Senior Credit Facility Commitment Letter

Exhibit 10.1 MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
4 World Financial Center
New York, New York 10080 MERRILL LYNCH CAPITAL CORPORATION
4 World Financial Center
New York, New York 10080

June 16, 2004

Senior Credit Facility
Commitment Letter

Atmos Energy Corporation
5430 LBJ Freeway
Dallas, TX 75240
Attention: J. Patrick Reddy

Ladies and Gentlemen:

You have advised Merrill Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, " ML" ) and Merrill Lynch Capital Corporation (" Merrill" ; together with ML, the " Commitment Parties" ) that you or one or more of your affiliates proposes to effect the Acquisition more specifically described in the Term Sheet referred to below (the term " Acquisition" and each other capitalized term used but not defined herein being given the meaning assigned to such term in the Term Sheet). In such connection, you have requested that ML agree to structure, arrange and syndicate a senior credit facility in an aggregate amount of $1,925,000,000 (the " Credit Facility" ) and that Merrill commit to provide the entire principal amount of the Credit Facility and to serve as administrative agent for the Credit Facility. The Credit Facility will be used to (i) finance, or backstop the issuance of commercial paper to finance, the Acquisition and (ii) pay fees and expenses incurred in connection with the Acquisition.

ML is pleased to advise you that it is willing to act as the sole lead arranger and sole bookrunner for the Credit Facility, and Merrill is pleased to advise you of its commitment to provide the entire amount of the Credit Facility. This Commitment Letter and the Summary of Terms and Conditions attached as Exhibit A hereto (the " Term Sheet" ) set forth the principal terms and conditions on and subject to which Merrill is willing to make available the Credit Facility.


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It is agreed that ML will act as the sole lead arranger and sole bookrunner in respect of the Credit Facility (in such capacities, the " Arranger" ) and that Merrill will act as the sole administrative agent in respect of the Credit Facility. You agree that, as a condition to the commitments and agreements hereunder, no other agents, co-agents or arrangers will be appointed, no other titles will be awarded, and no compensation (other than that expressly contemplated by the Term Sheet and the Fee Letter referred to below) will be paid in connection with the Credit Facility unless you and we shall so agree.

We intend to syndicate the Credit Facility to a group of lenders (together with Merrill, the " Lenders" ) identified by us in consultation with you and to commence such syndication efforts promptly following execution of a definitive agreement with respect to the Acquisition. You agree to assist us actively in completing a syndication satisfactory to us. Such assistance shall include (a) your using commercially reasonable efforts to ensure that the syndication efforts benefit materially from your existing banking relationships, (b) direct contact between senior management and advisors of you and, to the extent practicable, TXU Gas and the proposed Lenders, (c) assistance in the preparation of a Confidential Information Memorandum and other marketing materials to be used in connection with the syndication and (d) the hosting, with us, of one or more meetings of prospective Lenders. You also agree to provide us with reasonable prior notice of the syndication of any credit facility in connection with any other investment by you and, upon our reasonable request, coordinate the syndication of such credit facility with the syndication of the Credit Facility.

ML, in its capacity as Arranger, will manage, in consultation with you, all aspects of the syndication, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocation of the commitments among the Lenders and the amount and distribution of fees among the Lenders, provided that the identity of the Lenders and the amount of their commitments shall be subject to your consent (not to be unreasonably withheld). In its capacity as Arranger, ML will have no responsibility other than to arrange the syndication as set forth herein and in no event shall be subject to any fiduciary or other implied duties. To assist us in our syndication efforts, you agree promptly to prepare and provide to us all information with respect to you and your subsidiaries, TXU Gas and its subsidiaries, the Acquisition and the other transactions contemplated hereby, including all financial information and projections (the " Projections" ), as we may reasonably request in connection with the arrangement and syndication of the Credit Facility, except that you shall not be obligated to provide any information that is otherwise publicly available in SEC filings. At our request, you agree to assist in the preparation of a version of the information package and presentation consisting exclusively of information and documentation that is either publicly available or not material with respect to you and any of your securities for purposes of United States federal and state securities laws. You hereby represent and covenant that (a) all written information other than the Projections (all such non-excluded information, the " Information" ) that has been or will be made available to us by you or any of your representatives is or will be, when furnished, when taken together with all information filed with the Securities and Exchange Commission with respect to the Borrower, TXU Gas and their respective subsidiaries, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and


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(b) the Projections that have been or will be made available to us by you or any of your representatives have been or will be prepared in good faith based upon reasonable assumptions (it being understood that projections are subject to significant uncertainties and contingencies, many of which are beyond your control, and that no assurance can be given that any projections will be realized). You understand that in arranging and syndicating the Credit Facility we may use and rely on the Information and Projections without independent verification thereof.

As consideration for the commitments and agreements of the Commitment Parties hereunder, you agree to cause to be paid the nonrefundable fees described in the Fee Letter dated the date hereof and delivered herewith (the " Fee Letter" ).

Each Commitment Party' s commitments and agreements hereunder are subject to (a) there not occurring or becoming known to such Commitment Party any event, development or circumstance that has had a material adverse effect on the business or assets of you and your subsidiaries (after giving effect to the Acquisition) taken as a whole, (b) such Commitment Party not becoming aware after the date hereof of any information or other matter (including any matter relating to financial models and underlying assumptions relating to the Projections) affecting you, TXU Gas or the Acquisition that in such Commitment Party' s judgment is inconsistent in a material and adverse manner with any such information or other matter disclosed to such Commitment Party prior to the date hereof and could reasonably be expected to materially impair the syndication of the Credit Facility, (c) such Commitment Party' s satisfaction that prior to and during the syndication of the Credit Facility there shall be no competing offering, placement or arrangement of any debt securities (other than the senior notes the proceeds of which will, as provided in the Term Sheet, reduce the amount of the Credit Facility, offerings of your commercial paper as provided in the Term Sheet and the syndication of the Renewal Facility) or bank financing by or on behalf of the Borrower or any of its subsidiaries, (d) the closing of the Credit Facility on or before December 31, 2004 (or, with the consent of each of the Commitment Parties, up to 90 days beyond such date, but only to the extent (and for the duration) that TXU Gas has elected to extend the date for closing the Acquisition pursuant to the Acquisition Documentation in connection with the repair or replacement of assets damaged or destroyed by a casualty event), and (e) the other conditions set forth or referred to in the Term Sheet. The terms and conditions of the commitments hereunder and of the Credit Facility are not limited to those set forth herein and in the Term Sheet. Those matters that are not covered by the provisions hereof and of the Term Sheet are subject to the approval and agreement of the Commitment Parties and the Borrower.

You agree to indemnify and hold harmless the Commitment Parties, their affiliates and their respective officers, directors, employees, advisors, and agents (each, an " indemnified person" ) from and against any and all losses, claims, damages and liabilities to which any such indemnified person may become subject arising out of or in connection with any claim, litigation, investigation or proceeding relating to this Commitment Letter, the Credit Facility, the use of the proceeds thereof, the Acquisition or any related transaction, regardless of whether any indemnified person is a party thereto, and to reimburse each indemnified person upon demand for any legal or other expenses incurred in connection with investigating or defending any of the foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they arise from the willful misconduct or gross negligence of such indemnified person, and to


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reimburse each Commitment Party and its affiliates promptly after demand for all reasonable out-of-pocket expenses (including reasonable due diligence expenses, syndication expenses, and reasonable fees, charges and disbursements of one firm of counsel) incurred in connection with the Credit Facility and any related documentation (including this Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing documentation) or the administration, amendment, modification or waiver thereof. No indemnified person shall be liable for any damages arising from the use by others of Information or other materials obtained by unauthorized means through electronic, telecommunications or other information transmission systems or for any special, indirect, consequential or punitive damages in connection with the Credit Facility except to the extent any such damages arise from the gross negligence or willful misconduct of such indemnified person or such indemnified person' s affiliates, directors, employees, advisors or agents.

You agree that, without our prior written consent, neither you nor any of your affiliates or subsidiaries will settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification has been or could be sought under the indemnification provisions hereof (whether or not any other indemnified person is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent (a) includes an unconditional written release of each indemnified person in form and substance satisfactory to the indemnified person from all liability arising out of such claim, action or proceeding and (b) does not include any statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified person.

In the event that an indemnified person is requested or requi ...