LPSC (which Order does not have to be a Final Order). (e) HSR Act. The applicable waiting period under the HSR Act ------- with respect to the transactions contemplated hereby shall have expired or have been terminated. (f) Injunctions. On the Closing Date, there shall be no Orders ----------- which operate, to restrain, enjoin or otherwise prevent the consummation of the transactions contemplated by this Agreement, and no Proceeding to obtain such an Order shall be pending or Threatened. (g) Opinion of Counsel. On the Closing Date, Sellers shall have ------------------ received from counsel to Buyer an opinion to the effect set forth in Exhibit 7.1(g); provided that such opinion may contain limitations and exceptions that are customary for the subject matter addressed thereby. (h) Documents. Buyer shall have delivered all the certificates, --------- instruments, contracts and other documents specified to be delivered by it hereunder on or before the Closing Date, including pursuant to Section 8.1, and shall have taken such actions as Sellers may have requested pursuant to Section 11.2. Section 7.2 Buyer's Conditions Precedent to Closing. The obligation of Buyer to consummate the transactions contemplated by this Agreement shall be subject to fulfillment at or prior to the Closing of the following conditions: (a) Representations and Warranties True as of the Closing Date. ---------------------------------------------------------- Sellers' representations and warranties in this Agreement (i) shall have been true and correct in all material respects as of the date of this Agreement and (ii) shall be true and correct as of the Closing Date as if made on the Closing Date, subject to changes expressly contemplated and permitted by this Agreement, except (A) in the case of clauses (i) and (ii) above, that representations and warranties made as of, or in respect of, only a specified date or period shall be true and correct in all material 33 respects as of, or in respect of, such date or period and (B) in the case of clause (ii) above, to the extent that any failure of such representations and warranties to be true and correct on account of events or conditions arising after the execution date of this Agreement, without regard to any qualification as to materiality or Material Adverse Effect set forth therein, as of the Closing Date as if made on the Closing Date, when taken in the aggregate, would not have a Material Adverse Effect. (b) Compliance with Agreements. The covenants, agreements and -------------------------- conditions required by this Agreement to be performed and complied with by Sellers shall have been performed and complied with in all material respects prior to or at the Closing Date. (c) Certificate. Sellers shall execute and deliver to Buyer a ----------- certificate of authorized officers of Sellers, dated the Closing Date, stating that the conditions specified in Sections 7.2(a) and 7.2(b) have been satisfied. (d) Governmental Approvals and Other Consents; Rhodes Investigation. --------------------------------------------------------------- The LPSC shall have issued an Order approving the transactions contemplated hereby; such Order shall not contain any restrictions, conditions or other provisions (other than those in effect on the date of this Agreement or requiring that the regulatory treatment with respect to the Business in existence as of the date of this Agreement applicable to Sellers be continued following the Closing) that are materially adverse to the conduct of the Business as operated on the date of this Agreement or on the other operations of Buyer in the State of Louisiana as operated on the date of this Agreement; the other terms and conditions of such Order shall not be materially adverse to Buyer; and such Order shall have become a Final Order. For purposes of this Section 7.2(d), Buyer's failure to receive from the LPSC any regulatory treatment requested by Buyer in the parties' joint application to the LPSC that is different in any material respect from the regulatory treatment in effect with respect to the Business as of the date of this Agreement shall not be considered materially adverse to the Business, to Buyer's other operations in the State of Louisiana or to Buyer. In addition, Sellers shall have obtained all other Consents of Governmental Bodies and other Persons which are required by Sellers in order to consummate the transactions contemplated hereby other than those the failure of which to obtain would not result in Buyer incurring material liability under any Legal Requirement, Order or Contract. The Rhodes Investigation shall have been resolved pursuant to an Order of the LPSC (which Order does not have to be a Final Order). If such LPSC Order imposes any financial obligation or liability (or any administrative obligation or liability that could reasonably result in a financial obligation or liability) and such obligation or liability shall not have been discharged or settled in full by Citizens, then Citizens shall have delivered to Buyer (or to the appropriate Governmental Body, if required) a bond or other surety instrument or other collateral, in either case reasonably acceptable to Buyer (or, if such agreement is not reached, a standby letter of credit from Citibank N.A., or another financial institution reasonably acceptable to Buyer) fully securing such obligations or liability with respect to such Order. (e) HSR Act. The applicable waiting period under the HSR Act with ------- respect to the transactions contemplated hereby shall have expired or have been terminated. (f) Injunctions. On the Closing Date, there shall be no Orders ----------- which operate to restrain, enjoin or otherwise prevent the consummation of the transactions contemplated by this Agreement, and no Proceeding to obtain such an Order shall be pending or Threatened. 34 (g) Opinion of Counsel. On the Closing Date, Buyer shall have ------------------ received from L. Russell Mitten II, Vice President and General Counsel of Citizens, an opinion in the form of Exhibit 7.2(g) hereto. (h) Documents. Citizens and LGSN shall have delivered all of --------- the certificates, instruments, contracts and other documents specified to be delivered by them hereunder, including pursuant to Section 8.1, and shall have made arrangements reasonably satisfactory to Buyer to deliver to Buyer as promptly as practicable after the Closing such records (including customer and employee records) necessary to own and operate the Business. (i) No Material Adverse Change. Since the date of execution of -------------------------- this Agreement, no Material Adverse Effect shall have occurred that has continuing effect as of the Closing Date, it being agreed that no Order resolving or other development in the Proceedings referenced in item I.5 or I.23 in Schedule 5.8 shall be considered, for purposes of this Section 7.2(i) or Section 7.2(a) with respect to Sellers' representations and warranties set forth in Section 5.6(c)(v) or Section 7.2(b) with respect to Sellers' covenants in Section 6.1(a)(iii) (as such covenant relates to such representations and warranties) to have a Material Adverse Effect. ARTICLE VIII CLOSING Section 8.1 Closing. The closing of the purchase and sale of the Assets (the "Closing") will take place at the offices of Fleischman and Walsh, L.L.P., 1400 Sixteenth Street, N.W., Suite 600, Washington, D.C. 20036, on the last calendar day of the month in which the conditions specified in Sections 7.1(d) and 7.2(d) have been satisfied, unless another time, date and place is agreed to in writing by the parties. The date of the Closing is referred to in this Agreement as the "Closing Date." The transactions to be consummated on the Closing Date shall be deemed to have been consummated as of 11:59 p.m. on the Closing Date. At the Closing the following events shall occur, each event being deemed to have occurred simultaneously with the other events. (a) Payment of Purchase Price. Buyer will pay to Sellers an ------------------------- amount equal to the Estimated Purchase Price by wire transferring such amount, in lawful money of the United States of America in immediately available funds, to such account(s) as Sellers shall have designated by notice to Buyer. If the Closing Date is not a business day on which financial institutions are open and operating, then on or before the last business day on which financial institutions are open and operating before the Closing Date, Buyer shall deliver the Estimated Purchase Price to Buyer's lead bank (the "Escrow Agent") in immediately available funds in U.S. dollars, and each party shall deliver in escrow to the other party's designated outside legal counsel the instruments and other documents to be delivered by such party at the Closing. Upon receipt, the Escrow Agent shall invest the Estimated Purchase Price in an interest-bearing account mutually agreed upon by Sellers and Buyer. At Closing, upon satisfaction of the conditions therefor, (i) Buyer shall sign and deliver to Sellers a statement which confirms that the Closing has occurred and which instructs the Escrow Agent to transfer to Sellers the funds representing the Estimated Purchase Price, plus an amount representing the interest earned after the Closing Date until the date the funds are transferred, to an account that Sellers shall designate at least two (2) business days prior to the date the funds are required to be transferred hereunder and (ii) each party shall sign and deliver to the other party's designated outside legal counsel a statement which confirms that Closing has occurred and which 35 authorizes the release to the other party of the instruments and other documents previously delivered in escrow to such legal counsel by such party. The Escrow Agent shall refund the balance to Buyer. If the Closing does not occur on the appointed Closing Date, the funds shall be returned to Buyer, together with all interest earned thereon, and all escrowed instruments and documents shall be returned to the party who delivered them. The fees and expenses of Escrow Agent shall be paid one-half by Sellers and one-half by Buyer. (b) Other Related Documents. To the extent consistent with the ----------------------- other provisions of this Agreement, Sellers (or the appropriate Affiliate of Sellers) and Buyer shall execute and deliver acts of sale, conveyances, certificates of title, bills of sale, assignment and assumption instruments and other documents reasonably requested by a party that are necessary for the transfer of the Assets to Buyer, or the assumption of the Assumed Liabilities by Buyer, or the satisfaction of any applicable Legal Requirements relating thereto, or which are customarily given in the State of Louisiana to accomplish transfers of assets of the type involved; provided, however, that nothing in this clause (b) shall obligate Sellers or any Affiliate of Sellers to execute or deliver any document that affects, in a manner adverse to Sellers or Sellers' liability to Buyer, or to Buyer or to Buyer's liability to Sellers, as expressed herein; and provided also that all acts of sale with respect to parcels of Real Property owned in fee simple shall be with all legal warranties by, through and/or under the Seller, but not otherwise, with such warranty warranting title to the property from the date such Seller acquired title to such property to the Closing Date, subject to Permitted Encumbrances, and with full substitution and subrogation in and to all rights and actions of warranty that such Seller has or may have against all preceding owners and venders. ARTICLE IX TERMINATION Section 9.1 Termination Rights. This Agreement may be terminated in its entirety at any time prior to the Closing: (a) By the mutual written agreement of Sellers and Buyer; (b) By Buyer, on the one hand, or Sellers, on the other hand, in writing if there shall be in effect a nonappealable Order prohibiting the transactions contemplated by this Agreement; (c) By Buyer, upon and during the continuation of a breach in any material respect of any of the representations and warranties of Sellers contained herein or in the failure by Sellers to perform and comply in any material respect with any of the agreements and obligations required by this Agreement to be performed or complied with by Sellers, provided that such breach or failure is not cured by Sellers in a manner reasonably acceptable to Buyer within 45 days of Sellers' receipt of a written notice from Buyer that such a breach or failure has occurred; (d) By Sellers, upon and during the continuation of a breach in any material respect of any of the representations and warranties of Buyer contained herein or the failure by Buyer to perform and comply in any material respect with any of the agreements and obligations required by this Agreement to be performed or complied with by Buyer, provided that such breach or failure 36 is not cured by Buyer in a manner reasonably acceptable to Sellers within 45 days of Buyer's receipt of a written notice from Sellers that such a breach or failure has occurred; (e) By either party in writing if the Closing has not occurred within twelve (12) months after the date of this Agreement; provided that if Closing has not occurred within such period of time because the conditions precedent to Closing set forth in Sections 7.1(d) and 7.2(d) have not been fulfilled, then such period of time shall be automatically extended to August 1, 2001; or (f) By Sellers or Buyer, as appropriate, if any Governmental Body or other Person whose Consent is required to fulfill a condition precedent to Closing set forth in Section 7.1(d) (with respect to Sellers) or in Section 7.2(d) (with respect to Buyer) has affirmatively indicated that such Consent will not be given or will contain terms or conditions (or, if such Consent has been obtained, contains terms or conditions) that, in the reasonable business judgment of Sellers or Buyer, as appropriate, will result in a condition precedent to Closing set forth in Section 7.1(d) (with respect to Sellers) or in Section 7.2(d) (with respect to Buyer) not being satisfied. Section 9.2 Limitation on Right to Terminate: Effect of Termination. (a) A party shall not be allowed to exercise any right of termination pursuant to Section 9.1 if the event giving rise to the termination right shall be due to the willful failure of such party seeking to terminate this Agreement to perform or observe in any material respect any of the covenants or agreements hereof to be performed or observed by such party. (b) If this Agreement is terminated as permitted under Section 9.1, such termination shall be without liability of or to any party to this Agreement, or any shareholder or Representative of such party; provided, however, that if such termination shall result from the willful failure of any party to fulfill a material condition to the performance of any other party or to perform a material covenant of this Agreement or from a material and willful breach by any party to this Agreement (it being understood that the failure to cure a breach shall not, by itself, be a willful breach of this Agreement), then such party shall (subject to the limitation set forth in the last sentence of this Section 9.2(b)) be fully liable for any and all damages sustained or incurred by the other party. If prior to Closing any party to this Agreement resorts to legal proceedings to enforce this Agreement, the prevailing party in such proceedings shall be entitled to recover all costs incurred by such party including reasonable attorney's fees, in addition to any other relief to which such party may be entitled; provided, however, and notwithstanding anything to the contrary in this Agreement, in no such event shall any party be entitled to receive any consequential, exemplary, punitive, or speculative damages. ARTICLE X EMPLOYEE MATTERS Section 10.1 Employment of Transferred Employees. (a) As of the Closing Date, Buyer shall employ all employees actively employed by Citizens whose primary duties relate to the Business ("Active Employees") who as of the Closing Date are classified on Citizens' payroll records as 070 employees ("070 Active Employees") and who either are actively at work or are on vacation, bereavement leave, short-term sick leave or any 37 other authorized leave of absence which is scheduled to last not more than thirty (30) business days after the Closing Date at the same wages or salary as were in effect with Citizens immediately prior to the Closing Date. Buyer also shall employ any other 070 Active Employee who is on an authorized leave of absence scheduled to last more than thirty (30) days where there is a legal or contractual right to reinstatement, as of the date, if any, within one (1) year from the Closing Date, on which such employee returns to active work, in compliance with Buyer's return to work policies and practices, at the same wages or salary as were in effect with Citizens immediately prior to the Closing Date. Any such 070 Active Employee employed by Buyer as provided in this Section 10.1(a) is referred to herein as a "Transferred Employee". (b) Prior to the execution date of this Agreement, Sellers have delivered to Buyer a list of the persons who would have been Transferred Employees had the Closing Date occurred on March 31, 2000, showing the following information for each such person: (i) the name of each employee; (ii) the name of his or her current employer; (iii) his or her current base pay; (iv) his or her hire date, any rehire date (if available) and years of service; (v) his or her then-current position and job title; (vi) whether such employee is subject to a collective bargaining agreement or represented by a labor organization and, if so, the name of the union and local, (vii) whether such employee is on authorized leave of absence scheduled to last more than thirty (30) days with a legal or contractual right to reinstatement and the nature of such leave of absence. Sellers shall update such list as of the end of each calendar quarter occurring between the execution date hereof and the Closing Date, in each case assuming the Closing Date had occurred on such date, and shall deliver such updated lists to Buyer within ten (10) days after the end of each such calendar quarter. Section 10.2 Intentionally Omitted. Section 10.3 Cessation of Participation in Sellers' Plans; Bonuses. From and after the Closing Date, Transferred Employees shall accrue no additional benefits under any employee benefit plan, policy, program or arrangement of Sellers or its Affiliates. Citizens shall on a pro rata basis or as otherwise determined by Citizens in its sole discretion, pay any bonuses declared by Sellers after the Closing Date that would have been payable to the Transferred Employees had the Transferred Employees remained employed by Sellers or its Affiliates throughout the calendar year in which the Closing Date occurs, in accordance with the provisions of any policy, plan, practice or arrangement of Sellers under which such bonus would have been paid. Section 10.4 Similarity of Benefit Packages. As of the Closing Date, and except as otherwise expressly provided in this Article X, Buyer shall include each Transferred Employee in a benefit package providing benefits that are identical to those provided by Buyer to its non-union gas utility employees (which are deemed by Buyer and Seller to be in the aggregate substantially similar to those provided by Sellers to such Transferred Employees). Except as otherwise expressly provided in this Article X, Buyer shall treat all service and compensation credited to each such Transferred Employee as if such service and compensation had been rendered to, and paid by, Buyer for all purposes of eligibility and vesting of benefits but not for purposes of earning benefits under Buyer's benefit plans, arrangements, and policies. 38 Section 10.5 Defined Benefit Pension Plan. (a) At least fifteen days prior to the Closing Date, Sellers shall take any and all actions necessary to cease benefit accruals and fully vest all Transferred Employees in their accrued benefits under the Citizens' Pension Plan ("Citizens' Pension Plan"). Sellers shall retain all liabilities and assets for pension benefits accrued through the Closing Date by Transferred Employees and retirees of the Business under Citizens' Pension Plan. (b) As of the Closing Date, Buyer shall cause all Transferred Employees who are otherwise eligible to be included in the Atmos Energy Corporation Pension Account Plan (the "Buyer's Pension Plan"). Buyer shall take all actions necessary to cause Buyer's Pension Plan to recognize the service that all Transferred Employees had under Citizens' Pension Plan for purposes of such Employees' eligibility to participate, vesting, attainment of retirement dates, eligibility for early retirement benefits under Buyer's Pension Plan and entitlement to optional forms of payment. Section 10.6 401(k) Plan. (a) Buyer shall take all action necessary to ensure that, as of the Closing Date, it includes Transferred Employees who are otherwise eligible in the Atmos Energy Corporation Employee Stock Ownership Plan and Trust (the "Buyer's 401(k) Plan"). Buyer shall take all actions necessary to cause Buyer's 401(k) Plan to recognize the service that the Transferred Employees had in Citizens' 401(k) Savings Plan (the "Citizens' 401(k) Plan") for purposes of determining such Employees' eligibility to participate, vesting, attainment of retirement dates and, if applicable, contribution levels and eligibility for optional forms of benefit payments. Buyer shall cause the trustee of Buyer's 401(k) Plan to accept transfers and, to the extent legally permissible, direct rollovers from Citizens' 401(k) Plan of the vested account balances of Transferred Employees, including transfers of outstanding loan balances and related promissory notes, subject to compliance with applicable law. (b) Citizens shall vest Transferred Employees in their account balances under Citizens' 401(k) Plan as of the Closing Date. (c) Citizens shall direct the trustee of Citizens' 401(k) Plan to transfer to the trustee of Buyer's 401(k) Plan in a trustee-to-trustee transfer the account balances of the Transferred Employees under Citizens' 401(k) Plan with such transfer to consist of cash and the shares of Citizens' stock attributable to the former LGS Savings and Investment Plans credited to the accounts of each Transferred Employee; except that to the extent that the account balances consist of outstanding loans, Citizens shall direct the trustee of Citizens' 401(k) Plan also to transfer to the trustee of Buyer's 401(k) Plan the promissory notes, payroll deduction authorizations for installment payments and related documents evidencing such loans. (d) After the transfer of assets and liabilities pursuant to this Section, Buyer shall assume all liabilities for the benefits payable with respect to the assets transferred with respect to the Transferred Employees under Citizens' 401(k) Plan, and Citizens and Citizens' 401(k) Plan shall have no liability for such benefits. 39 (e) In connection with the transfer of assets and liabilities under this Section, Citizens and Buyer shall cooperate in making all appropriate filings, and providing all applicable notices, required by the IRC or ERISA. Buyer shall deliver to Citizens a copy of Buyer's 401(k) Plan, and a copy of the most recent determination letter from the IRS with respect to such Plan. Buyer will submit Buyer's 401(k) Plan to the IRS within the current remedial amendment period for a determination that Buyer's Plan satisfies the requirements of the Internal Revenue Code of 1986, as amended by the Uniformed Services Employment and Reemployment Acts of 1999, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997 and the Internal Revenue Services Restructuring and Reform Act of 1998. Section 10.7 Welfare Benefits. (a) Buyer shall take all action necessary and appropriate to ensure that, as of the Closing Date, Buyer includes the Transferred Employees to the extent they are otherwise eligible in the employee welfare benefit plans (including retiree medical benefits) applicable to the other non-union gas utility employees of Buyer (the "Buyer Welfare Plans"). For purposes of determining eligibility to participate, and entitlement to benefits, in each Buyer Welfare Plan, each Transferred Employee shall be credited with service, determined under the terms of the corresponding welfare plans maintained by Citizens on the Closing Date (hereinafter referred to collectively as the "Citizens Welfare Plans"). Any restrictions on coverage for pre-existing conditions, actively at work requirements, waiting periods, and requirements for evidence of insurability (with respect to life insurance and long term disability coverage) under the Buyer Welfare Plans shall be waived in the Buyer Welfare Plans for Transferred Employees to the extent that such Transferred Employees are covered by Citizens' Welfare Plans immediately prior to Closing, and Transferred Employees shall receive credit under the Buyer Welfare Plans for co-payments, payments under a deductible limit made by them, and for out-of- pocket maximums applicable to them during the plan year of the Citizens Welfare Plan in which the Closing Date occurs. As soon as practicable after the Closing Date, Citizens shall deliver to Buyer a list of the Transferred Employees who had credited service under a Citizens Welfare Plan, together with each such Transferred Employee's service, co-payment, deductible and out-of-pocket payment amounts under each such plan. (b) Buyer shall provide or cause to be provided retiree medical, dental and life insurance benefits to each retiree of the Business identified in Schedule 10.7 as updated as of the Closing Date (the "Retirees"), including those Retirees who were retirees at the time Seller purchased LGS ("LGS Retirees"), under the same or better terms and conditions as applied to such Retirees immediately prior to the Closing Date, and shall provide or cause to be provided retiree medical benefits to each Transferred Employee under the same terms and conditions as otherwise applied to non-union gas utility employees retiring from Buyer at the time such Transferred Employee retires from the Buyer. Citizens shall have no obligation or liability, contingent or otherwise, to provide retiree medical, dental or life insurance benefits to any Retiree or Transferred Employee on or after the Closing Date. For purposes of this Section 10.7, a "grandfathered employee" is a Transferred Employee or Retiree who was at least age 55 with at least 10 years of service as defined in the Citizens' Pension Plan by December 31, 1997, and who either retired on or after August 1, 1997 and on or prior to December 31, 1997 or was an employee of Citizens on December 31, 1997 and retires after December 31, 1997. Schedule 10.7 identifies each "grandfathered employee." Buyer agrees that, in the event it ever terminates or materially adversely modifies, those retiree medical, dental and life insurance benefits covering LGS Retirees and 40 Retirees who are "grandfathered employees", their spouses and dependents from those in effect immediately prior to the Closing Date or in the event it ever terminates or materially adversely modifies those retiree medical benefits provided to those Transferred Employees who are "grandfathered employees", their spouses and dependents from those provided by Buyer to Buyer's non-union gas utility employees immediately prior to the Closing Date, Buyer will indemnify and hold harmless Sellers Indemnitees from any and all Loss in connection therewith. Buyer's obligations under this Section 10.7(b) are subject to and conditioned upon the truth and accuracy of the representation and warranty contained in Section 5.13(f), and if such representation and warranty is determined at any time not to be true and accurate, Buyer shall have no further obligations under this Section 10.7(b). Section 10.8 Flexible Spending Accounts. As soon as possible following the Closing Date, Citizens shall transfer to Buyer's flexible benefits plan any balances standing to the credit of Transferred Employees under Citizens' flexible benefits plan as of the Closing Date. Citizens shall provide to Buyer prior to the Closing Date a list of those Transferred Employees who have participated in the health or dependent care reimbursement accounts of Citizens, together with their elections made prior to the Closing Date, with respect to such account, and balances standing to their credit or debit as of the Closing Date, and a statement of aggregate expenses reimbursed from the plan for each Transferred Employee during the plan year. Buyer agrees to administer such accounts (consistent with the terms of the flexible benefits plan applicable to Buyer's employees) such that Transferred Employees will be able to defer compensation (in accordance with the terms of the applicable Buyer plan) and to submit claims against such accounts within the time period permitted by applicable law. Section 10.9 Employment Agreements. Buyer shall assume all obligations of each employment agreement to which Citizens or its Affiliates is a party and which covers any Transferred Employee immediately prior to the Closing Date other than any such employment agreement that is identified as a Retained Liability in Part III of Schedule 5.13. Section 10.10 Vacation/Time Off. Citizens shall pay to Transferred Employees any "banked" vacation credited to them on or prior to the Closing Date. On or after the Closing Date, each Transferred Employee shall be eligible to participate in the Buyer's Time Off Policy. Buyer shall take all actions necessary to cause Buyer's Time Off Policy to recognize for all purposes under said Policy the service, vacation and accrued sick time off that Transferred Employees had with Citizens. Citizens shall provide Buyer with a list of all vacation, service and sick time off taken by each Transferred Employee and the vacation, service and sick time off entitlement for each Transferred Employee for the year including the Closing Date. Section 10.11 Severance. In the event that Buyer terminates the services of any Transferred Employee within twelve (12) months following the Closing Date without cause, Buyer shall provide to any such Transferred Employee severance or separation pay benefits in accordance with Schedule 10.11. Buyer will reimburse Seller at Closing for one-half of any severance or separation pay benefits provided by Citizens to any Active Employee in connection with the termination of such employee with which Buyer concurs at any time from the date of this Agreement through and including the Closing Date. 41 Section 10.12 Health Care Continuation Coverage. Citizens shall be responsible for compliance with all requirements under Section 4980B of the Code and Section 601 et seq. of ERISA (collectively "COBRA") with respect to any (a) Transferred Employee and (b) family member of such Transferred Employee, in each case who becomes a "qualified beneficiary" within the meaning of Section 4980B(g)(1) of the Code as a result of any "qualifying event" within the meaning of Section 4980B(f)(3) of the Code which occurs on or prior to the Closing Date. Citizens also shall remain responsible for compliance with COBRA with respect to any (c) former employee of the Business or current employee of the Business who is not a Transferred Employee and (d) family member of such former employee or current employee, in each case who becomes a qualified beneficiary as a result of any qualifying event, whether such event occurs on, prior to or after the Closing Date. Citizens covenants and agrees that Buyer shall have no liability or responsibility for any of Citizens' COBRA obligations as described in this Section 10.12. Buyer shall be responsible for compliance with COBRA with respect to any (a) Transferred Employee and (b) family member of such Transferred Employee, in each case who becomes a qualified beneficiary as a result of any qualifying event which occurs after the Closing Date. In the event Seller shall fail or refuse to provide COBRA coverage as described in this Section 10.12 to the Transferred Employees and their family members who become qualified beneficiaries, Seller shall immediately so notify Buyer of such failure or refusal and shall provide Buyer a list of (a) each person employed in the Business within the 36 months immediately preceding the Closing Date and (b) each such employee and all dependents of such employee, in each case who had coverage at any time during such period and the dates during which he or she had coverage during the 36 months immediately preceding the Closing Date. For each person who had coverage from any of Seller's group health plans and lost such coverage at any time during the 36 months immediately preceding the Closing Date, Seller shall provide to Buyer a copy of the COBRA notice and election provided to each at the time of his/her qualifying event (as defined in IRC (S) 4980B(f)), copies of procedures used to notify each such qualified beneficiary of the qualifying event, evidence of any election of COBRA coverage, evidence of the reason for termination of each such COBRA coverage, evidence of any election not to take COBRA, and evidence of COBRA premiums paid and any delinquency. The foregoing sentence shall apply only if Seller shall fail or refuse to provide coverage to all Transferred Employees and family members who become qualified beneficiaries, and shall not apply simply because any one or more individual Transferred Employees and/or family members who become qualified beneficiaries may not be provided with the appropriate COBRA coverage. ARTICLE XI TAX MATTERS Section 11.1 Purchase Price Allocation. Prior to the Closing Date, Buyer and Sellers shall use their good faith efforts to agree upon the allocation (the "Allocation") of the Purchase Price for the Division Assets and the Purchase Price for the LGSN Assets, the Assumed Liabilities and other relevant items (including, for example, adjustments to the Purchase Price) to the individual assets or classes of Citizens or LGSN, respectively, of assets within the meaning of Section 1060 of the IRC. If Buyer and Sellers agree to such Allocation prior to Closing, Buyer and Sellers covenant and agree that (i) the values assigned to the assets by the parties' mutual agreement shall be conclusive and final for all purposes, and (ii) neither Buyer nor Sellers will take any position before any Governmental Body or in any Proceeding that is in any way inconsistent with such Allocation. Notwithstanding the foregoing, if Buyer and Sellers cannot agree to an Allocation, Buyer and Sellers covenant and agree to file, and to cause their respective Affiliates to file, all Tax Returns and 42 schedules thereto (including, for example, amended returns, claims for refund, and those returns and forms required under Section 1060 of the IRC and any Treasury regulations promulgated thereunder) consistent their respective good faith Allocations, unless otherwise required because of a change in any Legal Requirement. Section 11.2 Cooperation with Respect to Like-Kind Exchange. Buyer agrees that each Seller may, at its election prior to the Closing Date, direct that all or a portion of the Purchase Price apportioned to its Assets be delivered to a "qualified intermediary" (as defined in Treasury Regulation Section 1.1031(k) - 1(g)(4)) as to enable its relinquishment of its Assets to qualify as part of a like-kind exchange of property covered by Section 1031 of the IRC, so long as the portion of the Purchase Price delivered to the qualified intermediary in exchange for such Assets is consistent with Buyer's Allocation under Section 11.1 with respect to such Assets. If a Seller so elects, Buyer shall cooperate with such Seller (at no cost to Buyer) in connection with its efforts to effect such like-kind exchange, which cooperation shall include taking such actions as such Seller reasonably requests (but without Buyer being required to incur any out-of-pocket costs in the course thereof) in order to enable such Seller to qualify such transfer as part of a like-kind exchange of property covered by Section 1031 of the IRC (including any actions required to facilitate the use of a "qualified intermediary"), and Buyer agrees that such Seller may assign all or part of its rights and delegate all or part of its obligations under this Agreement to a Person acting as a qualified intermediary to qualify the transfer of the Assets as part of a like-kind exchange of property covered by Section 1031 of the IRC, provided, however, that no such assignment or delegation shall relieve Sellers of any of their obligations under this Agreement nor shall legal title to any of the Assets transfer other than directly from a Seller to Buyer. Buyer and Sellers agree in good faith to use reasonable efforts to coordinate the transactions contemplated by this Agreement with any other transactions engaged in by either Buyer or Sellers in a manner consistent with this Section 11.2; provided that such efforts are not required to include an unreasonable delay in the consummation of the transactions contemplated by this Agreement. Section 11.3 Transaction Taxes. Buyer and Citizens shall each bear and be responsible for paying one-half of any sales, use, transfer, documentary, registration (other than any annual registration fees), and other similar transfer type Taxes (including related penalties, additions to Tax and interest) imposed by any Governmental Body with respect to the transfer of Assets (including the Real Property) to Buyer ("Transaction Taxes"), regardless of whether the ax authority seeks to collect such Taxes from Sellers or Buyer. Citizens shall prepare all Tax filings related to any Transaction Taxes (other than with respect to Real Property and motor vehicle title transfer and registration, which shall be prepared by Buyer). Twenty (20) days prior to making such filings, the filing party shall provide to the nonfiling party the filing party's workpapers and proposed Tax Return for the nonfiling party's review and approval. The nonfiling party shall provide to the filing party approval (which approval shall not be unreasonably withheld) or disapproval of such workpapers and proposed Tax Return within ten (10) days of delivery by the filing party. If the filing and nonfiling party are unable to agree on the workpapers and proposed Tax Return, Buyer and Citizens shall engage a nationally recognized independent accounting firm mutually satisfactory to both to prepare the workpapers and proposed Tax Return, which preparation shall be binding and conclusive on the Buyer and Sellers without further appeal therefrom, and which fees and expenses shall be borne equally by the Buyer and Citizens. The filing party shall be responsible for (i) administering the payment of such Transaction Taxes, (ii) defending or pursuing any Proceedings related thereto, and (iii) paying any expenses related thereto, in each case subject to reimbursement 43 by the nonfiling party for one-half of such payments and expenses. Each party shall give prompt written notice to the other of any proposed adjustment or assessment of any Transaction Taxes with respect to the transaction, or of any examination of said transaction in a sales, use, transfer or similar Tax audit. In any Proceedings, whether formal or informal, the filing party shall control the defense of such Proceedings, but shall permit the nonfiling party to participate in the defense of such proceeding and shall take all actions and execute all documents required to allow such participation. Neither party shall negotiate a settlement or compromise of any Transaction Taxes without the prior written consent of the other, which consent shall not be unreasonably withheld. Section 11.4 Clearance Certificates. Sellers shall provide Buyer with a Tax clearance certificate or similar document(s) which may be required by any state taxing authority in order to relieve Buyer of any obligation to withhold any portion of the Purchase Price. ARTICLE XII ENVIRONMENTAL MATTERS Section 12.1 Environmental Due Diligence. (a) Right to Conduct Environmental Due Diligence. All -------------------------------------------- environmental due diligence (including employee interviews and sampling of any media or wastewater) conducted by Buyer shall be conducted in accordance with this Section 12.1. All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of the Business and the Assets. (b) Delivery of Environmental Reports. Buyer shall provide to --------------------------------- Sellers or to Sellers' counsel, copies of all reports, assessments and other information composed or compiled by Buyer or Buyer's environmental consultant(s) promptly following Buyer's receipt thereof. Buyer shall treat all such information delivered to, or composed or compiled by, Buyer or Buyer's environmental consultant(s) as Environmental Data in accordance with the procedures of Section 12.1(c). (c) Confidentiality of Environmental Data. All audits, reports ------------------------------------- and studies delivered to or prepared by Buyer and any other information collected and generated as a result of Buyer's environmental due diligence ("Environmental Data") will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 12.1. Prior to the Closing, neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Sellers and all such information shall be kept strictly confidential. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Sellers' prior written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Citizens' prior written consent, except as required by applicable Legal Requirements or by express provisions of Buyer's corporate compliance program if Sellers are provided written notice at least ten (10) days prior to such distribution, provided, however, that after the Closing Date, Buyer may distribute the Environmental Data to any potential purchaser of any of the Assets but only after first notifying Sellers. 44 (d) Environmental Consultants. Buyer may retain one or more outside ------------------------- environmental consultants to assist in its environmental due diligence concerning the Assets and shall notify Sellers of the environmental consultant or consultants Buyer intends to retain. Thereafter, Sellers shall have five (5) days after receipt of such notification to notify Buyer in writing of Sellers' objection (which must be for good cause) and substantiate the basis for that objection. If Sellers do not object for good cause and substantiate that objection within said five (5) day period, Sellers shall be deemed to have consented to Buyer's selection. (e) Phase I Reviews. Buyer may conduct, at its sole expense, --------------- Phase I environmental assessment activities with respect to the Assets, including reviewing existing environmental reports, correspondence, permits and related materials regarding the Assets and all other Phase I activities as set forth in the ASTM protocol regarding Phase I assessments. Any permitted Phase I environmental assessment activities shall not include any sampling or intrusive testing. All Phase I environmental assessment activities shall be conducted in accordance with ASTM standards regarding Phase I assessments and shall be completed within sixty (60) days after the date of execution of this Agreement. Upon completion of such Phase I assessment activities, Buyer's environmental consultant shall prepare and deliver to Buyer a written report with respect thereto. All reports from Buyer's environmental consultants shall be delivered to Sellers or Sellers' counsel within ninety (90) days after the execution of this Agreement. Buyer shall notify Sellers in writing within ninety (90) days after the date of execution of this Agreement if it has concluded, based on its environmental due diligence, that the condition to Closing set forth in Section 7.2(a) will not be satisfied due to the discovery of such potential material Environmental Liabilities unless environmental remediation of such potential liabilities occurs prior to Closing. Buyer's failure to provide such notice by such date shall preclude Buyer from subsequently declaring that the condition to Closing set forth in Section 7.2(a) has not been satisfied based on the results of Buyer's environmental due diligence, but shall not preclude the indemnification or other rights of Buyer from Sellers in respect of the Environmental Liabilities discovered by Buyer. (f) Phase II Reviews. Prior to Closing, Buyer may not conduct any ---------------- Phase II environmental assessment activities with respect to the Assets (including the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells, taking soil borings and excavating) without the prior written consent of Sellers, which consent may be withheld, conditioned or delayed by Sellers in their sole discretion. (g) Asbestos. Buyer may conduct, at its sole expense, asbestos -------- survey activities with respect to the Assets, including reviewing existing reports, correspondence and other related documents, inspecting individual sites and collecting samples of suspected asbestos-containing materials. These asbestos survey activities shall be completed within sixty (60) days after the date of execution of this Agreement and shall be conducted in accordance with the provisions of Section 12.1(e). (h) Additional Due Diligence. Notwithstanding the foregoing, if ------------------------ prior to Closing Citizens or LGSN receives notice of any Proceeding or Threatened Proceeding arising under Environmental Laws or if Sellers otherwise acquire Knowledge that is reasonably likely to require a change to Schedule 5.14, Sellers promptly shall notify Buyer of the same and Buyer may request that Sellers authorize Buyer to conduct specific additional environmental due diligence measures if and to the extent that such measures are required to determine the extent of any potential Environmental 45 Liability relating thereto. Such authorization shall not be unreasonably withheld, conditioned or delayed by Sellers. Any such additional environmental due diligence shall be conducted at Buyer's sole expense. (i) Indemnity for Due Diligence Activities. Buyer hereby agrees -------------------------------------- to indemnify and hold harmless Sellers, Sellers' Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Losses with respect to personal injury or property damage arising out of or in connection with any site visit by Buyer or its environmental consultant(s) and resulting from an act or omission of Buyer or its environmental consultant(s) in the course of its environmental inspections. ARTICLE XIII INDEMNIFICATION Section 13.1 Indemnification by Sellers. From and after Closing and subject to the other provisions of this Article XIII, Sellers shall jointly and severally indemnify and hold harmless Buyer, its Representatives, Affiliates, successors and permitted assigns (collectively, the "Buyer Indemnitees") from and against any and all Losses arising out of or resulting from: (a) any representations and warranties made by Sellers in or pursuant to this Agreement not being true and correct when made or when required by this Agreement to be true and correct, or any breach or default by Sellers in the performance of their covenants, agreements, or obligations under this Agreement required to be performed prior to Closing; (b) any breach or default by Sellers in the performance of their covenants, agreements, or obligations under this Agreement or any Related Document delivered pursuant hereto required to be performed on or after Closing; (c) any Retained Liabilities; and (d) the Rhodes Proceedings. Section 13.2 Indemnification by Buyer. From and after Closing and subject to the other provisions of this Article XIII, Buyer shall indemnify and hold harmless Sellers, their Representatives, Affiliates, successors and permitted assigns (collectively, the "Sellers Indemnitees") from and against any and all Losses arising out of or resulting from: (a) any representations and warranties made by Buyer in or pursuant to this Agreement not being true and correct when made or when required by this Agreement to be true and correct, or any breach or default by Buyer in the performance of its covenants, agreements, or obligations under this Agreement required to be performed prior to Closing; (b) any breach or default by Buyer in the performance of its covenants, agreements, or obligations under this Agreement or any Related Document delivered pursuant hereto required to be performed on or after Closing; and 46 (c) any Assumed Liabilities and, except as to Retained Liabilities and except to the extent Buyer is entitled (without regard to the time or amount limitations provided in this Article XIII) to indemnification under Section 13.1 with respect thereto, the operation of the Business after the Closing Date. Section 13.3 Limitations on Liability. Notwithstanding anything to the contrary in this Agreement, the liability of Sellers and Buyer under this Agreement and any documents delivered in connection herewith or contemplated hereby shall be limited as follows: (a) IN NO EVENT SHALL SELLERS BE LIABLE TO THE BUYER INDEMNITEES, OR BUYER BE LIABLE TO THE SELLERS INDEMNITEES, FOR ANY CONSEQUENTIAL DAMAGES (OTHER THAN FORESEEABLE DAMAGES INCLUDING FORESEEABLE DIMINUTION IN VALUE AND FORESEEABLE LOST PROFITS), EXEMPLARY, PUNITIVE, OR SPECULATIVE DAMAGES; provided, however, that if the Indemnified Party (as such term is hereafter defined in Section 13.4(a)) is held liable to a third party for any of such damages and the Indemnifying Party (as such term is hereafter defined in Section 13.4(a)), is obligated to indemnify the Indemnified Party for the matter that gave rise to such damages, then the Indemnifying Party shall be liable for, and obligated to reimburse the Indemnified Party for, such damages. (b) Except as provided below, the representations, warranties, covenants and agreements of Sellers and Buyer set forth in this Agreement shall survive the Closing, and all representations, warranties, covenants and agreements of Sellers and Buyer under this Agreement and the indemnities granted by Sellers in Section 13.1 and by Buyer in Section 13.2 (except those that survive without time limit) shall terminate at 5:00 p.m., local time in Stamford, Connecticut, on the appropriate anniversary of the Closing Date or on the expiration of the applicable statute of limitations (or extensions or waivers thereof), as the case may be, as set forth below in this Section 13.3(b); provided, however, that, except in the case of indemnities that survive without time limit, such indemnities shall survive with respect only to the specific matters that are the subject of a proper Claim Notice delivered in good faith in compliance with the requirements of this Section 13.3 until the earlier to occur of (A) the date on which a final nonappealable resolution of the matter described in such Claim Notice has been reached or (B) the date on which the matter described in such Claim Notice has otherwise reached final resolution, provided that in each case the Indemnifying Party has fully satisfied any indemnity obligation arising as a result of such resolution of such matter. In no event, except in the case of indemnities that survive without time limit, shall any amounts be recovered from Sellers under Section 13.1 or from Buyer under Section 13.2, respectively, or otherwise for any matter for which a Claim Notice is not delivered to Sellers or Buyer, as the case may be, prior to the close of business on the applicable date set forth below. (1) All representations and warranties of Sellers and Buyer contained in or made pursuant to this Agreement, and all covenants, agreements or obligations of Sellers and Buyer contained in or made pursuant to this Agreement that are required to be performed prior to Closing, and the related indemnity obligations of Buyer and Sellers contained in Sections 13.1(a) and 13.2(a), respectively, shall survive Closing until and shall terminate on the second anniversary of the Closing Date. 47 (2) The indemnity obligations of Sellers contained in Section 13.1(b) and 13.1(c) with respect to (i) Taxes shall survive until the expiration of the applicable statute of limitations (or extensions or waivers thereof); (ii) Environmental Liabilities shall survive until the fifth anniversary of the Closing Date except with respect to Liabilities arising out of or relating to non-compliance with a permit or authorization requirement of any Environmental Law, which shall only survive until the second anniversary of the Closing Date; (iii) the matters described in Sections 2.4(a), (c), (d), (e) (but only with respect to Proceedings pending or Threatened as of the Closing Date), and (g) shall survive without limitation as to time; (iv) the other matters described in Section 13.1(b) shall survive without limitation as to time except for any covenant as to title herein (the survival of which is addressed exclusively in clause (vii) of this Section 13.3(b)(2)) and except in the event any specific post-Closing covenant, agreement or obligation of Sellers under this Agreement is expressly limited as to time, in which event such covenant, agreement or obligation shall survive until the expiration of such specified time period; (v) Retained Liabilities not otherwise addressed in clauses (i), (ii) and (iii) of this Section 13.3(b)(2)) shall survive until the third anniversary of the Closing Date; (vi) any warranty of title included in the acts of sale with respect to parcels of Real Property owned in fee simple delivered pursuant to Section 8.1(b) shall survive without time limit; and (vii) any covenant in this Agreement as to title shall only survive until the second anniversary of the Closing Date. (3) The indemnity obligations of Sellers contained in Section 13.1(d) shall survive for an unlimited period of time. (The indemnity obligations of Sellers described in this Section 13.3(b)(3) together with the indemnity obligations of Sellers described in clauses (i), (iii) and (iv) of Section 13.3(b)(2), and exclusive of the indemnity obligations of Sellers described in clauses (ii), (v), (vi), and (vii) of Section 13.3(b)(2), are collectively referred to hereinafter as the "Specified Indemnity Obligations.") (4) The indemnity obligations of Buyer contained in Sections 13.2(b) and (c) shall survive for an unlimited period of time, except in the event any post-Closing covenant, agreement or obligation of Buyer under this Agreement is expressly limited as to time, in which event such covenant, agreement or obligation shall survive until the expiration of such specified time period. (5) Notwithstanding the foregoing, the parties acknowledge that Buyer shall be entitled to indemnification by Sellers for Losses incurred by Buyer in respect of any intentional misrepresentation or omission or fraud by Sellers without any time limitation (it being understood that the failure to cure a breach shall not, by itself, be an intentional act or omission) (hereinafter referred to as "Sellers' Fraud"). (c) Notwithstanding anything to the contrary in this Agreement, Sellers shall not be required to indemnify the Buyer Indemnitees, or be otherwise liable to the Buyer Indemnitees after the Closing with respect to this Agreement, the transactions provided for herein or contemplated hereby or Sellers' ownership or use of the Assets or operation of the Business on or before the Closing Date for any Losses (other than Losses incurred by the Buyer Indemnitees in respect of Specified Indemnity Obligations or Sellers' Fraud (hereinafter referred to as "First-Dollar Losses")) until the Buyer Indemnitees have suffered Losses (determined after giving effect to the provisions of Section 13.3(f) and other than First-Dollar Losses) that are in excess of a deductible in an amount equal to $3,000,000, after which point Sellers will be obligated only to indemnify the 48 Buyer Indemnitees from and against further Losses in excess of such deductible. Buyer shall be entitled to indemnification for all First-Dollar Losses without regard to the foregoing limitation on Sellers' indemnification liability. (d) Notwithstanding anything to the contrary in this Agreement, Sellers shall not be required to indemnify the Buyer Indemnitees, or be otherwise liable to the Buyer Indemnitees, after the Closing with respect to this Agreement, the transactions provided for herein or contemplated hereby or Sellers' ownership or use of the Assets or operation of the Business on or before the Closing Date for any Losses (other than First-Dollar Losses) that are in excess of an amount equal to $35,000,000. Buyer shall be entitled to indemnification for all First-Dollar Losses without regard to the foregoing limitation on Sellers' indemnification liability. (e) No right to indemnification under this Article XIII shall be limited by reason of any investigation conducted by any party at any time or by the decision by a party to complete the Closing. (f) Buyer agrees to use its commercially reasonable efforts to give written notice to the appropriate insurance carrier(s) of any occurrence or circumstances which, in the judgment of Buyer consistent with its customary risk management practices, appear likely to be covered by one or more insurance policies of Buyer. Any such notice shall be given in good faith by Buyer without regard to the possibility of indemnification payments by Sellers under Section 13.1, and shall be processed by Buyer in good faith and in a manner consistent with its risk management practices involving claims for which no third party contractual indemnification is available. Sellers agree to use their commercially reasonable efforts to give written notice to the appropriate insurance carrier(s) of any occurrences or circumstances which, in the judgment of Sellers consistent with their customary risk management practices, appear likely to be covered by one or more insurance policies of Sellers; and Buyer agrees to cooperate with Sellers in connection with Sellers' investigation, submission, prosecution, defense and settlement of claims under Sellers' insurance policies, at Sellers' expense. Any such notice shall be given in good faith by Sellers without regard to the possibility of the limitation on indemnification payments from Sellers under Sections 13(b) or (c), and shall be processed by Sellers in good faith and in a manner consistent with its risk management practices involving claims for which no such limitations are available. If at any time subsequent to the receipt by a Buyer Indemnitee of an indemnity payment from a Seller hereunder, such Buyer Indemnitee (or any Affiliate thereof) receives any recovery, settlement or other similar payment with respect to the Loss for which it receives such indemnity payment, such Buyer Indemnitee shall promptly pay to Sellers an amount equal to the amount of such recovery, less any out-of-pocket costs incurred by such Buyer Indemnitee (or its Affiliates) in connection with claim preparation, pursuit and settlement; provided that if such net recovery reduces the amount of Losses actually incurred by the Buyer Indemnitees to an amount that is then below the deductible amount set forth in Section 13.3(c), then the amount of such reduction below such deductible amount shall again be available for Losses in accordance with Section 13.3(c). (g) Any limitation on indemnification provided in this Section 13.3 that is expressly applicable to any subsection or clause of Section 13.1 or 13.2 shall not be applicable to any indemnification as may be applicable under any other subsection or clause of Section 13.1 or 13.2 to which such limitation is not also expressly applicable. 49 (h) Notwithstanding any language contained in any Related Document (including deeds and other conveyance documents relating to the Real Property), the representations and warranties of Sellers set forth in this Agreement will not be merged into any such Related Document and the indemnification obligations of Sellers, and the limitations on such obligations, set forth in this Agreement shall control. No provision set forth in any such Related Document shall be deemed to enlarge, alter or amend the terms or provisions of this Agreement. (i) For the purposes of this Article XIII, once a determination has been made that a specific breach of a representation, warranty, covenant or agreement has occurred for purposes of the indemnification obligation hereunder, the calculation of Losses with respect to such specific breach shall be made without regard to any limitation or qualification as to materially set forth in such representation, warranty, covenant or agreement. (j) Notwithstanding anything to the contrary in this Agreement, Sellers shall not be required to indemnify the Buyer Indemnitees or otherwise be liable to Buyer in respect of the Proceedings described in Section 2.4(e) for any Losses of any Buyer Indemnitee arising out of or resulting from any regulatory action affecting the regulatory treatment or requirements of Buyer with respect to the Business after the Closing Date except to the extent a Buyer Indemnitee is required by a Governmental Body to refund or otherwise credit directly to customers revenues collected by Sellers on or prior to the Closing Date, together with interest or any other amounts identified therewith. Section 13.4 Claims Procedure. (a) All claims for indemnification under Section 13.1 or 13.2, or any other provision of this Agreement except as otherwise expressly provided in this Agreement, shall be asserted and resolved pursuant to this Article XIII. Any Person claiming indemnification hereunder is referred to as the "Indemnified Party" and any Person against whom such claims are asserted hereunder is referred to as the "Indemnifying Party." (b) Except in the case of the Rhodes Proceedings, in the event that any Losses are asserted against or sought to be collected from an Indemnified Party by a third party, said Indemnified Party shall with reasonable promptness provide to the Indemnifying Party a Claim Notice. The obligation of the Indemnifying Party to indemnify the Indemnified Party with respect to any such Losses shall be reduced to the extent the Indemnifying Party is damaged by the failure of the Indemnified Party to provide such notice. Any other claim hereunder shall require the provision of a Claim Notice. The Indemnifying Party shall have 30 days from the personal delivery or receipt of the Claim Notice (the "Notice Period") to notify the Indemnified Party (i) whether or not it disputes the liability of the Indemnifying Party to the Indemnified Party hereunder with respect to such Losses and/or (ii) whether or not it desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against such Losses; provided, however, that any Indemnified Party is hereby authorized prior to and during the Notice Period to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party (and of which it shall have given notice and opportunity to comment to the Indemnifying Party) and not prejudicial to the Indemnifying Party. In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against such Losses, the Indemnifying Party shall defend all appropriate 50 Proceedings, and with counsel of its own choosing, which Proceedings shall be promptly settled or prosecuted by it to a final conclusion; provided that no such Proceeding may be settled without the prior written consent of the Indemnified Party unless a full release is obtained by the Indemnified Party, all amounts payable pursuant thereto are paid by the Indemnifying Party and the settlement does not adversely affect the business or assets of the Indemnified Party, including the Business or the Assets. If the Indemnified Party desires to participate in, but not control, any such defense or settlement it may do so at its sole cost and expense. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any Losses that the Indemnifying Party elects to contest or, if appropriate and related to the claim in question, in making any counterclaim against the Person asserting the third party Losses, or any cross- complaint against any Person. In the event that the Indemnifying Party fails to notify the Indemnified Party within the Notice Period that it will defend against such Losses, the Indemnified Party shall have the right to defend all appropriate Proceedings, and with counsel of its own choosing, at the Indemnifying Party's expense, which Proceedings may be settled (without consent of the Indemnifying Party) or prosecuted by it to a final conclusion. (c) Sellers shall defend the Rhodes Proceedings at their own expense, with counsel of their own choosing, which Sellers shall promptly and diligently pursue to a settlement or prosecute to a final conclusion; provided that neither of the Rhodes Proceedings may be settled without the consent of Buyer unless reasonably concurrently therewith any financial obligations or liability payable pursuant thereto are paid by Sellers or provision for payment is made in accordance with any related Legal Requirements and this Section 13.4(c) or Sections 6.8 or 7.2(d), as the case may be. If Buyer becomes obligated to pay any financial compensation to the plaintiffs in the Rhodes Lawsuit, then Citizens will pay such compensation in accordance with all applicable Legal Requirements or deliver to Buyer (or to the Judicial District Court, Jefferson Parish, Louisiana, if appropriate) a bond or other surety instrument reasonably acceptable to Buyer fully securing payment of such compensation. Notwithstanding the delivery of surety instruments pursuant hereto, Citizens shall remain liable for, and shall pay when due, all obligations secured thereby. If Citizens fails to pay any such obligations when due, and Buyer is required to pay, Buyer shall be entitled to draw on such surety instruments in accordance with the terms thereof. Upon satisfaction of all of Citizens' obligations secured by any such surety instrument, Buyer shall return such surety instrument to Citizens. Citizens' obligation to indemnify the Buyer Indemnitees in respect of the Rhodes Proceedings shall be paid without any right of setoff and notwithstanding any failure of Buyer to perform any of its obligations under the Agreement or any other agreement as instrument delivered pursuant hereto. (d) The Indemnified Party shall provide reasonable assistance to the Indemnifying Party and provide access to its books, records and personnel as the Indemnifying Party reasonably requests in connection with the investigation or defense of the Losses. The Indemnifying Party shall promptly upon receipt of reasonable supporting documentation reimburse the Indemnified Party for out-of- pocket costs and expenses incurred by the latter in providing the requested assistance. (e) With regard to third party claims for which Buyer is or Sellers are entitled to indemnification under Section 13.1 or 13.2, but subject to Section 13.4(c), such indemnification shall be paid by the Indemnifying Party upon: (i) the entry of an Order against the Indemnified Party and the expiration of any applicable appeal period; or (ii) a settlement. Notwithstanding the foregoing but subject to Section 13.4(b) and (c), and provided that there is no dispute as to the applicability of 51 indemnification, expenses of counsel to the Indemnified Party shall be reimbursed on a current basis by the Indemnifying Party as if such expenses are a liability of the Indemnifying Party. Section 13.5 Exclusive Remedy. Except as otherwise provided in Article VI, Article X and this Section 13.5, the rights, remedies and obligations of the Buyer Indemnitees and the Sellers Indemnitees set forth in this Article XIII will be the exclusive rights, remedies and obligations of such Persons after the Closing with respect to this Agreement, the transactions provided for herein or contemplated hereby or Sellers' ownership of the Assets or operation of the Business on or before the Closing Date, except for Sellers' Fraud. Notwithstanding the foregoing, with respect to Environmental Liabilities and Retained Liabilities referred to in Section 13.3(b)(2)(v), the indemnification provisions set forth in this Article XIII are not exclusive and shall be in addition to any other remedies any Buyer Indemnitee may have pursuant to statutory or common law, but subject to the limitations provided in Section 13.3(a), (c) and (d). Section 13.6 Indemnification for Negligence. WITHOUT LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, VIOLATION OF ANY LAW OR OTHER LEGAL FAULT OF OR BY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND. ARTICLE XIV GENERAL PROVISIONS Section 14.1 Expenses. Except as otherwise specifically provided herein, each party will pay all costs and expenses of its performance of and compliance with this Agreement, except (i) Buyer will pay all real estate and motor vehicle title transfer recording fees, and (ii) all Transaction Taxes relating to the transfer of real property and motor vehicles will be shared equally between Buyer, on the one hand, and Sellers, on the other hand. Section 14.2 Notices. All notices, requests and other communications hereunder shall be in writing and shall be deemed to have been given upon receipt if either (a) personally delivered, (b) sent by prepaid first class mail, and registered or certified and a return receipt requested (c) sent by overnight delivery via a nationally recognized carrier or (d) by facsimile with completed transmission acknowledged: If to either Seller, to: Citizens Utilities Company/LGS Natural Gas Company High Ridge Park Stamford, CT 06905 Attention: Robert J. DeSantis Telecopier: (203) 614-4625 52 with a copy to each of: Citizens Utilities Company High Ridge Park Stamford, CT 06905 Attention: L. Russell Mitten, II Telecopier: (203) 614-4651 and: Citizens Utilities Company High Ridge Park Stamford, CT 06905 Attention: J. Michael Love Telecopier: (203) 614-5201 and: Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Attention: Jeffry L. Hardin Telecopier: (202) 387-3467 If to Buyer, to: Atmos Energy Corporation 1800 Three Lincoln Centre 5430 LBJ Freeway Dallas, TX 75240 Attention: John P. Reddy Telecopier: (972) 855-3793 with a copy to each of: Atmos Energy Corporation 1800 Three Lincoln Centre 5430 LBJ Freeway Dallas, TX 75240 Attention: Phillip L. Allbritten Telecopier: (972) 855-3080 53 and: Gibson, Dunn & Crutcher LLP 2100 McKinney Avenue, Suite 1100 Dallas, TX 75201 Attention: Irwin F. Sentilles, III Telecopier: (214) 698-3400 or at such other address or number as shall be given in writing by a party to the other party. Section 14.3 Assignment. This Agreement may not be assigned, by operation of law or otherwise, by any party hereto without the prior written consent of the other party hereto; provided, however, in the event of any such assignment by a party by operation of law without the consent of the other party as required above, such other party may consent in writing to such assignment after it has occurred and, in such event, this Agreement and all the provisions hereof shall be binding upon the Person receiving such assignment by operation of law. Notwithstanding the foregoing, (a) Buyer may assign this Agreement (or any right or obligation hereunder), without the prior written consent of Sellers, to any direct or indirect wholly-owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer (or such obligation) hereunder (provided that no such assignment by Buyer shall in any way operate to enlarge, alter or change any obligation due to Sellers or relieve Buyer of its obligations hereunder if such subsidiary fails to perform such obligations, with the understanding that Buyer shall be jointly and severally liable with such subsidiary for any nonperformance of such obligations hereunder); and (b) Sellers may assign all or part of its rights or delegate all or part of their duties under this Agreement, without the prior written consent of Buyer, to a qualified intermediary chosen by Sellers to structure all or part of the transactions contemplated hereby as a like-kind exchange of property covered by Section 1031 of the IRC, (provided that no such assignment by Sellers shall in any way operate to enlarge, alter or change any obligations due to Buyer or relieve Sellers of their obligations hereunder if such qualified intermediary fails to perform such obligations, with the understanding that Sellers shall be jointly and severally liable with such qualified intermediary for any nonperformance of Sellers' obligations hereunder). Section 14.4 Successor Bound. Subject to the provisions of Section 14.3, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Section 14.5 Governing Law. THE VALIDITY, PERFORMANCE, AND ENFORCEMENT OF THIS AGREEMENT AND ALL RELATED DOCUMENTS, UNLESS EXPRESSLY PROVIDED TO THE CONTRARY, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE THAT WOULD APPLY ANY OTHER LAW. Section 14.6 Dispute Resolution. Except as otherwise provided in Sections 3.3(b), 6.4 and 11.3, and this Section 14.6, any dispute, controversy or claim between the parties relating to, arising out of or in connection with this Agreement (or any subsequent agreements or amendments thereto), including as to its existence, enforceability, validity, interpretation, performance or breach or as to indemnification or damages, including claims in tort, whether arising before or after the termination 54 of this Agreement (any such dispute, controversy or claim being herein referred to as a "Dispute") shall be settled without litigation and only by use of the following alternative dispute resolution procedure: (a) At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any Dispute. The discussions shall be left to the discretion of the representatives. Upon agreement by the parties, the representatives may utilize other alternative dispute resolution procedures such as mediation (including through a mediator upon whom the parties mutually agree or selected or designated by the Washington, DC office of the American Arbitration Association) to assist in the negotiations. Buyer, on the one hand, and Sellers, on the other hand, shall bear one-half of the expenses of any such mediator. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for the purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below, or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in the arbitration. (b) If negotiations between the representatives of the parties do not resolve the Dispute within 60 days of the initial written request, the Dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules, as then amended and in effect, of the American Arbitration Association (the "Rules"). Either party may demand such arbitration in accordance with the procedures set out in the Rules. The arbitration shall take place in Washington, D.C. The arbitration hearing shall be commenced within 60 days of such party's demand for arbitration. The arbitrator shall have the power to and will instruct each party to produce evidence through discovery (i) that is reasonably requested by the other party to the arbitration in order to prepare and substantiate its case and (ii) the production of which will not materially delay the expeditious resolution of the dispute being arbitrated; each party hereto agrees to be bound by any such discovery order. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. At the arbitration hearing, each party may make written and oral presentations to the arbitrator, present testimony and written evidence and examine witnesses. No party shall be eligible to receive, and the arbitrator shall not have the authority to award, exemplary or punitive damages. The arbitrator shall rule on the Dispute by issuing a written opinion within 30 days after the close of hearings. The arbitrator's decision shall be binding and final. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. (c) Each party will bear its own costs and expenses in submitting and presenting its position with respect to any Dispute to the arbitrator; provided, however, that if the arbitrator determines that the position taken in the Dispute by the nonprevailing party taken as a whole is unreasonable, the arbitrator may order the nonprevailing party to bear such fees and expenses, and reimburse the prevailing party for all or such portion of its reasonable costs and expenses in submitting and presenting its position, as the arbitrator shall reasonably determine to be fair under the circumstances. Each party to the arbitration shall pay one-half of the fees and expenses of the arbitrator and the American Arbitration Association. 55 (d) Notwithstanding any other provision of this Agreement, (i) either party may commence an action to compel compliance with this Section 14.6 and (ii) if any party, as part of a Dispute, seeks injunctive relief or any other equitable remedy, including specific enforcement, then such party shall be permitted to seek such injunctive or equitable relief in any federal or state court or competent jurisdiction before, during or after the pendency of a mediation or arbitration proceed under this Section 14.6. Each of the parties irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the United States District Court for the District of Delaware and any state court sitting in the State of Delaware, and any appellate court therefrom, in any action or proceeding permitted by this Section 14.6. Each of the parties hereby irrevocably consents to service of process by registered or certified mail to the address provided for notices in Section 14.2. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. Section 14.7 Cooperation. Except as otherwise provided herein, each of the parties hereto agrees to use its commercially reasonable efforts to take or cause to be taken all action, and to do or cause to be done all things necessary, proper or advisable under applicable laws, regulations or otherwise, to consummate and to make effective the transactions contemplated by this Agreement, including the timely performance of all actions and things contemplated by this Agreement to be taken or done by each of the parties hereto. Section 14.8 Construction of Agreement. The terms and provisions of this Agreement represent the results of negotiations between Buyer and Sellers, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms and provisions of this Agreement shall be interpreted and construed in accordance with their usual and customary meanings, and Buyer and Sellers hereby waive the application in connection with the interpretation and construction of this Agreement of any rule of law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the party whose attorney prepared the executed draft or any earlier draft of this Agreement. It is understood and agreed that neither the specification of any dollar amount in the representations and warranties contained in this Agreement nor the inclusion of any specific item in the Schedules or Exhibits is intended to imply that such amounts or higher or lower amounts, or the items so included or other items, are or are not material, and none of the parties shall use the fact of the setting of such amounts or the fact of any inclusion of any such item in the Schedules or Exhibits in any dispute or controversy between the parties as to whether any obligation, item or matter is or is not material for purposes hereof. The word "including" in this Agreement shall mean including without limitation. Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires. The terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified. 56 Section 14.9 Publicity. No party hereto shall issue, make or cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby, or otherwise make any disclosures relating thereto, without the consent of the other party, such consent not to be unreasonably withheld or delayed; provided, however, that such consent shall not be required where such release or announcement is required by applicable law or the rules or regulations of a securities exchange, in which event the party so required to issue such release or announcement shall endeavor, wherever possible, to furnish an advance copy of the proposed release to the other party. Section 14.10 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. Section 14.11 Parties in Interest. This Agreement (including the documents and instruments referred to herein) is not intended to confer upon any Person, other than the parties hereto and their successors and permitted assigns, any rights or remedies hereunder. Section 14.12 Section and Paragraph Headings. The section and paragraph headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Section 14.13 Amendment. This Agreement may be amended only by an instrument in writing executed by duly authorized officers of the parties hereto. Section 14.14 Entire Agreement. This Agreement, the Exhibits and Schedules hereto and the documents specifically referred to herein and the Confidentiality Agreement constitute the entire agreement, understanding, representations and warranties of the parties hereto, and supersede all prior agreements, both written and oral, between Buyer and Sellers. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Disclosure of any fact or item in any Schedule referenced by a particular paragraph or Section in this Agreement shall, should such fact or item or its contents be expressly or obviously related to any other paragraph or Section, be deemed to be disclosed with respect to that other paragraph or Section whether or not any explicit cross- reference appears therein. Section 14.15 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Section 14.16 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this 57 Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the greatest extent possible. [SIGNATURES APPEAR ON FOLLOWING PAGE] 58 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above. CITIZENS UTILITIES COMPANY By: /s/ ROBERT J. DESANTIS ----------------------------------- Robert J. DeSantis, Chief Financial Officer and Vice President LGS NATURAL GAS COMPANY By: /s/ ROBERT J. DESANTIS ----------------------------------- Robert J. DeSantis, Vice President ATMOS ENERGY CORPORATION By: /s/ ROBERT W. BEST ----------------------------------- Robert W. Best, Chairman, President and Chief Executive Officer 59 EX-4.1 3 0003.txt FORM OF DEBT SECURITIES INDENTURE Exhibit 4.1 ================================================================================ ATMOS ENERGY CORPORATION, Issuer, to SUNTRUST BANK, Trustee Indenture Dated as of , 2000 Debt Securities ================================================================================ Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of ________, 2000 Trust Indenture Act Section Indenture Section (S) 310(a)(1) ......................................... 608 (a)(2) ......................................... 608 (b) ......................................... 604, 607, 609(d)(1) (S) 311(a) ......................................... 101(2), 604, 613 (b) ......................................... 101(2), 604, 613 (S) 312(c) ......................................... 701 (S) 313 ......................................... 702 (S) 314(a) ......................................... 703 (a)(4) ......................................... 1004 (c)(1) ......................................... 102 (c)(2) ......................................... 102 (e) ......................................... 101 ("Opinion of Counsel"), 102 (S) 315(b) ......................................... 601 (S) 316(a)(last sentence) ......................................... 101 ("Outstanding") (a)(1)(A) ......................................... 512 (a)(1)(B) ......................................... 513 (b) ......................................... 508 (c) ......................................... 104(d) (S) 317(a)(1) ......................................... 503 (a)(2) ......................................... 504 (b) ......................................... 1003 (S) 318(a) ......................................... 107 TABLE OF CONTENTS Page ---- PARTIES .................................................................................... 1 RECITALS OF THE COMPANY................................................................................. 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................... 1 SECTION 101. Definitions......................................................................... 1 ----------- Act................................................................................. 2 Additional Amounts.................................................................. 2 Affiliate........................................................................... 2 Attributable Debt................................................................... 2 Authenticating Agent................................................................ 2 Authorized Newspaper................................................................ 2 Authorized Representative........................................................... 3 Bankruptcy Law...................................................................... 3 Board of Directors.................................................................. 3 Board Resolution.................................................................... 3 Book-Entry Security................................................................. 3 Business Day........................................................................ 3 Capital Stock....................................................................... 3 Commission.......................................................................... 3 Company............................................................................. 3 Company Request..................................................................... 4 Consolidated Net Tangible Assets.................................................... 4 Corporate Trust Office.............................................................. 4 corporation......................................................................... 4 covenant defeasance................................................................. 4 Custodian........................................................................... 4 Default............................................................................. 4 Defaulted Interest.................................................................. 4 defeasance.......................................................................... 4 Definitive Security................................................................. 4 Depository.......................................................................... 4 Euroclear........................................................................... 5 Event of Default.................................................................... 5 Exchange Act........................................................................ 5 _______________ Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. Page ---- Final Maturity...................................................................... 5 Funded Indebtedness................................................................. 5 generally accepted accounting principles............................................ 5 Global Securities................................................................... 5 Government Obligations.............................................................. 5 Greeley Indenture................................................................... 5 guarantee........................................................................... 6 Holder.............................................................................. 6 incorporated provision.............................................................. 6 Indebtedness........................................................................ 6 Indenture........................................................................... 6 Indexed Security.................................................................... 6 interest............................................................................ 6 Interest Payment Date............................................................... 7 Lien................................................................................ 7 mandatory sinking fund payment...................................................... 7 Maturity............................................................................ 7 Non-Recourse Indebtedness........................................................... 7 Note Purchase Agreements............................................................ 8 Officers' Certificate............................................................... 8 Opinion of Counsel.................................................................. 8 Option to Elect Repayment........................................................... 8 Optional Reset Date................................................................. 8 optional sinking fund payment....................................................... 8 Original Issue Discount Security.................................................... 8 Original Stated Maturity............................................................ 8 Outstanding......................................................................... 9 Paying Agent........................................................................ 10 Person.............................................................................. 10 Place of Payment.................................................................... 10 Predecessor Security................................................................ 10 Principal Property.................................................................. 10 Redemption Date..................................................................... 10 Redemption Price.................................................................... 10 Regular Record Date................................................................. 10 Repayment Date...................................................................... 10 Repayment Price..................................................................... 10 Reset Notice........................................................................ 10 Restricted Securities............................................................... 11 Restricted Subsidiary............................................................... 11 Page ---- Sale and Leaseback Transaction...................................................... 11 Securities.......................................................................... 11 Security Register................................................................... 11 Special Record Date................................................................. 11 Stated Maturity..................................................................... 11 Subsequent Interest Period.......................................................... 11 Subsidiary.......................................................................... 12 Trustee............................................................................. 12 United Cities Indenture............................................................. 12 United States....................................................................... 12 United States person................................................................ 12 Vice President...................................................................... 12 Yield to Maturity................................................................... 12 SECTION 102. Compliance Certificates and Opinions................................................ 13 ------------------------------------ SECTION 103. Form of Documents Delivered to Trustee.............................................. 13 -------------------------------------- SECTION 104. Acts of Holders..................................................................... 14 --------------- SECTION 105. Notices, etc. to Trustee and Company................................................ 15 ------------------------------------ SECTION 106. Notice to Holders; Waiver........................................................... 15 ------------------------- SECTION 107. Conflict of any Provision of Indenture with Trust Indenture Act..................... 16 --------------------------------------------------------------- SECTION 108. Effect of Headings and Table of Contents............................................ 16 ---------------------------------------- SECTION 109. Successors and Assigns.............................................................. 16 ---------------------- SECTION 110. Separability Clause................................................................. 17 ------------------- SECTION 111. Benefits of Indenture............................................................... 17 --------------------- SECTION 112. Governing Law....................................................................... 17 ------------- SECTION 113. Legal Holidays...................................................................... 17 -------------- SECTION 114. No Recourse Against Others.......................................................... 17 -------------------------- ARTICLE TWO SECURITY FORMS.................................................................. 18 SECTION 201. Forms Generally..................................................................... 18 --------------- SECTION 202. Form of Trustee's Certificate of Authentication..................................... 18 ----------------------------------------------- SECTION 203. Securities Issuable in Global Form.................................................. 19 ---------------------------------- Page ---- SECTION 204. Form of Legend for Book-Entry Securities............................................ 20 ---------------------------------------- ARTICLE THREE THE SECURITIES.................................................................. 20 SECTION 301. Amount Unlimited; Issuable in Series................................................ 20 ------------------------------------ SECTION 302. Denominations....................................................................... 23 ------------- SECTION 303. Execution, Authentication, Delivery and Dating...................................... 23 ---------------------------------------------- SECTION 304. Book-Entry Securities............................................................... 25 --------------------- SECTION 305. Temporary Securities................................................................ 27 -------------------- SECTION 306. Registration, Registration of Transfer and Exchange................................. 27 --------------------------------------------------- SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities.................................... 28 ------------------------------------------------ SECTION 308. Payment of Interest; Interest Rights Preserved; Optional Interest Reset............. 29 ----------------------------------------------------------------------- SECTION 309. Optional Extension of Stated Maturity............................................... 32 ------------------------------------- SECTION 310. Persons Deemed Owners............................................................... 33 --------------------- SECTION 311. Cancellation........................................................................ 33 ------------ SECTION 312. Computation of Interest............................................................. 34 ----------------------- SECTION 313. CUSIP Numbers....................................................................... 34 ------------- ARTICLE FOUR SATISFACTION AND DISCHARGE...................................................... 34 SECTION 401. Satisfaction and Discharge of Indenture............................................. 34 --------------------------------------- SECTION 402. Application of Trust Money.......................................................... 35 -------------------------- ARTICLE FIVE REMEDIES........................................................................ 36 SECTION 501. Events of Default................................................................... 36 ----------------- SECTION 502. Acceleration of Maturity; Rescission and Annulment.................................. 37 -------------------------------------------------- SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee..................... 38 --------------------------------------------------------------- SECTION 504. Trustee May File Proofs of Claim.................................................... 39 -------------------------------- SECTION 505. Trustee May Enforce Claims Without Possession of Securities......................... 40 ----------------------------------------------------------- SECTION 506. Application of Money Collected...................................................... 40 ------------------------------ Page ---- SECTION 507. Limitation on Suits.............................................................. 40 ------------------- SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest........ 41 ------------------------------------------------------------------------- SECTION 509. Restoration of Rights and Remedies............................................... 41 ---------------------------------- SECTION 510. Rights and Remedies Cumulative................................................... 42 ------------------------------ SECTION 511. Delay or Omission Not Waiver..................................................... 42 ---------------------------- SECTION 512. Control by Holders............................................................... 42 ------------------ SECTION 513. Waiver of Past Defaults.......................................................... 42 ----------------------- SECTION 514. Undertaking for Costs............................................................ 43 --------------------- SECTION 515. Waiver of Stay or Extension Laws................................................. 43 -------------------------------- ARTICLE SIX THE TRUSTEE.................................................................... 44 SECTION 601. Notice of Defaults............................................................... 44 ------------------ SECTION 602. Certain Rights of Trustee........................................................ 44 ------------------------- SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities................... 46 -------------------------------------------------------------- SECTION 604. May Hold Securities.............................................................. 46 ------------------- SECTION 605. Money Held in Trust.............................................................. 46 ------------------- SECTION 606. Compensation and Reimbursement................................................... 46 ------------------------------ SECTION 607. Conflicting Interests............................................................ 47 --------------------- SECTION 608. Corporate Trustee Required; Eligibility; Conflicting Interests................... 47 -------------------------------------------------------------- SECTION 609. Resignation and Removal; Appointment of Successor................................ 48 ------------------------------------------------- SECTION 610. Acceptance of Appointment by Successor........................................... 49 -------------------------------------- SECTION 611. Merger, Conversion, Consolidation or Succession to Business...................... 50 ----------------------------------------------------------- SECTION 612. Appointment of Authenticating Agent.............................................. 51 ----------------------------------- SECTION 613. Preferential Collection of Claims Against Company................................ 53 ------------------------------------------------- ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............................. 53 Page ---- SECTION 701. Disclosure of Names and Addresses of Holders..................................... 53 -------------------------------------------- SECTION 702. Reports by Trustee............................................................... 53 ------------------ SECTION 703. Reports by Company............................................................... 53 ------------------ ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........................... 54 SECTION 801. Company May Consolidate, Etc., Only on Certain Terms............................. 54 ---------------------------------------------------- SECTION 802. Rights and Duties of Successor Corporation....................................... 55 ------------------------------------------ SECTION 803. Securities to be Secured in Certain Events....................................... 55 ------------------------------------------ ARTICLE NINE SUPPLEMENTAL INDENTURES........................................................ 56 SECTION 901. Supplemental Indentures Without Consent of Holders............................... 56 -------------------------------------------------- SECTION 902. Supplemental Indentures with Consent of Holders.................................. 57 ----------------------------------------------- SECTION 903. Execution of Supplemental Indentures............................................. 58 ------------------------------------ SECTION 904. Effect of Supplemental Indentures................................................ 59 --------------------------------- SECTION 905. Conformity with Trust Indenture Act.............................................. 59 ----------------------------------- SECTION 906. Reference in Securities to Supplemental Indentures............................... 59 -------------------------------------------------- SECTION 907. Notice of Supplemental Indentures................................................ 59 --------------------------------- ARTICLE TEN COVENANTS...................................................................... 59 SECTION 1001. Payment of Principal, Premium and Interest....................................... 59 ------------------------------------------ SECTION 1002. Maintenance of Office or Agency.................................................. 60 ------------------------------- SECTION 1003. Money for Security Payments to Be Held in Trust.................................. 60 ----------------------------------------------- SECTION 1004. Statement as to Compliance....................................................... 62 -------------------------- SECTION 1005. Corporate Existence.............................................................. 62 ------------------- SECTION 1006. Limitations on Liens............................................................. 62 -------------------- SECTION 1007. Limitation on Sale and Leaseback Transactions.................................... 64 --------------------------------------------- SECTION 1008. Additional Amounts............................................................... 64 ------------------ SECTION 1009. Waiver of Certain Covenants...................................................... 65 --------------------------- ARTICLE ELEVEN REDEMPTION OF SECURITIES....................................................... 65 Page ---- SECTION 1101. Applicability of Article......................................................... 65 ------------------------ SECTION 1102. Election to Redeem; Notice to Trustee............................................ 66 ------------------------------------- SECTION 1103. Selection by Trustee of Securities to Be Redeemed................................ 66 ------------------------------------------------- SECTION 1104. Notice of Redemption............................................................. 66 -------------------- SECTION 1105. Deposit of Redemption Price...................................................... 67 --------------------------- SECTION 1106. Securities Payable on Redemption Date............................................ 67 ------------------------------------- SECTION 1107. Securities Redeemed in Part...................................................... 68 --------------------------- ARTICLE TWELVE SINKING FUNDS.................................................................. 68 SECTION 1201. Applicability of Article......................................................... 68 ------------------------ SECTION 1202. Satisfaction of Sinking Fund Payments with Securities............................ 69 ----------------------------------------------------- SECTION 1203. Redemption of Securities for Sinking Fund........................................ 69 ----------------------------------------- ARTICLE THIRTEEN REPAYMENT AT OPTION OF HOLDERS................................................. 70 SECTION 1301. Applicability of Article......................................................... 70 ------------------------ SECTION 1302. Repayment of Securities.......................................................... 70 ----------------------- SECTION 1303. Exercise of Option............................................................... 71 ------------------ SECTION 1304. When Securities Presented for Repayment Become Due and Payable................... 71 -------------------------------------------------------------- SECTION 1305. Securities Repaid in Part........................................................ 72 ------------------------- ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE............................................. 72 SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance..................... 72 ------------------------------------------------------------ SECTION 1402. Defeasance and Discharge......................................................... 72 ------------------------ SECTION 1403. Covenant Defeasance.............................................................. 73 ------------------- SECTION 1404. Conditions to Defeasance or Covenant Defeasance.................................. 73 ----------------------------------------------- SECTION 1405. Deposited Money and Government Obligations to Be ------------------------------------------------ Held in Trust; Other Miscellaneous Provisions.................................... 75 --------------------------------------------- SECTION 1406. Reinstatement.................................................................... 76 ------------- INDENTURE, dated as of ______________, _______, between Atmos Energy Corporation, a Texas and Virginia corporation (herein called the "Company"), and SunTrust Bank, a banking corporation with trust powers organized and existing under the laws of the State of Georgia, trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its senior debt securities (herein called the "Securities"), to be issued in one or more series as in this Indenture provided. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. ----------- For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein, and the terms "cash transaction" and "self- liquidating paper", as used in TIA Section 311, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act; 2 (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles and except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States; and (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Three, are defined in that Article. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Additional Amounts" has the meaning specified in Section 1008. "Affiliate" means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Attributable Debt" means, as to any particular lease under which any Person is at the time liable, at any date as of which the amount thereof is to be determined, the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof (excluding amounts required to be paid on account of maintenance and repairs, services, insurance, taxes, assessments, water rates and similar charges and contingent rents), discounted from the respective due dates thereof at the weighted average of the rates of interest (or Yield to Maturity, in the case of Original Issue Discount Securities) borne by the then Outstanding Securities compounded annually. "Authenticating Agent" means any Person appointed by the Trustee to act on behalf of the Trustee pursuant to Section 612 to authenticate Securities. "Authorized Newspaper" means a newspaper, in the English language or in an official language of the country of publication, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day. 3 "Authorized Officer", when used with respect to the Trustee, means any vice-president, assistant vice president, any assistant secretary, any assistant treasurer, any trust officer or assistant trust officer, the controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, in each case who is assigned by the Trustee to administer corporate trust matters at its Corporate Trust Office, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company or any duly authorized committee of such Board. "Board Resolution" means a copy of a resolution certified by the Corporate Secretary or an Assistant Corporate Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Book-Entry Security" has the meaning specified in Section 304. "Business Day", when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the Securities, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or other location are authorized or obligated by law, regulation or executive order to close. "Capital Stock" means, with respect to any corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. To the extent necessary to comply with the requirements of the provisions of TIA Sections 310 4 through 317 as they are applicable to the Company, the term "Company" shall include any other obligor with respect to the Securities for the purposes of complying with such provisions. "Company Request" or "Company Order" means a written request or order signed in the name of the Company (i) by its Chairman, Chief Executive Officer, its President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer, its Corporate Secretary or an Assistant Corporate Secretary and delivered to the Trustee; provided, however, that such written request or order -------- ------- may be signed by any two of the officers or directors listed in clause (i) above in lieu of being signed by one of such officers or directors listed in such clause (i) and one of the officers listed in clause (ii) above. "Consolidated Net Tangible Assets" means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities (excluding any portion thereof constituting Funded Indebtedness) and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the most recent consolidated balance sheet of the Company contained in the latest quarterly or annual report of the Company filed with the Commission under the Exchange Act and computed in accordance with generally accepted accounting principles. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office on the date of execution of this Indenture is located at Suntrust Bank, Corporate Trust Division, 25 Park Place, 24th Floor, Atlanta, Georgia 30303-2900, Attention: Corporate Trust Department. "corporation" includes corporations, associations, partnerships, limited liability companies, companies and business trusts. "covenant defeasance" has the meaning specified in Section 1403 hereof. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar officer under any Bankruptcy Law. "Default" means any event that is, or after notice or passage of time or both would be, an Event of Default. "Defaulted Interest" has the meaning specified in Section 308 hereof. "defeasance" has the meaning specified in Section 1402 hereof. "Definitive Security" has the meaning specified in Section 304 hereof. "Depository" has the meaning specified in Section 304. 5 "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels Office, or its successor as operator of the Euroclear System. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Extension Notice" and "Extension Period" shall have the meanings specified in Section 309. "Final Maturity" has the meaning specified in Section 309. "Funded Indebtedness" as applied to any Person, means all Indebtedness of such Person maturing after, or renewable or extendable at the option of such Person beyond, 12 months from the date of determination. "generally accepted accounting principles" or "GAAP" means generally accepted accounting principles in the United States. "Global Securities" means one or more Securities evidencing all or part of the Securities to be issued as Book-Entry Securities, issued to the Depository in accordance with Section 301 and bearing the legend prescribed in Section 204. "Government Obligations" means, securities which are (i) direct obligations of the United States government or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States government, the payment of which is unconditionally guaranteed by the United States government, which, in either case, are full faith and credit obligations of the United States government payable and are not callable or redeemable at the option of the issuer thereof and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of any such Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required -------- by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest or principal of the Government Obligation evidenced by such depository receipt. "Greeley Indenture" means that certain Indenture of Mortgage and Deed of Trust, dated as of March 1, 1957, from Greeley Gas Company to U.S. Bank National Association (formerly The Central Bank and Trust Company), as Trustee, as amended and supplemented through December 1,1993 (the Indenture of Mortgage and Deed of Trust through the Tenth Supplemental Indenture by the Company to U.S. Bank National Association (formerly The 6 Central Bank and Trust Company), as Trustee, as amended, supplemented or otherwise modified from time to time. "guarantee" means, as applied to any obligation, (i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation or (ii) an agreement, direct or indirect, contingent or otherwise, providing assurance of the payment or performance (or payment of damages in the event of non-performance) of any part or all of such obligation, including, without limiting the foregoing, the payment of amounts drawn down by letters of credit. Notwithstanding anything herein to the contrary, a guarantee shall not include any agreement solely because such agreement creates a Lien on the assets of any Person. The amount of a guarantee shall be deemed to be the maximum amount of the obligation guaranteed for which the guarantor could be held liable under such guarantee. "Holder" means the Person in whose name a Security is registered in the Security Register. "incorporated provision" has the meaning specified in Section 107. "Indebtedness" means obligations for money borrowed, evidenced by notes, bonds, debentures or other similar evidences of indebtedness. "Indenture" means this instrument as originally executed (including all exhibits and schedules hereto) and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of Securities established as contemplated by Section 301; provided, however, that, if at any time there is more than one series of -------- ------- Securities issued under this instrument, "Indenture" shall mean, with respect to each such series of Securities, this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the provisions hereof applicable to such series and shall include the terms of such series of Securities established as contemplated by Section 301, exclusive, however, of any provisions or terms which do not relate to such series, regardless of when such provisions or terms were adopted. "Indexed Security" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance. "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity at the rate prescribed in such Original Issue Discount Security. 7 "Interest Payment Date", when used with respect to any series of Securities, means the Stated Maturity of an installment of interest on such Securities. "Lien" means any lien, mortgage, pledge, encumbrance, charge or security interest securing Indebtedness; provided, however, that the following -------- ------- types of transactions will not be considered for purposes of this definition to result in a Lien: (i) any acquisition by the Company or any Restricted Subsidiary of any property or assets subject to any reservation or exception under the terms of which any vendor, lessor or assignor creates, reserves or excepts or has created, reserved or excepted an interest in oil, gas or any other mineral in place or the proceeds thereof, (ii) any conveyance or assignment whereby the Company or any Restricted Subsidiary conveys or assigns to any Person or Persons an interest in oil, gas or any other mineral in place or the proceeds thereof, (iii) any Lien upon any property or assets either owned or leased by the Company or any Restricted Subsidiary or in which the Company or any Restricted Subsidiary owns an interest that secures for the benefit of the Person or Persons paying the expenses of developing or conducting operations for the recovery, storage, transportation or sale of the mineral resources of such property or assets (or property or assets with which it is unitized) the payment to such Person or Persons of the Company's or the Restricted Subsidiary's proportionate part of such development or operating expenses, (iv) any hedging arrangements entered into in the ordinary course of business, including any obligation to deliver any mineral, commodity or asset in connection therewith or (v) any guarantees by the Company of the repayment of Indebtedness of any Subsidiary or guarantees by the Company or any Subsidiary of the repayment of Indebtedness of any entity, including, but not limited to, Indebtedness of Woodward Marketing, L.L.C. "mandatory sinking fund payment" shall have the meaning specified in Section 1201. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided whether at the Stated Maturity, by declaration of acceleration, notice of redemption, notice of option to elect repayment or otherwise. "Non-Recourse Indebtedness" means, at any time, Indebtedness incurred after the date of the Indenture by the Company or a Restricted Subsidiary in connection with the acquisition of property or assets by the Company or a Restricted Subsidiary or the financing of the construction of or improvements on property, whenever acquired, provided that, under the terms of such Indebtedness -------- and pursuant to applicable law, the recourse at such time and thereafter of the lenders with respect to such Indebtedness is limited to the property or assets so acquired, or such construction or improvements, including Indebtedness as to which a performance or completion guarantee or similar undertaking was initially applicable to such Indebtedness or the related property or assets if such guarantee or similar undertaking has been satisfied and is no longer in effect. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse Indebtedness because there is recourse to the 8 borrower, any guarantor or any other person for (a) environmental representations, warranties or indemnities, or (b) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance and condemnation proceeds and other sums actually received from secured assets to be paid to the lender, waste and mechanics' liens or similar matters. "Note Purchase Agreements" collectively refers to the following Note Purchase Agreements, as amended, supplemented or otherwise modified from time to time, which were executed by and between the Company and the following parties on the dates indicated: (i) John Hancock Mutual Life Insurance Company, dated December 21, 1987; (ii) Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans - AT&T - John Hancock - Private Placement, dated December 21, 1987 (Agreement is identical to Hancock Agreement listed above except as to the parties thereto and the amounts thereof); (iii) John Hancock Mutual Life Insurance Company, dated October 11, 1989; (iv) The Variable Annuity Life Insurance Company, dated August 29, 1991; (v) The Variable Annuity Life Insurance Company, dated August 31, 1992; and (vi) New York Life Insurance Company, New York Life Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company and Merit Life Insurance Company, dated November 14, 1994. "Officers' Certificate" means a certificate signed by (i) the Chairman, Chief Executive Officer, the President, a Vice President or the Treasurer of the Company and (ii) the Corporate Secretary or an Assistant Corporate Secretary of the Company and delivered to the Trustee; provided, -------- however, that such certificate may be signed by two of the officers or directors ------- listed in clause (i) above in lieu of being signed by one of such officers or directors listed in such clause (i) and one of the officers listed in clause (ii) above. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. Each such opinion shall include the statements provided for in TIA Section 314(e) to the extent applicable. "Option to Elect Repayment" shall have the meaning specified in Section 1303. "Optional Reset Date" shall have the meaning specified in Section 308. "optional sinking fund payment" shall have the meaning specified in Section 1201. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Original Stated Maturity" shall have the meaning specified in Section 309. 9 "Outstanding" when used with respect to Securities means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: ------ (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment, purchase, redemption or repayment at the option of the Holder money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be -------- redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities, except to the extent provided in Sections 1402 and 1403, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in Article Fourteen; and (iv) Securities paid pursuant to Section 307 or Securities in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that, in determining whether the Holders of the requisite -------- ------- principal amount of Outstanding Securities have given any request, demand, direction, consent or waiver hereunder, and for the purpose of making the calculations required by TIA Section 316, (i) the principal amount of an Original Issue Discount Security that may be counted in making such determination or calculation and that shall be deemed to be Outstanding for such purpose shall be equal to the amount of principal thereof that would be (or shall have been declared to be) due and payable, at the time of such determination, upon a declaration of acceleration of the maturity thereof pursuant to Section 502, (ii) the principal amount of any Indexed Security that may be counted in making such determination or calculation and that shall be deemed outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided with respect to such Security pursuant to Section 301, and (iii) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which an Authorized Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so 10 to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (or premium, if any) or interest, if any, on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means, when used with respect to the Securities of or within any series, the place or places where the principal of (and premium, if any) and interest, if any, on such Securities are payable as specified as contemplated by Sections 301 and 1002. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 307 in exchange for a mutilated Security or in lieu of a destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Principal Property" means any natural gas distribution property or propane property located in the United States, except any such property that in the opinion of the Board of Directors of the Company is not of material importance to the total business conducted by the Company and its consolidated Subsidiaries. "Redemption Date", when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of or within any series means the date specified for that purpose as contemplated by Section 301. "Repayment Date" means, when used with respect to any Security to be repaid at the option of the Holder, the date fixed for such repayment pursuant to this Indenture. "Repayment Price" means, when used with respect to any Security to be repaid at the option of the Holder, the price at which it is to be repaid pursuant to this Indenture. "Reset Notice" shall have the meaning specified in Section 308. 11 "Restricted Securities" has the meaning specified in Section 1006. "Restricted Subsidiary" means any Subsidiary the amount of Consolidated Net Tangible Assets of which constitutes more than 5% of the aggregate amount of Consolidated Net Tangible Assets of the Company and its Subsidiaries. "Sale and Leaseback Transaction" means any arrangement with any Person pursuant to which the Company or any Restricted Subsidiary leases any Principal Property that has been or is to be sold or transferred by the Company or the Restricted Subsidiary to such Person, other than (i) a lease for a term, including renewals at the option of the lessee, of not more than three years or classified as an operating lease under generally accepted accounting principles, (ii) leases between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and (iii) leases of a Principal Property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation, of the Principal Property. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture; provided, however, that if at any time there is more than -------- ------- one series of Securities, "Securities" with respect to the Indenture for such series shall mean the Securities authenticated and delivered under such Indenture for such series, exclusive, however, of the Securities of any series authenticated and delivered under any other Indenture. "Security Register" and "Security Registrar" have the respective meanings specified in Section 306. "Special Record Date" means a date fixed by the Trustee for the payment of any Defaulted Interest pursuant to Section 308. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security representing such installment of principal or interest as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable, as such date may be extended pursuant to the provisions of Section 309. "Subsequent Interest Period" shall have the meaning specified in Section 308. 12 "Subsidiary" of the Company means (i) a corporation, a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is owned, directly or indirectly, at the date of determination, by the Company, by one or more Subsidiaries or by the Company and one or more Subsidiaries or (ii) any other Person (other than a corporation) in which at the date of determination the Company, one or more Subsidiaries or the Company and one or more Subsidiaries, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as amended, and as in force at the date as of which this Indenture was executed, except as provided in Section 905. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder; provided, however, that if at any time there is more than one such Person, -------- ------- "Trustee" as used with respect to the Securities of any series shall mean only the Trustee with respect to Securities of that series. "United Cities Indenture" means that certain Indenture of Mortgage, dated as of July 15, 1959, from United Cities Gas Company to U.S. Bank Trust National Association (formerly First Trust of Illinois, National Association), and M.J. Kruger, as Trustees, as amended and supplemented through July 29, 1997 (the Indenture of Mortgage through the Twenty-Second Supplemental Indenture by the Company to U.S. Bank Trust National Association (formerly First Trust of Illinois, National Association) and Russell C. Bergman, as Trustees), as amended, supplemented or otherwise modified from time to time. "United States" means, unless otherwise specified with respect to any Securities pursuant to Section 301, the United States of America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. "United States person" means, unless otherwise specified with respect to any Securities pursuant to Section 301, an individual who is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or an estate or trust the income of which is subject to United States federal income taxation regardless of its source. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Yield to Maturity" means the yield to maturity, computed at the time of issuance of a Security (or, if applicable, at the most recent redetermination of interest on such Security) 13 and as set forth in such Security in accordance with generally accepted United States bond yield computation principles. SECTION 102. Compliance Certificates and Opinions. ------------------------------------ Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion (other than the certificates required by Section 1004) with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such covenant or condition has been complied with. SECTION 103. Form of Documents Delivered to Trustee. -------------------------------------- In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. 14 Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. --------------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of the Outstanding Securities of any series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments or so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to TIA Section 315) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner which the Trustee deems sufficient. (c) The ownership of Securities shall be proved by the Security Register. (d) If the Company shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of such Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), any such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not more than 30 days prior to the first solicitation of 15 Holders generally in connection therewith and no later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Securities then Outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Securities then Outstanding shall be computed as of such record date; provided that no such request, demand, authorization, direction, notice, -------- consent, waiver or other Act by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act by the Holder of any Security shall bind every future Holder of the same Security or the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, suffered or omitted to be done by the Trustee, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 105. Notices, etc. to Trustee and Company. ------------------------------------ Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder, an agent of any bank or the Company shall be sufficient for every purpose hereunder if made, given, furnished or delivered, in writing, to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department; or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or delivered, in writing, to the Company addressed to it c/o 1800 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240, Attention: Treasurer, or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. ------------------------- Where this Indenture provides for notice of any event to Holders of Securities by the Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where 16 notice to Holders of Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders of Securities. Any notice mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. In case, by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impractical to mail notice of any event to Holders of Securities when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be sufficient giving of such notice for every purpose hereunder. Any request, demand, authorization, direction, notice, consent or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 107. Conflict of any Provision of Indenture with Trust ------------------------------------------------- Indenture Act. ------------- If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Sections 310 to 318, inclusive, or conflicts with any provision (an "incorporated provision") required by or deemed to be included in this Indenture by operation of such TIA Sections, such imposed duties or incorporated provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 108. Effect of Headings and Table of Contents. ---------------------------------------- The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. ---------------------- All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. 17 SECTION 110. Separability Clause. ------------------- In case any provision in this Indenture or in any Security shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. --------------------- Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, any Authenticating Agent, any Paying Agent, any Securities Registrar and their successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. ------------- This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles that would apply any other law. This Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. SECTION 113. Legal Holidays. -------------- In any case where any Interest Payment Date, Redemption Date, sinking fund payment date or Stated Maturity or Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of any Security other than a provision in the Securities of any series which specifically states that such provision shall apply in lieu of this Section), payment of principal (or premium, if any) or interest, if any, need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date or sinking fund payment date, or at the Stated Maturity or Maturity; provided that no -------- interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be, to such succeeding Business Day. SECTION 114. No Recourse Against Others. -------------------------- A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting any of the Securities waives and releases all such liability. 18 ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. --------------- The Securities shall be in substantially the forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the forms of Securities of any series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Corporate Secretary or an Assistant Corporate Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. The Trustee's certificate of authentication on all Securities shall be in substantially the form set forth in this Article. The definitive Securities shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Securities, as evidenced by their execution of such Securities. SECTION 202. Form of Trustee's Certificate of Authentication. ----------------------------------------------- Subject to Section 612, the Trustee's certificate of authentication shall be in substantially the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION Dated: ____________________ This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. SUNTRUST BANK, as Trustee By ________________________________ Authorized Representative 19 SECTION 203. Securities Issuable in Global Form. ---------------------------------- When Securities of or within a series are issued in global form, as specified as contemplated by Section 301, then, any such Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities of such series from time to time endorsed thereon and that the aggregate amount of Outstanding Securities of such series represented thereby may from time to time be increased or decreased to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby shall be made by the Trustee in such manner and upon instructions given by such Person or Persons as shall be specified therein or in the Company Order to be delivered to the Trustee pursuant to Section 303 or Section 305. Subject to the provisions of Section 303 and, if applicable, Section 305, the Trustee shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order. If a Company Order pursuant to Section 303 or Section 305 has been, or simultaneously is, delivered, any instructions by the Company with respect to endorsement or delivery or redelivery of a Security in global form shall be in writing but need not comply with Section 102 and need not be accompanied by an Opinion of Counsel. The provisions of the last sentence of Section 303 shall apply to any Security represented by a Security in global form if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Security in global form together with written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 303. Notwithstanding the provisions of Section 308, unless otherwise specified as contemplated by Section 301, payment of principal of (and premium, if any) and interest, if any, on any Security in permanent global form shall be made to the Person or Persons specified therein. Notwithstanding the provisions of Section 310 and except as provided in the preceding paragraph, the Company, the Trustee and any agent of the Company and the Trustee shall treat as the Holder of such principal amount of Outstanding Securities represented by a permanent Global Security the Holder of such permanent Global Security. 20 SECTION 204. Form of Legend for Book-Entry Securities. ---------------------------------------- Any Global Security authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Security) in substantially the following form: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. ARTICLE THREE THE SECURITIES SECTION 301. Amount Unlimited; Issuable in Series. ------------------------------------ The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in one or more Board Resolutions or pursuant to authority granted by one or more Board Resolutions and, subject to Section 303, set forth in, or determined in the manner provided in, an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, any or all of the following, as applicable (each of which (except for the matters set forth in clauses (1) and (2) below), if so provided, may be determined from time to time by the Company with respect to unissued Securities of the series and set forth in such Securities of the series when issued from time to time): (1) The title of the Securities of the series (which shall distinguish the Securities of the series from all other series of Securities); (2) The aggregate principal amount of the Securities of the series, the percentage of their principal amount at which the Securities of the series shall be issued and the date or dates on which the principal of the Securities of the series shall be payable or the method by which such date or dates shall be determined or extended; 21 (3) The rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, and, if variable, the method by which such rate or rates shall be determined; (4) The date or dates from which any interest shall accrue or the method by which such date or dates will be determined, the date or dates on which any interest will be payable (including the Regular Record Dates for such Interest Payment Dates) and the basis on which any interest will be calculated if other than on the basis of a 360-day year of twelve 30-day months; (5) The place or places, if any, other than or in addition to New York City, where the principal of (and premium, if any, on) and interest, if any, on the Securities of the series will be payable, where any Securities may be surrendered for registration of transfer, where the Securities of the series may be surrendered for exchange and where notices or demands to or upon the Company in respect of the Securities of the series may be served; (6) The period or periods within which, the price or prices at which, and the other terms and conditions upon which, the Securities of the series may be redeemed, in whole or in part, at the option of the Company, if the Company is to have that option; (7) The obligation, if any, of the Company to redeem, purchase or repay the Securities of the series, in whole or in part, pursuant to any sinking fund or analogous provision or at the option of a holder thereof, and the period or periods within which, the price or prices at which, and the other terms and conditions upon which, the Securities of the series will be so redeemed, purchased or repaid; (8) Whether the amount of payments of principal of (and premium, if any, on) and interest, if any, on the Securities of the series may be determined with reference to an index, formula or other method (which index, formula or method may, without limitation, be based on one or more commodities, equity indices or other indices) and the manner in which such amounts shall be determined; (9) Any deletions from, modifications of or additions to the Events of Default or covenants of the Company with respect to the Securities of the series (which Events of Default or covenants may not be consistent with the Events of Default or covenants set forth in the general provisions of this Indenture); (10) If other than the entire principal amount thereof, the portion of the principal amount of the Securities of the series that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502 or the method by which such portion shall be determined; 22 (11) Any provisions in modification of, in addition to or in lieu of any provisions of Article Fourteen of this Indenture relating to defeasance and covenant defeasance that shall be applicable to the Securities of the series; (12) Any provisions granting special rights to the Holders of the Securities of the series upon the occurrence of such events as may be specified; (13) If other than the Trustee, the designation of any Paying Agent or Security Registrar for the Securities of the series, and the designation of any transfer or other agents or depositories for the Securities of the series; (14) Whether the Securities of the series shall be issuable initially in temporary global form, whether any the Securities of the series is to be issuable in permanent global form (a "Global Security") and, if so, whether beneficial owners of interests in any Global Security may exchange such interests for Definitive Securities of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner provided in the Indenture, and, if the Securities are to be issuable as a Global Security, the identity of the depository for the Securities of the series; (15) The person to whom any interest on any Security shall be payable, if other than the person in whose name the Securities of the series (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, or the manner in which any interest payable on a temporary Security issued in global form shall be paid (if other than as described in Section 304); (16) The denomination or denominations in which the Securities of the series shall be issuable, if other than $1,000 or any integral multiple thereof; (17) Whether and under what circumstances the Company shall pay Additional Amounts, as contemplated by Section 1008 of this Indenture, on the Securities of the series to any Holder who is not a United States person (including any modification of the definition of such term as contained in this Indenture) in respect of any tax, assessment or governmental charge and, if so, whether the Company shall have the option to redeem the Securities of the series rather than pay such Additional Amounts (and the terms of any such option); and (18) Any other terms, conditions, rights and preferences (or limitations on such rights and preferences) of the Securities of the series which may not be consistent with the other provisions of this Indenture. All Securities of any one series shall be substantially identical except as may otherwise be provided in or pursuant to such Board Resolution (subject to Section 303) and set 23 forth in such Officers' Certificate or in any such indenture supplemental hereto. Not all Securities of any one series need be issued at the same time, and, unless otherwise provided, a series may be reopened for issuances of additional Securities of such series. If any of the terms of the series are established by action taken pursuant to one or more Board Resolutions, such Board Resolutions shall be delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. SECTION 302. Denominations. ------------- The Securities of each series shall be issuable in such denominations as shall be specified as contemplated by Section 301. In the absence of any such provisions, the Securities of such series, other than Securities issued in global form (which may be of any denomination), shall be issuable in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. ---------------------------------------------- The Securities shall be executed on behalf of the Company by any one of the following: its Chairman, Chief Executive Officer, its President or one of its Vice Presidents, and attested by one of its Vice Presidents or its Corporate Secretary or one of its Assistant Corporate Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and make available for delivery such Securities. If not all the Securities of any series are to be issued at one time and if the Board Resolution or supplemental indenture establishing such series shall so permit, such Company Order may set forth procedures acceptable to the Trustee for the issuance of such Securities and determining terms of particular Securities of such series such as interest rate, stated maturity, date of issuance and date from which interest shall accrue. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to TIA Sections 315(a) through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel stating: 24 (1) that the form or forms of such Securities have been established in conformity with the provisions of this Indenture; (2) that the terms of such Securities have been established in conformity with the provisions of this Indenture; (3) that such Securities, when completed by appropriate insertions and executed and delivered by the Company to the Trustee for authentication in accordance with this Indenture, authenticated and made available for delivery by the Trustee in accordance with this Indenture and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting the enforcement of creditors' rights, to general equitable principles and to such other qualifications as such counsel shall conclude do not materially affect the rights of Holders of such Securities; (4) that all laws and requirements in respect of the execution and delivery by the Company of such Securities, and of the supplemental indentures, if any, have been complied with and that authentication and delivery of such Securities and the execution and delivery of the supplemental indenture, if any, by the Trustee will not violate the terms of the Indenture; (5) that the Company has the corporate power to issue such Securities, and all necessary corporate action with respect to such issuance has been taken; and (6) that the issuance of such Securities will not contravene the articles of incorporation or bylaws of the Company or result in any violation of any of the terms or provisions of any law or regulation or of any indenture, mortgage or other agreement known to such Counsel by which the Company is bound. Notwithstanding the provisions of Section 301 and of the preceding two paragraphs, if not all the Securities of any series are to be issued at one time, so long as the terms and provisions of such Securities are substantially identical to the other Securities of such series, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to the preceding two paragraphs prior to or at the time of issuance of each Security, but such documents shall be delivered prior to or at the time of issuance of the first Security of such series. The Trustee shall not be required to authenticate and make available for delivery any such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties, immunities, protections, privileges, indemnities and benefits under 25 the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 311 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 304. Book-Entry Securities. --------------------- (a) The Securities of a series may be issuable in whole or in part in the form of one or more Global Securities ("Book-Entry Securities") deposited with, or on behalf of, a Depository (the "Depository"). In the case of Book- Entry Securities, one or more Global Securities will be issued in a denomination or aggregate denomination equal to the portion of the aggregate principal amount of Outstanding Securities of the series to be represented by such Global Security or Global Securities. The additional provisions set forth in this Section 304 shall apply to Book-Entry Securities. (b) Book-Entry Securities will be deposited with, or on behalf of, the Depository, and registered in the name of the Depository's nominee, for credit to the respective accounts of institutions that have accounts with the Depository or its nominee ("Participants"); provided that Book-Entry Securities -------- purchased by Persons outside the United States may be credited to or through accounts maintained at the Depository by or on behalf of Euroclear or Clearstream International. The accounts to be credited will be designated by the underwriters or agents of such Securities or, if such Securities are offered and sold directly by the Company, by the Company. Ownership of beneficial interests in Book-Entry Securities will be limited to Persons that may hold interests through Participants. Participants shall have no rights under this Indenture or any indenture supplemental hereto with respect to any Book-Entry Security held on their behalf by the Depository, or the Trustee as its custodian, or under the Book-Entry Security, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the 26 absolute owner of the Book-Entry Security for all purposes whatsoever. Notwithstanding the foregoing, nothing in this Indenture or any such indenture supplemental shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between a Depository and its Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Security. (c) Transfers of Book-Entry Securities shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in Book-Entry Securities may be transferred or exchanged for Securities in fully registered, certificated form ("Definitive Securities") only if (i) the Depository notifies the Trustee in writing that the Depository is no longer willing or able to continue as Depository and a qualified successor Depository is not appointed by the Company within 90 days following such notice, (ii) the Company, at any time and in its sole discretion, determines not to have any Securities of one or more series represented by Global Securities or (iii) after the occurrence of an Event of Default with respect to such Securities, a holder of Securities notifies the Trustee in writing that it wishes to receive a Definitive Security and provides to the Trustee evidence reasonably satisfactory to the Trustee of its ownership interest in such Securities. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery of Definitive Securities equal in principal amount to such beneficial interest and registered in its name. (d) In connection with any transfer or exchange of a portion of the beneficial interest in any Book-Entry Security to beneficial owners pursuant to paragraph (c) above, the Security Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Book-Entry Security in an amount equal to the principal amount of the beneficial interest in the Book-Entry Security to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Definitive Securities of like tenor and principal amount of authorized denominations. (e) In connection with the transfer of Book-Entry Securities as an entirety to beneficial owners pursuant to paragraph (c) above, the Book-Entry Securities shall be deemed to be surrendered to the Trustee for cancellation and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Book-Entry Securities, an equal aggregate principal amount of Definitive Securities of like tenor of authorized denominations. (f) The Holder of any Book-Entry Security may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Indenture or the Securities. 27 SECTION 305. Temporary Securities. -------------------- Pending the preparation of Definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are typewritten, printed, lithographed, engraved or otherwise produced by any combination of these methods, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued, in registered form and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. Such temporary Securities may be in global form. If temporary Securities of any series are issued, the Company will cause Definitive Securities of that series to be prepared without unreasonable delay. After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for Definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of the same series of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of such series. Until exchanged in full as hereinabove provided, the temporary Securities of any series, including temporary Global Securities (whether or not issued as Book-Entry Securities as provided in Section 304), shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of the same series and of like tenor authenticated and delivered hereunder. SECTION 306. Registration, Registration of Transfer and Exchange. --------------------------------------------------- The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register for each series of Securities (the registers maintained in such office of the Trustee and in any other office or agency designated pursuant to Section 1002 being herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby initially appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Except as otherwise described in this Article Three, upon surrender for registration of transfer of any Security of any series at the office or agency of the Security Registrar in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new 28 Securities of the same series, in each case, of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to pay all documentary, stamp, similar issue or transfer taxes or other governmental charges that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 305, 906, 1107 or 1305 not involving any transfer. Neither the Company nor the Security Registrar shall be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the selection for redemption of Securities of that series under Section 1103 or 1203 and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (iii) to issue, register the transfer of or exchange any Security which has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid. SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities. ------------------------------------------------ If any mutilated Security is surrendered to the Trustee together with, in proper cases, such security or indemnity as may be required by the Company or the Trustee to save each of them and any agent of either of them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like 29 tenor and principal amount and bearing a number not contemporaneously outstanding, or, in case any such mutilated Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or an Authorized Officer of the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. Notwithstanding the provisions of the previous two paragraphs, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to pay all documentary, stamp or similar issue or transfer taxes or other governmental charges that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series, if any, issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section 307 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 308. Payment of Interest; Interest Rights Preserved; Optional -------------------------------------------------------- Interest Reset. -------------- (a) Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest, if any, on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that each -------- ------- installment of interest, if any, on any Security may at the Company's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to 30 Section 310, to the address of such Person as it appears on the Security Register or (ii) with the consent of the Trustee (if the Trustee is then serving as Paying Agent) wire transfer to an account located in the United States maintained by the payee. Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such defaulted interest and, if applicable, interest on such defaulted interest (to the extent lawful) at the rate specified in the Securities of such series (such defaulted interest and, if applicable, interest thereon herein collectively called "Defaulted Interest") may be paid by the Company, at its election in each case, as provided in Subsection (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money (except as otherwise specified pursuant to Section 301 for the Securities of such series) equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Subsection provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose name the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Subsection (2). (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. 31 (b) The provisions of this Section 308(b) may be made applicable to any series of Securities pursuant to Section 301 (with such modifications, additions or substitutions as may be specified pursuant to such Section 301). The interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) on any Security of such series may be reset by the Company on the date or dates specified on the face of such Security (each an "Optional Reset Date"). The Company may exercise such option with respect to such Security by notifying the Trustee of such exercise at least 50 but not more than 60 days prior to an Optional Reset Date for such Note, which such notice shall contain such information as may be required by the Trustee to transmit the Reset Notice (as hereinafter defined). Not later than 40 days prior to each Optional Reset Date, the Trustee shall transmit, in the manner provided for in Section 106, to the Holder of any such Security a notice (the "Reset Notice") indicating whether the Company has elected to reset the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable), and if so (i) such new interest rate (or such new spread or spread multiplier, if applicable) and (ii) the provisions, if any, for redemption during the period from such Optional Reset Date to the next Optional Reset Date or if there is no such next Optional Reset Date, to the Stated Maturity Date of such Security (each such period a "Subsequent Interest Period"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during the Subsequent Interest Period. Notwithstanding the foregoing, not later than 20 days prior to the Optional Reset Date, the Company may, at its option, revoke the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) provided for in the Reset Notice and establish an interest rate (or a spread or spread multiplier used to calculate such interest rate, if applicable) that is higher than the interest rate (or the spread or spread multiplier, if applicable) provided for in the Reset Notice, for the Subsequent Interest Period by causing the Trustee to transmit, in the manner provided for in Section 106, notice of such higher interest rate (or such higher spread or spread multiplier, if applicable) to the Holder of such Security; and such notice shall be irrevocable. All Securities with respect to which the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) is reset on an Optional Reset Date, and with respect to which the Holders of such Securities have not tendered such Securities for repayment (or have validly revoked any such tender) pursuant to the next succeeding paragraph, will bear such higher interest rate (or such higher spread or spread multiplier, if applicable). The Holder of any such Security will have the option to elect repayment by the Company of the principal of such Security on each Optional Reset Date at a price equal to the principal amount thereof plus interest accrued to such Optional Reset Date. In order to obtain repayment on an Optional Reset Date, the Holder must follow the procedures set forth in Article Thirteen for repayment at the option of Holders except that the period for delivery or notification to the Trustee shall be at least 25 but not more than 35 days prior to such Optional Reset Date and except that, if the Holder has tendered any Security for repayment pursuant to the Reset Notice, the Holder may, by written notice to the Trustee, revoke such tender or repayment 32 until the close of business on the tenth day (or if such day is not a Business Day, on the immediately succeeding Business Day) before such Optional Reset Date. Subject to the foregoing provisions of this Section and Section 306, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 309. Optional Extension of Stated Maturity. ------------------------------------- The provisions of this Section 309 may be made applicable to any series of Securities pursuant to Section 301 (with such modifications, additions or substitutions as may be specified pursuant to such Section 301). The Stated Maturity of any Security of such series may be extended at the option of the Company for the period or periods specified on the face of such Security (each an "Extension Period") up to but not beyond the date (the "Final Maturity") set forth on the face of such Security. The Company may exercise such option with respect to any Security by notifying the Trustee of such exercise at least 50 but not more than 60 days prior to the Stated Maturity of such Security in effect prior to the exercise of such option (the "Original Stated Maturity"). If the Company exercises such option, the Trustee shall transmit, in the manner provided for in Section 106, to the Holder of such Security not later than 40 days prior to the Original Stated Maturity a notice (the "Extension Notice") indicating (i) the election of the Company to extend the Stated Maturity, (ii) the new Stated Maturity, (iii) the interest rate, if any, applicable to the Extension Period and (iv) the provisions, if any, for redemption during such Extension Period. Upon the Trustee's transmittal of the Extension Notice, the Stated Maturity of such Security shall be extended automatically and, except as modified by the Extension Notice and as described in the next paragraph, such Security will have the same terms as prior to the transmittal of such Extension Notice. Notwithstanding the foregoing, not later than 20 days before the Original Stated Maturity of such Security, the Company may, at its option, revoke the interest rate provided for in the Extension Notice and establish a higher interest rate for the Extension Period by causing the Trustee to transmit, in the manner provided for in Section 106, notice of such higher interest rate to the Holder of such Security; and such notice shall be irrevocable. All Securities with respect to which the Stated Maturity is extended will bear such higher interest rate. If the Company extends the Maturity of any Security, the Holder will have the option to elect repayment of such Security by the Company on the Original Stated Maturity at a price equal to the principal amount thereof, plus interest accrued to such date. In order to obtain repayment on the Original Stated Maturity once the Company has extended the Maturity thereof, the Holder must follow the procedures set forth in Article Thirteen for repayment at the option of Holders, except that the period for delivery or notification to the Trustee shall be at least 25 but not more than 35 days prior to the Original Stated Maturity and except that, if the Holder has tendered any Security for repayment pursuant to an Extension Notice, the Holder may by written 33 notice to the Trustee revoke such tender for repayment until the close of business on the tenth day (or if such day is not a Business Day, on the immediately succeeding Business Day) before the Original Stated Maturity. SECTION 310. Persons Deemed Owners. --------------------- Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Sections 306 and 308) interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of (i) the records relating to or payments made on account of any Participants or any beneficial ownership interests of a Security in global form, (ii) maintaining, supervising or reviewing any records maintained by any Depository or Participant or any other Person relating to such beneficial ownership interests, (iii) the delivery or timeliness of delivery or any notice to any beneficial owner of Securities which is required or permitted under the terms of this Indenture or such Securities, (iv) the selection of the beneficial owners to receive payments in the event of a partial redemption or repayment, or (v) any consent given or other action taken by the Depository or other Holder of a Security, as the registered holder thereof. Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by any Depository, as a Holder, with respect to such Global Security or impair, as between such Depository and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the rights of such Depository (or its nominee) as Holder of such Global Security. SECTION 311. Cancellation. ------------ All Securities surrendered for payment, redemption, repayment at the option of the Holder, registration of transfer or exchange or for credit against any current or future sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Securities so delivered to the Trustee shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not 34 issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures, unless by Company Order the Company shall direct that cancelled Securities be returned to it. SECTION 312. Computation of Interest. ----------------------- Interest, if any, on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 313. CUSIP Numbers. ------------- The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use) in addition to serial numbers, and, if so, the Trustee shall use such "CUSIP" numbers in addition to serial numbers in notices of repurchase as a convenience to Holders; provided that any such notice may state that no -------- representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a repurchase and that reliance may be placed only on the serial or other identification numbers printed on the Securities, and any such repurchase shall not be affected by any defect in or omission of such "CUSIP" numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. --------------------------------------- This Indenture shall, upon Company Request, cease to be of further effect with respect to any series of Securities specified in such Company Request (except as to any surviving rights of registration of transfer or exchange of Securities of such series expressly provided for herein or pursuant hereto) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture as to such series when (1) either 35 (A) all Securities of such series theretofore authenticated and delivered have been delivered to the Trustee for cancellation; or (B) all Securities of such series not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest, if any, to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to such series; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture as to such series have been complied with. Notwithstanding the satisfaction and discharge of this Indenture as to such series, the obligations of the Company to the Trustee under Section 606, the obligations of the Trustee to any Authenticating Agent under Section 612 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Subsection (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money. -------------------------- Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either 36 directly or through any Paying Agent (including the Company act