SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

Form 10-K

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

For the fiscal year ended December 31, 1995
Commission File Number 0-10763

AlaTenn Resources, Inc.
(Exact Name of Registrant as Specified in its Charter)

Alabama 63-0821819
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

Post Office Box 918, Florence, Alabama 35631
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code (205) 383-3631
---------------

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock (Par Value $0.10 Per Share)
----------------------------------------
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
--- ---
Estimated aggregate market value of the voting stock held by nonaffiliates of
the registrant at February 29, 1996 $40,261,717

Number of shares of Common Stock outstanding
at February 29, 1996 2,120,084 Shares

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

DOCUMENTS INCORPORATED BY REFERENCE

Parts I, II and IV of this report incorporate by reference certain portions of
the Registrant's 1995 Annual Report to shareholders.

Part III of this report incorporates by reference the Registrant's Proxy
Statement relating to the 1996 annual meeting of shareholders.

2
ALATENN RESOURCES, INC.

FORM 10-K

ANNUAL REPORT TO
THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1995

TABLE OF CONTENTS

Item Page
- ---- ----

PART I.

1. Business ............................................... 1
2. Properties ............................................. 12
3. Legal Proceedings ...................................... 13
4. Submission of Matters to a Vote of Security Holders .... 13

PART II.

5. Market for Registrant's Common Equity and
Related Shareholder Matters ..................... 16
6. Selected Financial Data ................................ 16
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............. 16
8. Financial Statements and Supplementary Data ............ 16
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ........... 16

PART III.

10. Directors and Executive Officers of the Registrant ..... 16
11. Executive Compensation ................................. 17
12. Security Ownership of Certain Beneficial Owners
and Management .................................. 17
13. Certain Relationships and Related Transactions ......... 17

PART IV.

14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ............................. 18

3
ALATENN RESOURCES, INC.

PART I

Item 1 - Business

General

AlaTenn Resources, Inc. (AlaTenn or the Company) was incorporated in the
state of Alabama in 1982 in connection with a reorganization of
Alabama-Tennessee Natural Gas Company (Alabama-Tennessee) which was
founded in 1944 and which has been in operation since 1950. AlaTenn is a
diversified holding company which is engaged in two lines of business: (1)
pipeline and energy services and (2) medical and health care products.
During 1995, the Company was the sole owner of five natural gas
transmission companies, a natural gas marketing company, two natural gas
distribution companies, one company which is engaged in oil and gas
exploration through its participation in a limited partnership and a new
pipeline subsidiary, formed in 1994, to transport gaseous oxygen. The
Company also owns a manufacturer of medical and health care products and,
in 1995, formed a new subsidiary to market and distribute a new line of
medical products.

The Company's principal pipeline subsidiary, Alabama-Tennessee, is an
interstate natural gas pipeline company engaged in the transportation of
natural gas in the Tennessee Valley. Its main pipeline extends from
Selmer, Tennessee approximately 130 miles across northern Mississippi and
Alabama to Huntsville, Alabama. This system includes approximately 288
miles of pipeline and two compressor stations.

Because it is engaged in the transportation of natural gas in interstate
commerce, Alabama-Tennessee is a "natural gas company" as defined in the
Natural Gas Act of 1938. As such, it is subject to the jurisdiction of the
Federal Energy Regulatory Commission (FERC), which jurisdiction includes
the power to determine Alabama-Tennessee's maximum rates for the
transportation of natural gas for its customers, as well as the power to
authorize the construction and operation of certain new facilities.

Tennessee River Intrastate Gas Company, Inc. (TRIGAS), one of the
Company's intrastate pipeline subsidiaries, completed construction in 1990
of a 38-mile, 10-inch pipeline that extends from Barton, Alabama to
Courtland, Alabama. In 1990, TRIGAS entered into a long-term agreement to
transport natural gas to an industrial customer in the Courtland, Alabama
area. In 1993, this customer substantially increased its transportation
volume under its existing contract. In 1994, TRIGAS completed a one mile,
8-inch pipeline to transport natural gas to an industrial customer on a
fixed fee basis for a minimum period of ten years.

1
4

AlaTenn Energy Marketing Company, Inc. (ATEMCO) is the Company's natural
gas marketing subsidiary. ATEMCO buys natural gas primarily on the spot
market and sells that natural gas to customers on the Company's interstate
and intrastate pipeline systems, as well as to off-system customers. As
part of its services, ATEMCO evaluates customers' supply requirements,
locates natural gas supplies and negotiates and manages contracts for
those customers. ATEMCO also can arrange for the use of its customers'
excess gas storage and transportation rights by other natural gas
transporters through capacity release transactions, generating savings for
its customers.

Two of the Company's subsidiaries, Central Gas Company (Central) and
Tennessee River Development Company (Tennessee River), operated natural
gas distribution systems in Alabama prior to May 3, 1991, when both
subsidiaries sold substantially all their distribution assets to the City
of Florence, Alabama. Since that time, both subsidiaries have transported
or sold natural gas to the City of Florence for resale to its customers.

Hardin County Gas Company (Hardin County), an AlaTenn distribution
subsidiary, served approximately 140 customers in Hardin County,
Tennessee. In early 1996, Hardin County sold substantially all of its
assets and is not currently active. In 1994, North Mississippi Natural
Gas Corporation, which is also an AlaTenn distribution subsidiary, sold
substantially all of its distribution assets to a former customer and is
not active at the current time.

Vulcan Oil and Gas Company (Vulcan) is a wholly owned subsidiary of
AlaTenn that is engaged in limited oil and natural gas production through
its participation as a limited partner in Lima Resources Associates
(Lima). Vulcan did not make any additional investments in Lima during
1995. As of December 31, 1992, the total investment in Lima had been
written off by the Company, and Vulcan is under no obligation to invest
any additional funds in the limited partnership. The Company does not
anticipate any significant income in the future from Lima's operations.

In recent years, changes in the nature of Alabama-Tennessee's business,
attributable in large part to significant regulatory changes in the
natural gas industry, contributed to the emergence of ATEMCO as the
Company's primary marketer of natural gas. Also, as a result of these
regulatory changes, Alabama-Tennessee's customers have utilized
Alabama-Tennessee to provide transportation services rather than sales
services and have utilized other companies, including ATEMCO, for the
purchase of their natural gas supplies. While this change in the nature
of its business has had an adverse impact on Alabama-Tennessee, ATEMCO has
benefitted from the open-access status of Alabama-Tennessee and other
pipelines. Also, TRIGAS contributed materially to the Company's earnings
in 1995, 1994 and 1993 as a result of transportation revenues derived from
deliveries through its pipeline.

In 1994, the Company formed AlaTenn Pipeline Company Inc., which is party
to a contract with an industrial gas producer to construct and operate a
22-mile high pressure steel pipeline to transport gaseous oxygen in north
Alabama. Construction began in 1995 and the pipeline is expected to be
operational in the second quarter of 1996.

On April 19, 1994, the Company through RIC Acquisition Corporation, a
wholly-owned subsidiary of the Company formed to effect the acquisition,
purchased the business of Ryder International Corporation by acquiring its
assets, excluding cash and receivables, and assuming substantially all of
its liabilities. The Company paid to Ryder International Corporation,
including post-closing adjustments, $11.1 million in cash, issued a
promissory note in the principal amount of $1.0 million and assumed
liabilities totaling $2.2 million. Following the closing, RIC Acquisition
Corporation's name was changed to Ryder International Corporation (Ryder).
Ryder is principally engaged in the design, development, manufacture and
sale of proprietary products for the health care industry, including
disposable or semi-disposable soft contact lens storage and disinfection
systems as well as diagnostic devices used in blood analysis and tissue
biopsies, and inflation devices used with balloon catheters. Ryder's
products are sold primarily to major health care companies which market
and distribute the products to hospitals, clinics, surgical centers,
physicians and other health care providers. Since the acquisition, Ryder
has significantly contributed to the Company's earnings.

In 1995, the Company through a new subsidiary, ATRION Medical Products,
Inc. (ATRION Medical Products) purchased exclusive worldwide marketing
and manufacturing rights to a newly developed line of products, called
LacriCATH, to be used in a patented ophthalmic surgical procedure for
treating excessive tearing of the eye. The Company acquired the product
and licensing rights to the product, under a licensing agreement with the
product's inventor, for $425,000 and the assumption of certain
liabilities. ATRION Medical Products was formed to market and distribute
the new line of products. Marketing and distribution began in early 1996.

Unless the context otherwise requires, references in this report to
AlaTenn or the Company mean AlaTenn Resources, Inc. and its subsidiaries.
Additional information respecting certain of the above matters is
contained in Management's Discussion and Analysis of Financial Condition
and Results of Operations and in the Notes to Consolidated Financial
Statements in the Company's 1995 Annual Report to shareholders
incorporated herein by reference.

REVENUES

During 1995, 1994 and 1993, Alabama-Tennessee accounted for 12%, 14% and
30% of the Company's total revenues, respectively. ATEMCO accounted for
72%, 72% and 68% of revenues during these same periods. Ryder, the
Company's medical and health care products subsidiary, accounted for 14%
and 10% of total revenues in 1995 and 1994, respectively. Ryder was
acquired by the Company in April, 1994 and revenues for 1994 reflect only
results after the acquisition. The table below summarizes total revenue
and delivered volumes for the Company's pipelines as well as for its
natural gas marketing and other subsidiaries.

1995 1994 1993
--------------------- -------------------- -----------------------
Revenue Volume Revenue Volume Revenue Volume
($000) (MMMBtu) ($000) (MMMBtu) ($000) (MMMBtu)
------ ------- ------ ------- ------- -------

PIPELINE AND ENERGY SERVICES
Pipeline Transportation
Interstate Pipelines 9,669 37,021 8,764 32,637 4,702 32,186
Intrastate Pipelines 2,533 9,340 2,656 9,461 2,004 10,111
------ ------- ------ ------- ------- -------
12,202 46,361 11,420 42,098 6,706 42,297
------ ------- ------ ------- ------- -------

Gas Marketing 57,879 30,141 51,214 22,744 80,501 35,026
Other Natural Gas Sales 927 309 2,007 354 33,191 3,473
------ ------- ------ ------- ------- -------
58,806 30,450 53,221 23,098 113,692 38,499
------ ------- ------ ------- ------- -------

Affiliated Transactions (1,654) (26,099) (1,196) (20,280) (1,376) (34,045)
------ ------- ------ ------- ------- -------
69,354 50,712 63,445 44,916 119,022 46,751
------ ------- ------ ------- ------- -------
MEDICAL AND
HEALTH CARE PRODUCTS 11,025 N/A 6,876 N/A 0 N/A
------ ------- ------ ------- ------- -------
Total 80,379 50,712 70,321 44,916 119,022 46,751
====== ======= ====== ======= ======= =======

The 1995 gas marketing sales by ATEMCO totaled 30.1 million MMBtu of natural
gas, an increase of 7.4 million MMBtu from the 1994 volume of 22.7 million
MMBtu. Related revenues increased to $57.9 million in 1995, an increase of
$6.7 million from 1994. These increases in volumes and revenues resulted
from increased sales to customers on Alabama-Tennessee's system, primarily
six industrial customers including three of which were formerly served by
the City of Decatur. In addition, off-system sales volumes increased 78%
over 1994 volumes to 4.6 million MMBtu, resulting in a $2.4 million increase
in revenues. The increase in volumes was partially offset by a 12% decrease
in natural gas prices in 1995, as compared with 1994. Gas marketing sales
in 1994 totaled 22.7 million MMBtu of natural gas, a decrease of 12.3
million MMBtu from the 1993 volume of 35.0 million MMBtu. Related revenues
decreased to $51.2 million in 1994, a reduction of $29.3 million from 1993.
These decreases in volumes and revenues resulted from the loss of certain
ATEMCO customers in late 1993, as described below, three of which have since
returned to ATEMCO for sales services. The decreases in revenues and volume
between years associated with the loss of such customers were partially
offset by an increase of approximately 1.8 million MMBtu and $2.1 million in
revenues

from off-system sales. The decrease in revenues from 1993 to 1994 was
also attributable to a decrease in the price of natural gas purchased and
sold. Natural gas prices decreased by approximately 14% in 1994 compared
with 1993. During 1995, 1994 and 1993, ATEMCO sold approximately 56%, 47% and
74%, respectively, of the natural gas delivered on the Company's pipelines.
For a description of recent changes in ATEMCO's contractual relationship with
certain of its municipal customers, see "Competition" below.

Alabama-Tennessee receives a fee for transportation services provided to its
customers which is set by the FERC. In 1993, as a result of changes in the
natural gas industry brought about by FERC Order 636, Alabama-Tennessee's
sales customers converted their firm sales service on Alabama-Tennessee to
firm transportation service, and also acquired Alabama-Tennessee's firm
capacity on Tennessee Gas Pipeline Company (TGP), an upstream pipeline. The
conversion of sales service to transportation service along with the
upstream assignments resulted in decreased revenues by Alabama-Tennessee
because (1) transportation service does not include a gas cost component as
does a bundled sales and transportation service and (2) the assignment of
upstream capacity on TGP required those customers to pay TGP directly,
thereby removing those revenues from Alabama-Tennessee.

As in 1994, during 1995 the Company's two largest industrial customers each
accounted for more than 10% of the Company's revenues. Champion
International Corporation and Amoco Chemicals Corporation, accounted for
approximately 25% and 12%, respectively, of the Company's operating
revenues.

Approximately 52% of Alabama-Tennessee's natural gas throughput in 1995 was
delivered to 17 municipal customers serving 28 communities under contracts
expiring in late 1997 through 2001. Alabama-Tennessee currently serves most
of the communities extending from Selmer, Tennessee to Huntsville, Alabama,
including portions of northeast Mississippi, the Shoals area of northwest
Alabama, and Athens, Decatur and Huntsville, Alabama. The remaining 48% of
Alabama-Tennessee's throughput was delivered directly to eight industrial
users. A substantial portion of the deliveries to industrial users was
delivered to a major customer under a contract expiring in September, 1997.
The remaining portion was delivered under short-term interruptible contracts
with annual renewals. Approximately 99% of TRIGAS's deliveries through its
pipeline were delivered to one major industrial customer while the remaining
1% was delivered to a single resale customer.

Alabama-Tennessee's business is seasonal in nature and is strongly
influenced by weather conditions. Natural gas deliveries on
Alabama-Tennessee's pipeline system tend to be higher in the winter months
due to increased consumption for residential heating. Natural gas deliveries
during the summer months decline as a result of lower residential usage.
Sales by ATEMCO

to municipal customers on the Company's pipelines also tend to be
seasonal in nature, while sales to industrial users are not normally impacted
by weather changes. TRIGAS, the Company's intrastate pipeline, is less
subject to such seasonal fluctuations because the majority of its pipeline
deliveries are to one industrial user whose usage does not materially change
as a result of weather conditions.

Ryder, the Company's medical and health care products subsidiary, is engaged
in the design, development, manufacture and sale of proprietary products
used in the medical and health care industry. Ryder's products are
generally manufactured through an injection molding process, using
state-of-the-art equipment. These products include disposable and
semi-disposable soft contact lens storage and disinfection systems which are
marketed to major medical and health care companies in conjunction with
their name-brand products. In 1995, more than 28% of Ryder's products were
shipped to international markets. Ryder also produces a range of diagnostic
devices, including products used in blood analysis and tissue biopsies, and
inflation devices used with balloon catheters. Ryder sells it products to
major health care companies which market and distribute the products to
hospitals, clinics, surgical centers, physicians and other health care
providers. Ryder develops working models or prototypes that allow its
customers to test products in their own markets.

As a result of its development of various products and engineering
solutions, Ryder currently holds a number of design and use patents. Ryder
relies on patents and contracts to protect its proprietary technology.
Ryder generally enters into confidentiality agreements with its employees,
consultants and customers and limits access to and distribution of its
documentation and other proprietary information. In 1995 and 1994, Ryder
spent approximately $1 million and $.5 million, respectively, for research
and development of new products or improvements to existing product lines.
Typically, Ryder bears the expense of the product-development phase and then
enters into long-term contracts with its customers which allow Ryder to
retain exclusive world-wide manufacturing rights to the products it has
developed. Generally, these long-term contracts are full-requirements
contracts and Ryder manufactures the product only upon receipt of customer
purchase orders. Since lead times on materials purchases and production
schedules for the manufacture of its products are relatively short, Ryder
does not have any significant backlog. Ryder employs a limited number of
sales persons who make direct contact with potential customers who may have
need of Ryder's services.

Revenues for Ryder in 1995 and 1994 totaled $11.0 million and $6.9 million,
respectively. The increase in revenues at Ryder between years is
attributable to the inclusion of a full year's operations in 1995 compared
to eight months in the prior year, but also reflected, on a comparable
basis, higher sales volumes. The acquisition of Ryder's business was
recorded using the purchase method of accounting. Accordingly, only results
from

Ryder's operations subsequent to the acquisition date of April 19, 1994
are reflected in the Company's financial statements for 1995 and 1994 and
results for prior periods are not included.

For additional financial information regarding each operating segment, see
Note 11 of Notes to Consolidated Financial Statements contained in the
Company's 1995 Annual Report to shareholders incorporated herein by
reference.

AVAILABILITY OF NATURAL GAS SUPPLY AND RAW MATERIALS

Alabama-Tennessee's historical supplier of natural gas under firm contract
until the implementation of FERC Order 636 (see Regulation) was TGP, a
subsidiary of Tenneco, Inc. In November 1992, Alabama-Tennessee assigned
all of its storage entitlement and related firm transportation capacity on
the TGP system to its resale customers. On September 1, 1993,
Alabama-Tennessee converted the balance of its capacity on TGP to firm
transportation service as a result of regulatory changes requiring the
implementation by TGP of FERC Order 636, which resulted in the "unbundling"
of sales and transportation service on regulated pipelines. Effective
September 1, 1993, Alabama-Tennessee also implemented Order 636 allowing its
customers to convert firm sales capacity on Alabama-Tennessee to firm
transportation service. Alabama-Tennessee, as required by Order 636,
assigned to its customers the firm transportation service which it held on
TGP, giving its customers firm transportation service on both
Alabama-Tennessee and its upstream pipeline. The assignment of these firm
transportation and storage rights enhanced these customers' flexibility in
acquiring and maintaining gas supplies by allowing them to benefit from
recent changes in the natural gas industry (see Regulation).

During 1995 and 1994, transportation services by Alabama-Tennessee
constituted 100% of its throughput. As a result of FERC Order 636, as noted
above, Alabama-Tennessee has no obligation to provide a natural gas supply,
or sales, service to its customers. ATEMCO, the Company's natural gas
marketing subsidiary, generally purchases natural gas on the spot market,
but has contracted for longer-term supplies as required to meet its
commitments to its customers. In all cases in which ATEMCO contracts for
long-term supplies, matching long-term sales contracts are also obtained
that allow ATEMCO to serve as a conduit between the producer and the
end-user of the natural gas without incurring the risk of shortfalls in
either the demand or supply. These spot market and long-term arrangements
should provide ATEMCO with an adequate supply of natural gas in 1996.

In 1990, ATEMCO entered into a 15-year contract with a producer to purchase
up to 20,000 MMBtu of natural gas per day. ATEMCO obtained this supply to
meet a matching sales obligation with an industrial customer. During 1993,
this industrial customer increased its supply requirements by 9,000 MMBtu
per day. At that time, ATEMCO entered into new agreements with a natural
gas

producer to secure a source of supply to meet this increased obligation
(see Revenues).

Ryder purchases high-grade resin and other minor components for its
manufacturing process from various suppliers. The resin is a readily
available material and, while Ryder is selective in its choice of suppliers,
it believes that there are no significant restrictions or limitations on
supply.

COMPETITION

Except for natural gas deliveries to four municipal customers and one indus-
trial customer from other intrastate pipelines, Alabama-Tennessee's and
TRIGAS's pipelines currently are the only pipelines utilized by their
customers to access upstream pipelines and supplies of natural gas. In 1995
and 1994, transportation constituted 100% of all deliveries on these
pipelines. The principal competitive fuels for industrial and commercial
purposes are coal and fuel oil. Electricity is the main competition for
residential uses.

The Cities of Decatur and Huntsville, which accounted for approximately 14%
and 16%, respectively of Alabama-Tennessee's pipeline throughput in 1995,
have entered into a 20 year contract with Southern Natural Gas Company
(Southern), a wholly owned subsidiary of Sonat, Inc., for natural gas
transportation services. In order to provide service under these contracts,
Southern plans to construct a new pipeline to serve the Huntsville and
Decatur area. Southern has filed an application with the FERC to build a
110-mile pipeline from Tuscaloosa, Alabama to North Alabama to provide such
service to Huntsville and Decatur beginning in or after the fourth quarter
of 1997. These contracts with Southern cover substantially all of the
natural gas requirements of Huntsville and Decatur. For further information
regarding the proposed bypass see Item 3 - Legal Proceedings.

In 1994, the FERC granted authorization for three of Decatur's major
industrial customers to obtain natural gas service directly from
Alabama-Tennessee, thus bypassing Decatur. As of the end of 1995, all of
these customers, Monsanto Company, Minnesota Mining and Manufacturing, and
American Maize had already begun to receive service directly from the
Company. This bypass of Decatur would have the effect of reducing the
adverse impact of the intended by-pass of Alabama-Tennessee's pipeline
system.

ATEMCO buys and resells natural gas primarily on the spot market, resulting
in a gross margin equal to the difference between the purchase price and the
resale price of such gas. ATEMCO has a long-term agreement to supply
natural gas for a major industrial customer on the TRIGAS pipeline. Almost
all of ATEMCO's other contracts are shorter-term agreements. Through its
knowledge of the industry and contacts with industry

personnel, ATEMCO identifies potential natural gas markets, contracts
for the sale of natural gas to these markets, contracts for the purchase of
natural gas from suppliers and arranges for the transportation of the natural
gas over one or more pipeline systems. ATEMCO's success is highly dependent
upon its ability to find and market competitively-priced natural gas.

Regulatory changes culminating with FERC Order 636 have given customers on
Alabama-Tennessee's pipeline system increased flexibility over the past few
years in contracting directly with producers and marketing companies for
their natural gas supplies. While such changes have required
Alabama-Tennessee to transport natural gas as opposed to its traditional
role as a seller of natural gas, ATEMCO has been able to provide numerous
services to its customers in the new environment which have helped to offset
revenues lost at Alabama-Tennessee.

Ryder, the Company's health care products subsidiary, manufactures products
for certain major health care companies and is dependent on several
customers for the majority of its sales. The loss of one or more of these
customers would have a material adverse impact on the health care products
segment of the Company. Also, the fact that Ryder's products are somewhat
limited in number and normally are only a component of the ultimate product
sold by Ryder's customers, requires Ryder to be continually attentive to the
need to manufacture such products at competitive prices and in compliance
with strict manufacturing standards. Depending on the product and the
nature of the project, Ryder competes on the basis of its ability to provide
engineering and design expertise as well as on the basis of product and
price. Ryder believes that its expertise and reputation for quality
products have allowed it to compete favorably with respect to each such
factor and to maintain long-term relationships with these customers. Also,
as Ryder continues to expand its product lines, adding new products and
customers, dependency on a limited number of customers will be reduced.
Ryder frequently designs products for a customer, or potential customer, at
its own expense prior to entering into long-term development and
manufacturing agreements with that customer. While certain of Ryder's
customers may internally design and develop their own products, or out
source certain aspects of the design and development processes, the Company
is unaware of any other companies who directly compete on the same basis as
Ryder.

To the extent that each Ryder product is sold to a single customer, Ryder is
dependent on the ability of that customer to sell its products, of which
Ryder's products are a component. Therefore, Ryder seeks to choose highly
successful companies with which to do business. This risk is somewhat
minimized by Ryder's ability to obtain long-term exclusive manufacturing
rights while its customers have long-term marketing rights.

REGULATION

Alabama-Tennessee is subject to the Natural Gas Pipeline Safety Act of 1968,
as amended, which regulates pipeline safety requirements, and to the
National Environmental Policy Act and other environmental legislation.
Alabama-Tennessee has a continuing program of inspection designed to keep
all of its facilities in compliance with environmental and pipeline safety
requirements.

Also, as an interstate natural gas pipeline company, Alabama-Tennessee
is subject to the jurisdiction of the FERC (under the Natural Gas Act of 1938
and other federal legislation) with respect to interstate transportation of
natural gas, certain rates and charges, construction of new facilities,
extension or abandonment of services and facilities, accounts and records,
depreciation and amortization policies and certain other related matters.
Alabama-Tennessee holds certificates of public convenience and necessity
issued by the FERC authorizing it to construct and operate all pipelines,
facilities and properties which it now operates, and to transport natural gas
in interstate commerce in instances where such certificates are required. As
necessary, Alabama-Tennessee files with the FERC applications for changes in
its transportation rates and charges which are designed to allow it to
recover its costs of providing such services to its customers, as well as a
reasonable return on its investment. These rates are normally allowed to
become effective, subject to refund, until such time as the FERC determines
the just and reasonable rates.

During 1992, the FERC issued Order Nos. 636, 636-A and 636-B, (collectively
referred to as the "Restructuring Rule"). Under the Restructuring Rule,
which is pending review by certain federal appellate courts, all interstate
natural gas pipelines were required to make a number of changes in the
structure of the services which they provided prior to the end of 1993.
Among other things, the Restructuring Rule required interstate pipelines to
revise their tariffs to reflect a separating or "unbundling" of their sales
services from their transportation services and the provision of all
transportation services on a basis that is equal in quality for all natural
gas supplies, whether purchased from the pipeline or from any other natural
gas supplier. The Restructuring Rule also provides that pipelines would be
allowed to collect from their customers the prudently incurred "transition
costs" associated with the changes required by these orders, including gas
supply realignment costs.

Alabama-Tennessee implemented restructured services on its system as of
September 1, 1993 in compliance with the FERC's orders under the
Restructuring Rule.

From 1988 through 1992, Alabama-Tennessee's firm supplier of natural gas,
TGP, passed on to its customers certain take-or-pay costs paid to its
producers. During the same period, Alabama-Tennessee sought to recover from
its customers the take-or-pay costs passed through to it by TGP. In
accordance with the allocation method required by the FERC at the time, the
Company recorded a provision of $6.4 million, net of income taxes, in 1989
for its estimate of the nonrecoverable portion of its take-or-pay
obligation. However, changes in the allocation methodology employed by the
FERC and agreements with customers in 1991 resulted in a favorable after-tax
adjustment of $3.4 million in the estimate for non-recoverable take-or-pay
expense. Based on this favorable adjustment and a favorable settlement with
the Internal Revenue Service in 1993 concerning the Company's treatment of
take-or-pay payments and collections in certain tax returns, the Company
recorded income in 1993 of $3.6 million, reduced by income taxes of $1.3
million.

Based on settlements with its customers which became final in 1991,
Alabama-Tennessee anticipates collections of approximately $1.8 million
during 1996, which will complete its recovery of take-or-pay payments from
its customers. As a result of the payments made by Alabama-Tennessee to TGP
since 1988, Alabama-Tennessee had fully paid its take-or-pay obligation to
TGP.

For more information on take-or-pay matters, see Note 3 of Notes to
Consolidated Financial Statements contained in the Company's 1995 Annual
Report to shareholders incorporated herein by reference.

The facilities of Ryder, the Company's health care products subsidiary, are
registered with the Food and Drug Administration (FDA). All of Ryder's
medical products are manufactured in accordance with Good Manufacturing
Practices as set forth in the Food, Drug and Cosmetic Act of 1938. The FDA
does not establish or regulate price levels for products manufactured by
Ryder.

TRIGAS, the Company's intrastate pipeline subsidiary, is subject to the
jurisdiction of the Alabama Public Service Commission (APSC), as are Central
Gas Company and Tennessee River Development Company. There are no material
proceedings before the Commission involving these companies.

AlaTenn Pipeline Company, Inc. a company engaged in the transportation of
gaseous oxygen is not a regulated pipeline.

Hardin County Gas Company and North Mississippi Natural Gas Corporation are
subject to the jurisdiction of the Tennessee Public Service Commission and
the Mississippi Public Service Commission, respectively. Both companies have
sold substantially all of their assets and are currently inactive. There
are no material proceedings before these state commissions involving these
companies.

Company pipeline facilities are subject to federal safety guidelines as
promulgated by the Department of Transportation (D.O.T.).
Alabama-Tennessee's facilities are subject to periodic inspection by the
D.O.T. to ensure compliance with these guidelines. Intrastate pipeline
facilities owned and operated by the Company's subsidiaries are subject to
the same D.O.T. guidelines and are inspected periodically by the appropriate
state agencies to verify compliance.

Additional regulatory information is contained in Management's Discussion
and Analysis of Financial Condition and Results of Operations and in Note 3
of Notes to Consolidated Financial Statements in the Company's 1995 Annual
Report to shareholders incorporated herein by reference.

PEOPLE

At December 31, 1995, the Company had 169 full-time employees, 40 of which
are employed in the pipeline and energy services segment. The remaining 129
are employed in the medical and health care products segment.

Employee relations are good and there has not been any work stoppage due to
labor disagreements. None of the Company's employees are represented by any
labor union.

ITEM 2 - PROPERTIES

The headquarters of the Company and its subsidiaries, except for Ryder and
ATRION Medical Products, are located in a Company-owned office building in
Sheffield, Alabama. Ryder is located in Arab, Alabama and ATRION Medical
Products leases office space in Birmingham, Alabama.

Alabama-Tennessee has approximately 288 miles of transmission pipeline and
two compressor stations. Its primary transmission pipeline extends from an
interconnection with TGP's pipeline near Selmer, Tennessee approximately 130
miles eastward across northern Mississippi and Alabama to Huntsville,
Alabama. The system interconnects with TGP's Kinder-Portland line near
Corinth, Mississippi and its Delta-Portland line near Barton, Alabama. The
system also interconnects with the Columbia Gulf Transmission Pipeline near
Corinth and with the Texas Eastern Transmission Pipeline near Barton. Pipe
sizes range from 2-inch to 16-inch, including 74 miles of 12-inch, 97 miles
of 10-inch, 48 miles of 8-inch, 51 miles of 6-inch and 18 miles of various
other diameters. These transmission pipelines are located primarily on
rights-of-way held under easement, license or permit on lands owned by
others. None of Alabama-Tennessee's properties is subject to any liens.
Alabama-Tennessee's pipeline system is certificated by the FERC to deliver
approximately 133,000 MMBtu per day of natural gas to its customers.

TRIGAS has 38 miles of 10-inch pipeline, extending from Barton, Alabama to
Courtland, Alabama, and 1 mile of 8-inch pipeline that transports gas from
an interconnect with Alabama-Tennessee Natural Gas Company to an end user
near Decatur, Alabama.

Ryder's manufacturing facilities, which are owned by Ryder, are located on a
67-acre site in Arab, Alabama. In addition to three office buildings which
house administrative, engineering and design operations, the manufacturing
facility, situated on the same location, contains approximately 112,000
square feet of manufacturing space.

In 1994, North Mississippi Natural Gas Corporation, which is also a
distribution subsidiary sold substantially all of its distribution assets to
a former customer and is not active at the current time. Hardin County Gas
Company, the Company's only remaining active natural gas distribution
subsidiary owned 11 miles of distribution pipeline which were sold in early
1996.

ITEM 3 - LEGAL PROCEEDINGS

For information concerning regulatory proceedings, see the section entitled
"Regulation" in Item 1 above and see Note 3 of the Notes to Consolidated
Financial Statements in the Company's 1995 Annual Report to shareholders
incorporated herein by reference.

On February 9, 1996 the Company filed a lawsuit in state court in Alabama.
In the lawsuit, the Company is asserting that the recently approved contract
between Southern Natural Gas Company and the City of Huntsville violates
Alabama's competitive bid laws and is requesting the contract be declared
void. (See "Competition".)

There were no other material pending legal proceedings to which the Company
or any of its subsidiaries was a party, or of which any of their property
was the subject, as of December 31, 1995.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

EXECUTIVE OFFICERS OF THE COMPANY

NAME AGE TITLE
---- --- -----

Jerry A. Howard 53 Chairman of the Board,
President and Chief Executive
Officer of the Company and of
Alabama-Tennessee Natural Gas
Company and Chairman of the
Board or President of all
other subsidiaries.

George G. Petty 55 Vice President-Finance, Chief
Financial Officer and
Secretary-Treasurer of the
Company and of Alabama-Tennessee
Natural Gas Company.

Jeffery Strickland 37 Vice President-Corporate
Development, Asst. Secretary
and Asst. Treasurer of the
Company and Vice President-Planning
of Alabama-Tennessee
Natural Gas Company.

Gus Magrini 43 President and Secretary of
AlaTenn Energy Marketing
Company, Inc.

Richard Rabenau 54 President and Secretary of
Ryder International
Corporation and President of
ATRION Medical Products, Inc.

The persons who are identified as executive officers of the Company
currently serve as officers of the Company or of Alabama-Tennessee, Ryder
International Corporation, ATRION Medical Products, Inc., AlaTenn Energy
Marketing Company, Inc. or of both the Company and Alabama-Tennessee. The
officers of the Company and Ryder International Corporation, ATRION Medical
Products, Inc., Alabama-Tennessee and AlaTenn Energy Marketing Company are
elected annually by the respective Boards of Directors of the Company and
its subsidiaries at the first meeting of such Boards of Directors held after
the annual meetings of shareholders of such entities. Accordingly, the
terms of office of the current officers of the Company and its subsidiaries
are due to expire on May 6, 1996 when such meetings of the Boards of
Directors of the Company and its subsidiaries are scheduled to be held or
when their successors are elected.

There are no arrangements or understandings between any officer and any
other person pursuant to which the officer was elected. There are no family
relationships between any of the executive officers or directors.

There have been no events under any bankruptcy act, no criminal
proceedings and no judgments or injunctions material to the evaluation of
the ability and integrity of any executive officers during the past five
years.

BRIEF ACCOUNT OF THE BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS

Except as noted below, the above listed executive officers have served in
the positions indicated above for more than the past five years.

Mr. Howard has served as Chairman of the Board, President and Chief
Executive Officer of the Company and of Alabama-Tennessee and Chairman of
the Board and President of all other subsidiaries, except for AlaTenn Energy
Marketing Company, Inc., Ryder International Company, and ATRION Medical
Products, Inc. for more than five years. Mr. Howard also serves as Chairman
of the Board for AlaTenn Energy Marketing Company, Inc. and served as its
President and Chief Executive Officer until May, 1992. Mr. Howard has also
served as Chairman of the Board of Ryder International Corporation since
April, 1994, and Chairman of the Board of ATRION Medical Products, Inc.
since September, 1995.

Mr. Strickland has served as Vice President-Corporate Development of the
Company since May 1992 and as Assistant Secretary and Assistant Treasurer of
the Company since May 1990. Mr. Strickland served as Director of Planning
of the Company from December 1988 until May 1992. Mr. Strickland has served
as Vice President-Planning of Alabama-Tennessee since May 1992 and as
Director of Planning of Alabama-Tennessee prior to May 1992.

Mr. Magrini has served as President and Secretary of AlaTenn Energy
Marketing Company, Inc. since May, 1993. From May, 1992 until May, 1993,
Mr. Magrini served as Vice-President-Customer Relations of
Alabama-Tennessee. Prior to that time, Mr Magrini served as Vice
President-Sales and Supply of Alabama-Tennessee.

Mr. Rabenau has served as President and Secretary of Ryder International
Corporation since April 19, 1994. From April 1, 1990 until April 19, 1994,
Mr. Rabenau served as President of the predecessor company, also named Ryder
International Corporation prior to the purchase of its assets by the
Company. Mr. Rabenau has served as President and Secretary of ATRION Medical
Products, Inc. since September, 1995.

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS

The information for this item is set forth on page 28 of the Company's 1995
Annual Report to shareholders (Exhibit 13) under the heading "Stock
Information" and is incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA

The information for this item is set forth in the section entitled "Selected
Financial Data" on page 22 of the Company's 1995 Annual Report to
shareholders (Exhibit 13) and is incorporated herein by reference.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The information for this item is set forth in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 23 through 26 of the Company's 1995 Annual Report to
shareholders (Exhibit 13) and is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information for this item is set forth on pages 11 through 21 of the
Company's 1995 Annual Report to shareholders (Exhibit 13) and is
incorporated herein by reference.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS -

The information for this item relating to directors and nominees of the
Company and to the filing of reports under Section 16(a) of the Securities
Exchange Act of 1934 is set forth in the section entitled "Election of
Directors" in the Company's Proxy Statement related to the annual meeting of
shareholders to be

held on May 6, 1996, which section is incorporated herein by reference.

EXECUTIVE OFFICERS -

The information for this item relating to executive officers of the Company
is set forth on pages 16 through 18 of this report.

ITEM 11 - EXECUTIVE COMPENSATION

The information for this item is set forth in the section entitled
"Executive Compensation" in the Company's Proxy Statement related to the
annual meeting of shareholders to be held on May 6, 1996, which section
(except for the portions thereof entitled "Compensation Committee Report on
Executive Compensation" and "Performance of Common Shares") is incor-
porated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS -

The information for this item is set forth in the section entitled
"Information Regarding Certain Beneficial Owners of Common Shares" in the
Company's Proxy Statement related to the annual meeting of shareholders to
be held on May 6, 1996, which section is incorporated herein by reference.

SECURITY OWNERSHIP OF MANAGEMENT -

The information for this item is set forth in the section entitled
"Securities Ownership of Management" in the Company's Proxy Statement
related to the annual meeting of shareholders to be held on May 6, 1996,
which section is incorporated herein by reference.

CHANGES IN CONTROL -

The Company knows of no arrangements which may at a subsequent date result
in a change in control of the Company.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information for this item is set forth in the section entitled "Certain
Transactions" in the Company's Proxy Statement related to the annual meeting
of shareholders to be held on May 6, 1996, which section is incorporated
herein by reference.

20
PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

ANNUAL REPORT
FINANCIAL STATEMENTS PAGE NUMBER
- -------------------- -------------

The following consolidated financial
statements, related notes to consolidated
financial statements and report of independent public
accountants contained on pages 11
through 21 of the Company's 1995 Annual
Report to shareholders (Exhibit 13) are
incorporated herein by reference in Item 8:

Consolidated Statements of Income
for the years ended December 31, 1995, 1994
and 1993 11
Consolidated Balance Sheets as of
December 31, 1995 and 1994 12-13
Consolidated Statements of Cash Flows
for the years ended December 31, 1995, 1994
and 1993 14
Notes to Consolidated Financial Statements 15-21
Report of Independent Public Accountants 10

FINANCIAL STATEMENT SCHEDULES

All financial statement schedules have been omitted since the
required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.

EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K)

The following exhibits are filed as part of this 1995 Form 10-K
Report. Those exhibits previously filed and incorporated herein by
reference are identified below by a note reference to the previous
filing.

EXHIBIT
NUMBERS DESCRIPTION
- ------- -----------

2 Stock Purchase Agreement dated February 17, 1990, between
AlaTenn Resources, Inc. and MEGA Natural Gas Company, as
amended by Letter Agreement dated March 9, 1990 (1)
3a Articles of Incorporation, as amended (5)
3b Bylaws, as amended (3)
4a Rights Agreement, dated as of February 1, 1990, between
AlaTenn Resources, Inc. and American Stock Transfer &
Trust Company, which includes the form of Right
Certificate as Exhibit A and the Summary of Rights to
Purchase Common Shares as Exhibit B (4)
4b Loan Agreement dated November 15, 1989, among AlaTenn
Credit Corp., Third National Bank in Nashville, and The
First National Bank of Florence (16)
4c Revolving Credit Note in the principal amount of $20
million dated November 15, 1989, by AlaTenn Credit Corp.
in favor of Third National Bank in Nashville and The
First National Bank of Florence (17)
4d First Amendment to Loan Agreement dated December 29, 1989
among AlaTenn Credit Corp., Third National Bank in
Nashville, and the First National Bank of Florence (23)
4e Second Amendment to Loan Agreement dated November 6, 1990
among AlaTenn Credit Corp., Third National Bank in
Nashville, and the First National Bank of Florence (24)
4f Credit Agreement in the amount of $20 million, dated
January 20, 1995 between AlaTenn Credit Corporation and
Compass Bank (34)
10a* Performance Share Plan of AlaTenn Resources, Inc. (13)
10b* Change in Control Agreement between AlaTenn Resources,
Inc. and Jerry A. Howard, dated October 23, 1987 and
amendment dated March 11, 1988 (14)
10c* Change in Control Agreement between AlaTenn Resources,
Inc. and George G. Petty, dated October 23, 1987 and
amendment dated March 11, 1988 (15)
10d Escrow Agreement dated December 27, 1989 by Alabama-Tennessee
Natural Gas Company and Third National Bank In
Nashville, as escrow agent and Tennessee Gas Pipeline
Company (18)
10e Gas Sales Contract between Alabama-Tennessee Natural Gas
Company and Tennessee Gas Pipeline Company, dated August
1, 1989 (19)
10f Agreement for Purchase and Sale of Assets, dated October
3, 1990, by and among Central Gas Company, Tennessee
River Development Company and the City of Florence,
Alabama (25)
10g First Amendment to Agreement for Purchase and Sale of
Assets, dated March 5, 1991, by and among Central Gas
Company, Tennessee River Development Company and the City
of Florence, Alabama (26)
10h Offer to Purchase, dated December 27, 1989 between Oryx
Energy Company and Alabama-Tennessee Natural Gas Company
(27)

10i Agreement of Sale, dated November 19, 1990 by and among
AlaTenn Resources, Inc., Triton Energy Corporation and
Pacific Basin Company (28)
10j* 1990 Stock Option Plan, adopted March 15, 1990 (20)
10k* Form of Incentive Stock Option Agreement (21)
10l* Restricted Shares Compensation Plan for Non-Employee
Directors, adopted May 6, 1991 (22)
10m* Alabama-Tennessee Natural Gas Company Non-Employee
Directors Deferral Plan (29)
10n* Alabama-Tennessee Natural Gas Company Supplemental
Executive Retirement Plan (30)
10o* Alabama-Tennessee Natural Gas Company Supplemental
Executive Thrift Plan (31)
10p Assets Purchase Agreement, dated April 19, 1994 between
Ryder International Corporation, Frank and Carolyn Ryder,
RIC Acquisition Corporation and AlaTenn Resources (32)
101* 1994 Key Employee Stock Incentive Plan (33)
13 Portions of 1995 Annual Report to Shareholders which are
incorporated by reference into the form 10-K (5)
21 Subsidiaries of AlaTenn Resources, Inc. as of December
31, 1995 (5)
23 Consent of Arthur Andersen & Co. (5)
24 Powers of Attorney authorizing Jerry A. Howard and George
G. Petty to sign the AlaTenn Resources, Inc. Annual
Report on Form 10-K for fiscal year ended December 31,
1995 on behalf of certain directors of the Company (5)
27 Financial Data Schedules (filed electronically only) (5)
99 System map of Alabama-Tennessee Pipeline System (35)

Notes:

(13) Filed as Exhibit A to the definitive Proxy Statement of
AlaTenn Resources, Inc. dated March 25, 1983
(14) Filed as Exhibit 10c to Form 10-K of AlaTenn Resources,
Inc. dated March 29, 1988
(15) Filed as Exhibit 10d to Form 10-K of AlaTenn Resources,
Inc. dated March 29, 1988
(16) Filed as Exhibit 4b to Form 10-K of AlaTenn Resources,
Inc. dated March 30, 1990.
(17) Filed as Exhibit 4c to Form 10-K of AlaTenn Resources,
Inc. dated March 30, 1990.
(18) Filed as Exhibit 10k to Form 10-K of AlaTenn Resources,
Inc. dated March 30, 1990.
(19) Filed as Exhibit 10l to Form 10-K of AlaTenn Resources,
Inc. dated March 30, 1990.
(20) Filed as Appendix A to the Definitive Proxy Statement of
the Company dated April 6, 1990.
(21) Filed as Exhibit 4(d) to the Registration Statement on
Form S-8 of AlaTenn Resources, Inc., filed May 17, 1991
(File No. 33-40639).
(22) Filed as Appendix A to the Definitive Proxy Statement of
the Company dated March 29, 1991.
(23) Filed as Exhibit 4d to Form 10-K of AlaTenn Resources,
Inc., dated March 28, 1991.
(24) Filed as Exhibit 4e to Form 10-K of AlaTenn Resources,
Inc., dated March 28, 1991.
(25) Filed as Exhibit 10m to Form 10-K of AlaTenn Resources,
Inc., dated March 28, 1991.
(26) Filed as Exhibit 10n to Form 10-K of AlaTenn Resources,
Inc., dated March 28, 1991.
(27) Filed as Exhibit 10o to Form 10-K of AlaTenn Resources,
Inc., dated March 28, 1991.
(28) Filed as Exhibit 10p to Form 10-K of AlaTenn Resources,
Inc., dated March 28, 1991.
(29) Filed as Exhibit 10t to Form 10-K of AlaTenn Resources,
Inc., dated March 27, 1992.
(30) Filed as Exhibit 10u to Form 10-K of AlaTenn Resources,
Inc., dated March 26, 1993.
(31) Filed as Exhibit 10v to Form 10-K of AlaTenn Resources,
Inc., dated March 26, 1993.
(32) Filed as Exhibit 2 to Form 8-K of AlaTenn Resources,
Inc., dated May 2, 1994.
(33) Filed as Appendix A to the Definitive Proxy Statement of
the Company dated March 28, 1994.
(34) Filed as Exhibit 4f to Form 10-K of AlaTenn Resources,
Inc., dated March 30, 1995.
(35) Filed as Exhibit 99 to Form 10-K of AlaTenn Resources,
Inc., dated March 30, 1995.

* Management Contract or Compensatory Plan or Arrangement

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the last quarter of the year
ended December 31, 1995.

22
25
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

AlaTenn Resources, Inc.

By: /s/Jerry A. Howard
-------------------------
Jerry A. Howard
Chairman of the Board,
President and Chief
Executive Officer

Dated: April 1, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

Signature Capacity Date
--------- -------- ----

(I) Principal Executive
Officer:

/s/Jerry A. Howard Chairman of the Board, April 1, 1996
- ------------------------ President and Chief
(Jerry A. Howard) Executive Officer

(ii) Principal Financial
Officer:

/s/George G. Petty Vice President - April 1, 1996
- ------------------------ Finance and Chief
(George G. Petty) Financial Officer

(iii) Directors:

/s/Emile A. Battat Director April 1, 1996
- ------------------------
(Emile A. Battat)

/s/Jerry A. Howard Director April 1, 1996
- ------------------------
Jerry A. Howard

/s/Richard O. Jacobson Director April 1, 1996
- ------------------------
(Richard O. Jacobson)

/s/John H.P. Maley Director April 1, 1996
- ------------------------
(John H.P. Maley)

/s/Jerome J. McGrath Director April 1, 1996
- ------------------------
(Jerome J. McGrath)

/s/Hugh J. Morgan, Jr. Director April 1, 1996
- ------------------------
(Hugh J. Morgan, Jr.)

/s/J. Kenneth Smith Director April 1, 1996
- ------------------------
(J. Kenneth Smith)

/s/Roger F. Stebbing Director April 1, 1996
- ------------------------
(Roger F. Stebbing)

/s/John P. Stupp, Jr. Director April 1, 1996
- ------------------------
(John P. Stupp, Jr.)

24
27

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and
the Board of Directors of
AlaTenn Resources, Inc.:

We have audited the accompanying consolidated balance sheets of AlaTenn
Resources, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income and cash flows for each of the
three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AlaTenn Resources,
Inc. and subsidiaries as of December 31, 1995 and 1994 and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted
accounting principles.

/s/ Arthur Andersen LLP
------------------------
Atlanta, Georgia
February 10, 1995
28
ALATENN RESOURCES, INC.

INDEX OF EXHIBITS

The following exhibits are filed as part of this 1995 Form 10-K Report. Those
exhibits previously filed and incorporated herein by reference are identified
below by a note reference to the previous filing.

EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
2 Stock Purchase Agreement dated February 17, 1990,
between AlaTenn Resources, Inc. and MEGA Natural
Gas Company, as amended by Letter Agreement dated
March 9, 1990 (1)
3a Articles of Incorporation, as amended (5)
3b Bylaws, as amended (3)
4a Rights Agreement, dated as of February 1, 1990,
between AlaTenn Resources, Inc. and American Stock
Transfer & Trust Company, which includes the form
of Right Certificate as Exhibit A and the Summary
of Rights to Purchase Common Shares as Exhibit B
(4)
4b Loan Agreement dated November 15, 1989, among
AlaTenn Credit Corp., Third National Bank in
Nashville, and The First National Bank of Florence
(16)
4c Revolving Credit Note in the principal amount of
$20 million dated November 15, 1989, by AlaTenn
Credit Corp. in favor of Third National Bank in
Nashville and The First National Bank of Florence
(17)
4d First Amendment to Loan Agreement dated December
29, 1989 among AlaTenn Credit Corp., Third National
Bank in Nashville, and the First National Bank of
Florence (23)
4e Second Amendment to Loan Agreement dated November
6, 1990 among AlaTenn Credit Corp., Third National
Bank in Nashville, and the First National Bank of
Florence (24)
4f Credit Agreement in the amount of $20 million,
dated January 20, 1995 between AlaTenn Credit
Corporation and Compass Bank (34)
10a* Performance Share Plan of AlaTenn Resources, Inc. (13)
10b* Change in Control Agreement between AlaTenn Re-
sources, Inc. and Jerry A. Howard, dated October
23, 1987 and amendment dated March 11, 1988 (14)
10c* Change in Control Agreement between AlaTenn Re-
sources, Inc. and George G. Petty, dated October
29
23, 1987 and amendment dated March 11, 1988 (15)
10d Escrow Agreement dated December 27, 1989 by
Alabama-Tennessee Natural Gas Company and Third
National Bank In Nashville, as escrow agent and
Tennessee Gas Pipeline Company (18)
10e Gas Sales Contract between Alabama-Tennessee
Natural Gas Company and Tennessee Gas Pipeline
Company, dated August 1, 1989 (19)
10f Agreement for Purchase and Sale of Assets, dated
October 3, 1990, by and among Central Gas Company,
Tennessee River Development Company and the City of
Florence, Alabama (25)
10g First Amendment to Agreement for Purchase and Sale
of Assets, dated March 5, 1991, by and among
Central Gas Company, Tennessee River Development
Company and the City of Florence, Alabama (26)
10h Offer to Purchase, dated December 27, 1989 between
Oryx Energy Company and Alabama-Tennessee Natural
Gas Company (27)
10i Agreement of Sale, dated November 19, 1990 by and
among AlaTenn Resources, Inc., Triton Energy
Corporation and Pacific Basin Company (28)
10j* 1990 Stock Option Plan, adopted March 15, 1990 (20)
10k* Form of Incentive Stock Option Agreement (21)
10l* Restricted Shares Compensation Plan for Non-Employee
Directors, adopted May 6, 1991 (22)
10m* Alabama-Tennessee Natural Gas Company Non-Employee
Directors Deferral Plan (29)
10n* Alabama-Tennessee Natural Gas Company Supplemental
Executive Retirement Plan (30)
10o* Alabama-Tennessee Natural Gas Company Supplemental
Executive Thrift Plan (31)
10p Assets Purchase Agreement, dated April 19, 1994
between Ryder International Corporation, Frank and
Carolyn Ryder, RIC Acquisition Corporation and
AlaTenn Resources (32)
101* 1994 Key Employee Stock Incentive Plan (33)
13 Portions of 1995 Annual Report to Shareholders
which are incorporated by reference into the form
10-K (5)
21 Subsidiaries of AlaTenn Resources, Inc. as of
December 31, 1995 (5)
23 Consent of Arthur Andersen & Co. (5)
24 Powers of Attorney authorizing Jerry A. Howard and
George G. Petty to sign the AlaTenn Resources, Inc.
Annual Report on Form 10-K for fiscal year ended
December 31, 1995 on behalf of certain directors of
the Company (5)
27 Financial Data Schedules (filed electronically
only) (5)
99 System Map of Alabama-Tennessee Pipeline System (35)

Notes:

(1) Filed as Exhibit 2 to Form 8-K of AlaTenn
Resources, Inc. dated March 26, 1990
(2) Filed as Exhibit 3a to Form 10-K of AlaTenn
Resources, Inc. dated March 27, 1987
(3) Filed as Exhibit 3b to Form 10-Q of AlaTenn
Resources, Inc. dated May 14, 1987
(4) Filed as Exhibit 1 to Registration Statement on
Form 8-A of AlaTenn Resources, Inc. dated February
15, 1990.
(5) Filed herewith
(6) Filed as Exhibit 2 to Form 8-K of AlaTenn
Resources, Inc. dated October 28, 1986
(7) Filed as Exhibit 10b to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1989.
(8) Filed as Exhibit 10c to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1989.
(9) Filed as Exhibit 10d to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1989.
(10) Filed as Exhibit 10e to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1989.
(11) Filed as Exhibit 10f to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1989.
(12) Filed as Exhibit 10g to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1989.
(13) Filed as Exhibit A to the definitive Proxy
Statement of AlaTenn Resources, Inc. dated March
25, 1983
(14) Filed as Exhibit 10c to Form 10-K of AlaTenn
Resources, Inc. dated March 29, 1988
(15) Filed as Exhibit 10d to Form 10-K of AlaTenn
Resources, Inc. dated March 29, 1988
(16) Filed as Exhibit 4b to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1990.
(17) Filed as Exhibit 4c to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1990.
(18) Filed as Exhibit 10k to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1990.
(19) Filed as Exhibit 10l to Form 10-K of AlaTenn
Resources, Inc. dated March 30, 1990.
(20) Filed as Appendix A to the Definitive Proxy
Statement of the Company dated April 6, 1990.
(21) Filed as Exhibit 4(d) to the Registration Statement
on Form S-8 of AlaTenn Resources, Inc., filed May
17, 1991 (File No. 33-40639).
(22) Filed as Appendix A to the Definitive Proxy
Statement of the Company dated March 29, 1991.
(23) Filed as Exhibit 4d to Form 10-K of AlaTenn
Resources, Inc., dated March 28, 1991.
(24) Filed as Exhibit 4e to Form 10-K of AlaTenn
Resources, Inc., dated March 28, 1991.
(25) Filed as Exhibit 10m to Form 10-K of AlaTenn
Resources, Inc., dated March 28, 1991.

(26) Filed as Exhibit 10n to Form 10-K of AlaTenn
Resources, Inc., dated March 28, 1991.
(27) Filed as Exhibit 10o to Form 10-K of AlaTenn
Resources, Inc., dated March 28, 1991.
(28) Filed as Exhibit 10p to Form 10-K of AlaTenn
Resources, Inc., dated March 28, 1991.
(29) Filed as Exhibit 10t to Form 10-K of AlaTenn
Resources, Inc., dated March 27, 1992.
(30) Filed as Exhibit 10u to Form 10-K of AlaTenn
Resources, Inc., dated March 26, 1993.
(31) Filed as Exhibit 10v to Form 10-K of AlaTenn
Resources, Inc., dated March 26, 1993.
(32) Filed as Exhibit 2 to Form 8-K of AlaTenn
Resources, Inc., dated May 2, 1994.
(33) Filed as Appendix A to the Definitive Proxy
Statement of the Company dated March 28, 1994.
(34) Filed as Exhibit 4f to Form 10-K of AlaTenn
Resources, Inc., dated March 30, 1995.
(35) Filed as Exhibit 99 to Form 10-K of AlaTenn Resources,
Inc., dated March 30, 1995.

* Management Contract or Compensatory Plan or Arrangement

32
EXHIBIT 3a

Articles of Incorporation

AlaTenn Resources, Inc.

The undersigned, for the purpose of forming a corporation pursuant to the
provisions of the Alabama Business Corporation Act, does hereby certify as
follows:

Article I

Name

1.01 The name of the Corporation is AlaTenn Resources, Inc.

Article II

Duration

2.01 The duration of the Corporation shall be perpetual.

Article III

Purposes

3.01 The purposes for which the Corporation is organized are:

(a) To drill for, explore for, mine, produce, recover, refine, store,
manufacturer purchase, sell, transport and distribute and generally to trade
and deal in petroleum and other oils, natural gas and other volatile
substances, mineral ores, clays and other mineral substances and products
derived in whole or in part therefrom; to construct, own, operate, lease and
repair pipe lines for the transmission of natural, manufactured and/or other
gases.

(b) To purchase, lease from others and otherwise acquire, own, hold,
develop, improve, operate, use, sell, mortgage, lease to others and otherwise
dispose of real property and estates and interests therein, and concessions,
licenses or franchises relating thereto, oil and gas wells, mines, quarries,
refineries, works, tanks, pipelines for its private use, and all other
structures, machinery, cars, vessels, containers, lamps, utensils, stoves,
burners and apparatus of any kind in which the material or products dealt in
are used, stored or transported, and all other equipment and appliances and
appurtenances thereto and all other personal property necessary or convenient
for conducting its business.

(c) To manufacture, acquire, mine for, produce, distribute, use and
sell artificial gas for light, heat, power and other purposes, and also to
produce, acquire, use, sell and distribute the by-products and residual
products therefrom, and to construct or in any manner acquire, maintain,
operate, encumber, sell or in any manner dispose of works therefor.

(d) To purchase, acquire, own, hold, improve, develop, operate,
manage, sell, convey, assign, transfer, exchange, release, dispose of,
mortgage, encumber, pledge, create security interest in, lease, hire, deal in,
and loan or borrow money upon, alone or in conjunction with others, real and
personal property, tangible and intangible, of every kind, character and
description, or any interest therein.

(e) To apply for, purchase, or acquire by assignment, transfer or
otherwise, and hold, mortgage, or otherwise pledge, and to sell, exchange,
transfer, deal in and with any license, power, authority, concession, right or
privilege which any corporation may make or grant.

(f) To manufacture, purchase or otherwise acquire, and to hold, own,
mortgage, pledge, sell, assign and transfer, exchange or otherwise dispose of,
and invest, trade and deal in and with goods, wares and merchandise and
personal property of every class and description, wherever situated, whether or
not the same specifically pertain to the classes of business specified in this
Article III; and to own and operate mines, plants, factories, mills,
warehouses, yards, merchandise stores, commissaries and all other installations
or establishments of whatever character or description, together with the
equipment, rolling stock and other facilities used or useful in connection with
or incidental thereto.

(g) To engage in the business of exploiting natural resources, to
search, prospect and explore for useful or valuable substances to acquire and
extract such substances, to sell and dispose of such substances, and to refine
such substances and manufacture and sell and dispose of products and
by-products derived therefrom.

(h) To purchase or otherwise acquire, hold, use, sell, assign,
lease, mortgage or in any manner dispose of, and to take, exchange and grant
licenses, or other rights therein, in respect of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements, processes, formulae, methods, copyrights, trademarks
and trade names, know how, and trade secrets, relating to or useful in
connection with any business, objects or purposes of the Corporation.

(i) To acquire, by purchase, subscription or otherwise, and to own,
hold, sell and dispose of, exchange, deal, in and with

shares, bonds, debentures, obligations, evidences of indebtedness, open
accounts, promissory notes, mortgages and securities executed by any individual
or by any corporation in Alabama or any other state or foreign countries,
whether public or private government or municipality or otherwise, and to issue
and exchange for all such shares, bonds, debentures, obligations, evidences of
indebtedness, open accounts, promissory notes, mortgages or securities, the
shares, bonds, debentures or other evidences of indebtedness of this
Corporation, and this Corporation shall have express power to hold, sell,
assign, transfer, mortgage, pledge or otherwise dispose of the shares, bonds,
debentures, promissory notes, mortgages and securities so acquired by it and,
while the owner thereof, to exercise all the rights, privileges and powers of
ownership, including the right to vote thereon, to the same extent as a natural
person may do, subject to the limitations, if any, on such rights now or
hereafter provided by the laws of Alabama.

(j) To endorse, lend its credit to, or otherwise guarantee, or
become a surety with respect to, or obligate itself for, or pledge or mortgage
all or any part of its properties to secure the payment of the principal and
interest, or either, on any bonds, debentures, notes, scrip, coupons, or other
obligations or evidences of indebtedness, or the performance of any contract,
lease, mortgage, or obligation, of any subsidiary, affiliated or related
corporation or any other corporation or association, domestic or foreign, or of
any person, firm, partnership or joint venture.

(k) To enter into, make and perform contracts of every kind for any
lawful purpose without limit as to amount, with any person, firm, association,
partnership, limited partnership, corporation, municipality, county, state,
territory, government, governmental subdivision, or body politic.

(l) To acquire the good will, rights, assets and properties, and to
undertake the whole or any part of the liabilities of any person, firm,
association or corporation; to pay for the same in cash, the shares or other
securities of the Corporation, or otherwise; to hold, or in any manner dispose
of, the whole or part of the property so acquired; to conduct in any lawful
manner the whole or any part of the business so acquired and to exercise all
the powers necessary or convenient in and about the conduct and management of
any such business.

(m) To borrow and lend money, without security, or upon the giving
or receipt of such security as the Board of Directors of the Corporation may
deem advisable by way of mortgage, pledger transfer, assignment, or otherwise,
of real and personal property of every nature and description, or by way of
guaranty, or otherwise, and to enter into revolving credit agreements or other
loan agreements of any kind with banks or other financial or institutional
investors.

(n) To draw, make; accept, endorse, discount, execute and issue
promissory notes, drafts, bills of exchange, warrants, debentures and other
negotiable or transferable instruments.

(o) To issue bonds, debentures or other securities or obligations
and to secure the same by mortgage, pledge, deed of trust, or otherwise.

(p) To act as agent, jobber, broker or attorney-in-fact in buying,
selling and dealing in real and personal property of every nature and
description and leases respecting the same and estates and interests therein
and mortgages and securities thereon, in making and obtaining loans, whether
secured by such property or not, and in supervising, managing and protecting
such property and loans and all interests in and claims affecting the same.

(q) To purchase, take, receive, redeem, exchange, or otherwise
acquire, hold, own, pledge, transfer or otherwise dispose of the Corporation's
own shares, whether or not redeemable (so far as may be permitted by law), and
its bonds, debentures, notes, scrip or other securities or evidences of
indebtedness, and to hold, sell, transfer or reissue the same.

(r) To enter into any plan or project for the assistance and welfare
of its employees, to lend money and use its credit to assist its employees, and
to pay pensions and establish pension plans, pension trusts, profit-sharing
plans, stock bonus plans, stock option plans, employee stock ownership plans
and other incentive or welfare plans for any or all of the Corporation's
directors, officers and employees.

(s) To enter into any lawful arrangements for sharing of profits,
union of interest, reciprocal concession, or cooperation, as partner (general
or limited), joint venturer, or otherwise, with any person, partnership,
corporation, association, combination, organization, entity or other body
whatsoever, domestic or foreign, carrying on or proposing to carry on any
business which this Corporation is authorized to carry on, or any business or
transaction deemed necessary, convenient or incidental to the carrying out of
any of the purposes of this Corporation.

(t) To do all kinds of mining, manufacturing and trading business;
to transport goods and merchandise by land or water in any manner; to build
houses, warehouses, buildings. structures, vessels, cars, wharves, docks and
piers; to do a general warehouse and storage business; to do a general
cooperative business; to buy, sell, deal in, issue, transfer, register, certify
and guarantee warehouse receipts.

(u) To manufacture, construct, install, service, repair, maintain,
operate, buy, lease, sell, let out upon license or royalty, or otherwise
dispose of, and generally deal in and deal

with, boilers, heating plants, power plants, furnaces, burners, heaters,
stoking devices, machinery, apparatus, equipment, appliances, and any other
article or thing necessary, useful or advantageous in the business of
furnishing apparatus for the development of heat, power and/or refrigeration in
any or all of their respective branches.

(v) To manufacturer purchase or otherwise acquire, own, mortgage,
pledge, sell, assign and transfer, or otherwise dispose of, to invest, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description.

(w) To have one or more offices to carry on all of the Corporation's
operations and business without restriction or limit as to amount, in any of
the states, districts, territories or possessions or colonies of the United
States, and in any and all foreign countries, subject to the laws of such
state, district, territory, possession, colony or country.

(x) To carry on any other business in connection with the foregoing,
to transact any or all lawful business for which corporations may be
incorporated under the Alabama Business Corporation Act, as amended, and to
have and exercise all powers necessary or convenient to effect the purposes of
the Corporation.

(y) To do any and all of the things herein set out and such other
things as are incidental or conducive to the attainment of the objects and
purposes of this Corporation, to the same extent as natural persons might or
could do and in any part of the world, as principal, factor, agent, contractor,
or otherwise, either alone or in conjunction with any person, firm,
association, partnership, corporation or any entity of whatsoever kind, and to
do any and all such acts and things and to have and exercise any and all such
powers to the full extent authorized or permitted to a corporation under any
laws that may now or hereafter be applicable or available to this Corporation.

(z) The Corporation's power to acquire property of any kind which it
is or shall be authorized to acquire and to engage in business in which it is
or shall be authorized to engage may be exercised directly or indirectly
through subsidiaries and the acquisition of shares and bonds representative of
such property or business and for the purpose of acquiring and holding either
in perpetuity or for a limited period.

The foregoing clauses, and each phrase thereof, shall be construed, in their
broadest sense as purposes and powers of the Corporation in addition to those
powers specifically conferred upon the Corporation by law, and it is hereby
expressly provided that the

foregoing specific enumeration of purposes and powers shall not be held to
limit or restrict in any manner the powers of the Corporation otherwise granted
by law. Nothing herein contained, however, shall be construed as authorizing
this Corporation to carry on the business of banking or that of a trust
company, or the business of insurance.

Article IV

Authorized Capital

4.01 The aggregate number of shares which the Corporation shall have
authority to issue is 2,000,000 common shares of the par value of $1.00 each.

4.02 Each outstanding common share shall be entitled to one vote
on each matter submitted to a vote of Shareholders, to be cast in person or by
proxy.

Article V

Initial Registered Office And Agent

5.01 The location and mailing address of the initial registered office
of the Corporation is P. 0. Box 918, Florence, Alabama 35631 and the name of
its initial registered agent at such address is M. D. Prouty, Jr.

Article VI

Directors

6.01 The number of directors constituting the initial Board of
Directors shall be eight. Thereafter, the number of directors shall be fixed
in the manner provided in the Bylaws, and may be increased or decreased from
time to time by amendment to, or in the

manner provided in, the Bylaws, but no decrease shall have the effect of
shortening the term of any incumbent director.

6.02 The name and address of each person who is to serve as a director
until the first annual meeting of shareholders or until his successor shall be
elected and qualified is as follows:

Name Address
---- -------

Lewis C. Bartmess P. 0. Box 918
Florence, Alabama 35631

Stephen A. Bergman P.O. Box 7366
Shawnee Mission, Kansas 66207

Stanley M. Morley 1700 K Street, N.W.
Washington, D.C. 20006

M. D. Prouty, Jr. P. 0. Box 918
Florence, Alabama 35631

Paul E. Sackett P. 0 Box 201
Lynchburg, Virginia, 24505

J. Kenneth Smith 1800 K Street, N.W.
Washington, D.C. 20006

John P. Stupp P. 0. Box 6600
St. Louis, Missouri 63125

Claude A. Wilson, Jr. P. 0. Box 4087
Greenwich, Connecticut 06830

Article VII

Incorporator

7.01 The name and address of the incorporator is Alabama-Tennessee
Natural Gas Company, P. 0. Box 918, Florence, Alabama 35631.

7
39

Article VIII

Description and Terms of Shares

8.01 The Corporation may from time to time issue its shares for such
Consideration (not less than the par value respecting shares having a par
value) as may be fixed from time-to-time by the Board of Directors and may
receive in payment thereof, in whole or in part, money, labor done, services
actually performed, or real or personal property (tangible or intangible). Any
and all shares so issued for which the consideration so fixed shall have been
paid or delivered shall be deemed fully paid shares and shall not be liable to
any further call or assessment thereon, and the holders of such shares shall
not be liable for any further payment in respect thereof.

8.02 If at any time the Corporation is engaged in the business of
exploiting natural resources, dividends may be declared and paid in cash out of
the depletion reserves, but each such dividend shall be identified as a
distribution of such reserves and the amount per share paid from such reserves
shall be disclosed to the shareholders receiving the same concurrently with the
distribution thereof.

8.03 No holder of any shares of the Corporation of any class shall have
any preferential or preemptive right to subscribe for, purchase, or receive any
shares of the Corporation of any class, including treasury shares, now or
hereafter authorized, or any securities convertible into, exchangeable for, or
carrying a right or option to purchase its shares of any class, which may at
any

time be issued, sold, or offered for sale by the Corporation for cash or
other consideration.

8.04 The Corporation shall have the right to purchase, take, receive or
otherwise acquire, hold, own, pledge and transfer or otherwise dispose of its
own shares, but purchases of its own shares, whether direct or indirect, shall
be made only to the extent of unreserved and unrestricted earned surplus and
unreserved and unrestricted capital surplus available therefor.

8.05 The private property of the shareholders shall not be subject to the
payment of debts of the Corporation to any extent whatever.

Article IX

Board of Directors

9.01 Except as may be otherwise provided by law or in these Articles of
incorporation, all corporate powers of the Corporation shall be exercised by or
under authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors. In furtherance and not
in limitation of the powers conferred by statute, the Board of Directors shall
have the following powers:

(a) In the interval between the meetings of the shareholders, to alter, amend
or repeal the Bylaws or adopt new Bylaws provided, however, that the Board of
Directors may not alter, amend or repeal any Bylaw establishing what
constitutes a quorum at shareholders meetings or which was adopted by the
shareholders and specifically provides that it cannot be altered, amended or
repealed by the Board of Directors, or which is not otherwise permitted by
applicable law to be altered, amended or repealed solely by the action of the
Board of Directors;

(b) To fix and determine and to vary the amount of working capital
of the Corporation; to determine whether any, and if any, what part of the net
income of the Corporation or its net assets in excess of its capital shall be
declared and paid as dividends and paid to the shareholders and whether or not
in cash or shares of the Corporation or in other property; to determine the
date or dates for the declaration and payment of dividends; and to direct and
determine the use and disposition of any such net income or any such excess of
net assets over paid in capital;

(c) From time to time, and without other limit as to amount, except
as may be provided in a resolution or resolutions adopted by the shareholders
of the Corporation, to borrow or otherwise raise monies for any of the purposes
of the Corporation; to authorize the issue of bonds, debentures, notes, or
other obligations of the corporation, of any nature, or in any manner, and to
authorize the creation of mortgages upon, or the pledge, conveyance or
assignment in trust of, the whole or any part of the property of the
Corporation, real or personal whether at the time owned or thereafter acquired,
including contract rights, to secure the payment of any such bonds, debentures,
notes or other obligations and the interest thereon; and to authorize the sale
or pledge or other disposition of such bonds, debentures, notes or other
obligations of the Corporation for its corporate purposes;

(d) By resolution adopted by a majority of the full Board of
Directors, to designate from among its members one or more committees, each
committee to consist of at least three members of the Board of Directors, which
to the extent provided in such resolution or in the Bylaws of the Corporation
shall have and may, exercise all of the authority of the Board of Directors
except the authority reserved to the Board of Directors as provided by law or
by the Bylaws.
Article X

Amendment

10.01 The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation in the manner
now or hereafter provided by law, and all rights conferred herein upon
shareholders and directors are granted subject to this reservation.

IN WITNESS WHEREOF, the undersigned Alabama-Tennessee Natural Gas Company
hereunto subscribed its name to these Articles of Incorporation on this the day
26th of January, 1982.

ALABAMA-TENNESSEE NATURAL
GAS COMPANY

ATTEST: By:/s/ M. D. Prouty, Jr.
---------------------
Its:President

By:/s/ John R. Severin, Jr.
------------------------
Its: Secretary

11
43
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
ALATENN RESOURCES, INC.

Pursuant to the provisions of Section 10-2A-113 of the Code of Alabama,
the undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:

FIRST: The name of the Corporation is AlaTenn Resources, Inc.

SECOND: The following amendments of the Articles of Incorporation were
adopted by the shareholders of the Corporation on May 2, 1993, in the manner
prescribed by the Alabama Business Corporation Act.

RESOLVED, that Paragraph 4.01 of the Article IV, Authorized Capital, of
the Articles of Incorporation of the Company be amended to read as
follows:

4.01 The aggregate number of shares which the Corporation shall have
authority to issue is 3,000,000 common shares of the par value of $1.00
each."

THIRD: The number of shares of the Corporation outstanding at the time
of such adoption was 1,080,000; and the number of shares entitled to vote
thereon was 1,080,000.

FOURTH: The number of shares voted for such amendment was 707,713; and
the number of shares voted against such amendment was 5,593.

Dated: May 18, 1983

ALATENN RESOURCES, INC.

By: /s/ M.D. Prouty, Jr.
------------------------
Its President

and /s/ R.N. Lawson
------------------------
Its Secretary

STATE OF ALABAMA )
) ss
COUNTY OF COLBERT )

I, Pamela P. Zalot, a notary public, do hereby certify that on this 18th
day of May, 1983, personally appeared before me M.D. Prouty, Jr. and R. N.
Lawson, who, being by me first duly sworn, declared that they are the President
and Secretary of AlaTenn Resources, Inc., that they signed the foregoing
document as President and Secretary of the Corporation, and that the statements
therein contained are true.

/s/ Pamela P. Zalot
---------------------
Notary Public

13
45
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
ALATENN RESOURCES, INC.

Pursuant to the provisions of Code of Alabama (1975), # 10-2A-113,
the undersigned Corporation hereby adopts the following Articles of
Amendment to its Articles of Incorporation:

1. The name of the Corporation is:

AlaTenn Resources, Inc.

2. The amendments so adopted are:

FIRST: The following new Section 6.03 is hereby added to Article
VI of the original Articles of Incorporation:

6.03. At a meeting called expressly for that purpose, any director or the
entire Board of Directors may be removed, with or without cause, but only
upon the affirmative vote of the holders of not less than eighty percent
(80%) of the then outstanding common shares of the Corporation and the
affirmative vote of the holders of not less than sixty-seven percent (67%)
of the then outstanding common shares of the Corporation which are not
held by a Substantial Shareholder or any of its Affiliates or Associates.
Notwithstanding any other provision of these Articles of Incorporation or
the Bylaws (and notwithstanding the fact that a lesser percentage may be
specified by law,, these Articles of Incorporation or the Bylaws), the
provisions of this Section 6.03 may not be amended or repealed, and no
provision inconsistent herewith may be adopted, unless such action shall
have been approved by the affirmative vote of the holders of not less than
eighty percent (80%) of the then outstanding common shares of the
Corporation and the affirmative vote of the holders of not less than
sixty-seven percent (67%) of the then outstanding common shares of the
Corporation which are not held by a Substantial Shareholder or any of its
Affiliates or Associates.

SECOND: Paragraph (a) of Section 9.01 of Article IX of the
original Articles of Incorporation is hereby amended by deleting
said Paragraph (a) of said Section 9.01, Article IX in its
entirety, and substituting the following Paragraph (a), Section
9.01, Article IX in lieu thereof:

(a) The Board of Directors shall have the power to adopt, amend and
repeal from time to time Bylaws of the Corporation (other than any Bylaw
establishing what constitutes a quorum at shareholders meetings), subject
to the right of the

shareholders to adopt new Bylaws and to amend and repeal Bylaws made by
the Board of Directors; provided, however, that no Bylaws shall be
adopted, amended or repealed by the shareholders of the Corporation unless
such action shall have been approved by the affirmative vote of the
holders of not less than eighty percent (80%) of the then outstanding
common shares of the Corporation and the affirmative vote of the holders
of not less than sixty-seven percent (67%) of the then outstanding common
shares of the Corporation which are not held by a Substantial Shareholder
or any of its Affiliates or Associates. Notwithstanding any other
provision of these Articles of Incorporation or the Bylaws (and
notwithstanding the fact that a lesser percentage may be specified by law,
these Articles of Incorporation or the Bylaws), the provisions of this
Paragraph (a) may not be amended or repealed, and no provision
inconsistent herewith may be adopted, unless such action shall have been
approved by the affirmative vote of the holders of not less than eighty
percent (80%) of the then outstanding common shares of the Corporation and
the affirmative vote of the holders of not less than sixty-seven percent
(67%) of the then outstanding common shares of the Corporation which are
not held by a Substantial Shareholder or any of its Affiliates or
Associates.

THIRD: Article X of the original Articles of Incorporation is
hereby redesignated as Article XI of the Articles of Incorporation,
and the following new Article X is hereby added to the Articles of
Incorporation:

Article X

Certain Business Combinations

10.01. In addition to any affirmative vote, or other approval, required
by law or any other provision of these Articles of Incorporation or the
Bylaws, and except as otherwise expressly provided in Section 10.02 of
this Article X, any Business Combination (as defined in Section 10.03 of
this Article X) shall require the affirmative vote of the holders of not
less than eighty percent (80%) of the then outstanding common shares of
the Corporation (the "common shares") and the affirmative vote of the
holders of not less than sixty-seven percent (67%) of the then outstanding
common shares not held by a Substantial Shareholder (as defined in Section
10.03 of this Article X) or by any of its Affiliates (as defined in
Section 10.03 of this Article X) or Associates (as defined in Section
10.03 of this Article X). Such affirmative votes shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or otherwise.

10.02. The provisions of Section 10.01 of this Article X shall not
apply to any particular Business Combination, and

such Business Combination shall require only such affirmative vote, or
other approval, as is required by law and any other provision of these
Articles of Incorporation or the Bylaws, if all of the conditions
specified in either Section 10.02(a) or Section 10.02(b) of this Article X
are met.

(a) The Business Combination shall have been approved by a majority
of the Disinterested Directors (as defined in Section 10.03 of this
Article X).

(b) All of the conditions of clauses (1),(2),(3) and (4) below shall
have been met:

(1) The aggregate amount of the cash and the Fair Market Value
(as defined in Section 10.03 of this Article X) as of the date
of consummation of the Business Combination of consideration
other than cash to be received per common share by the
shareholders in such Business Combination is not less than the
higher of:

(i) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees)
paid by the Substantial Shareholder for any common shares,
with appropriate adjustments for share splits, share
dividends and like distributions; or

(ii) the Fair Market Value per common share on the date on
which the first public announcement of the proposal of the
Business Combination is made or on the date on which the
Substantial Shareholder became a Substantial Shareholder,
whichever is higher.

(2) The consideration payable to the holders of common shares of the
Corporation shall be in cash or in the same form as the Substantial
Shareholder has previously paid for common shares. If the
Substantial Shareholder has paid for common shares with varying forms
of consideration, the consideration payable shall be either cash or
the form used to acquire the largest number of common shares acquired
by the Substantial Shareholder.

(3) Subsequent to the Substantial Shareholder having become a
Substantial Shareholder, and prior to the consummation of the
Business Combination:

(i) except as approved by a majority of Disinterested
Directors, there shall have been: (A) no reduction in the annual
rate of dividends paid on the common shares of the Corporation
(except as

necessary to reflect any subdivision of such common shares);
and (B) no failure to increase such annual rate of dividends as
necessary to reflect any reclassification (including any reverse
share split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of
outstanding common shares of the Corporation; and

(ii) such Substantial Shareholder shall not have become the
Beneficial Owner (as defined in Section 10.03 of this Article X)
of any additional common shares except as part of the
transaction which results in such Substantial Shareholder
becoming a Substantial Shareholder and except in a transaction
which, after giving effect thereto, would not result in the
Substantial Shareholder becoming the Beneficial Owner of a
greater percentage of the outstanding common stock of the
Corporation; and

(iii) such Substantial Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
shareholder of the Corporation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise; and

(iv) except as approved by a majority of Disinterested
Directors, there shall have been no major change in the
Corporation's business or equity capital structure.

(4) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 shall be mailed to all shareholders
of the Corporation at least thirty (30) days prior to consummation of
the Business Combination, whether or not such proxy or information
statement would be required by the Securities Exchange Act of 1934.

10.03. For purposes of Section 6.03 of Article VI, Section 9.01(a) of
Article IX and this Article X of these Articles of Incorporation:

(a) The term "Person" shall mean any individual, firm, corporation
or other entity.

(b) The term "Affiliate" and the term "Associate" shall have the
respective meanings which were contained in the definitions thereof
set forth as of July 1, 1984, in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934.

(1) which such Person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or

(2) which such Person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding; or

(3) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of its Affiliates
or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of
any common shares.

(d) The term "Business Combination" shall mean:

(1) any merger or consolidation of the corporation or any
Subsidiary (as defined in this Section 10.03) with (i) any
Substantial Shareholder or (ii) any other corporation (whether
or not itself a Substantial Shareholder) which is, or after such
merger or consolidation would be, an Affiliate of a Substantial
Shareholder, regardless of which entity survives; or

(2) any sale, lease, exchange, loan, advance, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) to, or with, any Substantial Shareholder or any
Affiliate of a Substantial Shareholder, of any assets or
securities of the Corporation or any Subsidiary, or both, having
an aggregate Fair Market Value in excess of $1,000,000; or

(3) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation

proposed by or on behalf of a Substantial Shareholder or any
Affiliate of a Substantial Shareholder; or

(4) any transaction involving the Corporation or any
Subsidiary, including, without limitation, the issuance or
transfer of any securities of, any reclassification of
securities of, or any recapitalization of, the Corporation or
any Subsidiary, or any merger or consolidation of the
Corporation with any Subsidiary (whether or not involving a
Substantial Shareholder), if the transaction would have the
effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
owned directly or indirectly by a Substantial Shareholder or any
Affiliate of a Substantial Shareholder; or

(5) any agreement, contract or other arrangement providing for
any one or more of the actions specified in clauses (1) through
(4) of this Section 10.03(d).

(e) The term "Disinterested Director" shall mean any member of the
Board of Directors of the Corporation who is not an Affiliate or
Associate of the Substantial shareholder, and who was a member of the
Board of Directors prior to the time that the Substantial Shareholder
became a Substantial Shareholder; and any successor of a
Disinterested Director, if the successor is not an Affiliate or
Associate of the Substantial Shareholder and is recommended or
elected to succeed a Disinterested Director by a majority of
Disinterested Directors.

(f) The term "Fair Market Value" shall mean:

(1) in the case of shares, the highest closing sale price per
share of such shares during the 30-day period immediately
preceding the date in question as reported by any United States
securities exchange registered under the Securities Exchange Act
of 1934 on which such shares are listed, or, if such shares are
not listed on any such securities exchange, then the highest
closing bid quotation for any of such shares as reported during
the aforesaid 30-day period on the National Association of
Securities Dealers, Inc. Automatic Quotations System or any
system then in use, or, if no such closing sales price or bid
quotation is

reported, the fair market value of such shares on the date in
question, as determined in good faith by the Board of Directors;
or

(2) in the case of property or securities other than cash or
shares, the fair market value of said property or securities on
the date in question, as determined in good faith by the Board
of Directors.

(g) The term "Substantial Shareholder" shall mean any Person (other
than the Corporation or any Subsidiary) who or which, together with
its Affiliates and Associates, is at any time the Beneficial Owner in
the aggregate of more than ten percent (10%) of the outstanding
common shares or who or which is an Affiliate of the Corporation and
at any time within the two-year period immediately prior to the date
in question was the Beneficial Owner of more than ten percent (10%)
of the then outstanding common shares. For the purpose of
determining whether a Person is a Substantial Shareholder, the number
of common shares deemed to be outstanding shall include common shares
deemed beneficially owned through application of Section 10.03(c) of
this Article X but shall not include any other common shares which
may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants,
options or otherwise.

(h) The term "Subsidiary" shall mean any corporation of which a
majority of any class of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Substantial Shareholder set forth in
Paragraph (g) of this Section 10.03, the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.

(i) In the event of any Business Combination in which this
Corporation survives, the phrase "consideration other than cash to be
received" as used in Paragraph (b)(1) of Section 10.02 of this
Article X shall include the common shares retained by the holders of
such shares.

10.04. The directors of the Corporation shall have the power and duty
to determine, on the basis of information known to them after reasonable
inquiry, the following:

(a) whether a Person is a Substantial Shareholder;

(b) the number of common shares of which any Person is the
Beneficial Owner;

(d) whether any transaction described in Section 10.03(d)(2) of this
Article X involves assets or securities having an aggregate Fair
Market Value in excess of $1,000,000;

and the good faith determination of a majority of the directors on
such matters shall be conclusive and binding for the purposes of
Section 6.03 of Article VI, Section 9.01(a) of Article IX and this
Article X.

10.05. Nothing contained in this Article X shall be construed to
relieve any Substantial Shareholder from any fiduciary obligation imposed
by law.

10.06. The fact that any Business Combination complies with the
provisions of Section 10.02(b) of this Article X shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the shareholders of the Corporation,
nor shall such compliance limit, prohibit or otherwise restrict in any
manner the Board of Directors, or any member thereof, with respect to
evaluations of or actions and responses taken with respect to such
Business Combination.

10.07. Notwithstanding any other provision of these Articles of
Incorporation or the Bylaws (and notwithstanding the fact that a lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws), the provisions of this Article X may not be amended or repealed,
and no provision inconsistent herewith may be adopted, unless such action
shall have been approved by the affirmative vote of the holders of not
less than eighty percent (80%) of the then outstanding common shares and
the affirmative vote of not less than sixty-seven percent (67%) of the
then outstanding common shares which are not held by a Substantial
Shareholder or any of its Affiliates or Associates.

FOURTH: Except as hereinabove amended, the Articles of Incorporation of the
Corporation are continued in full force and effect.

3. The foregoing amendments to the Articles of Incorporation of the
Corporation were adopted by the shareholders of the Corporation on the 26th day
of October, 1984.

4. The number of shares of the Corporation outstanding at the time of the
adoption of the amendments was 2,160,100 and the number of shares entitled to
vote thereon was 2,160,000.

5. The number of shares voted for such amendments was 1,347,214 and the
number of shares voted against such amendments was 85,772.

6. The amendments do not provide for an exchange, reclassification or
cancellation of issued shares.

7. The amendments do not effect a change in the amount of stated capital of
the Corporation.

This the 31st day of October, 1984.

ALATENN RESOURCES, INC.

By: /s/ M.D. Prouty, Jr.
------------------------
M.D. Prouty, Jr.
President

By: /s/ R.N. Lawson
------------------------
R.N. Lawson
Secretary

VERIFICATION

The undersigned, M.D. Prouty, Jr., President of AlaTenn Resources, Inc., a
corporation organized and existing under the laws of the State of Alabama,
hereby certifies, as such President, that M.D. Prouty, Jr. and R.N. Lawson,
whose names as the respective President and Secretary of AlaTenn Resources,
Inc. are signed to the foregoing Articles of Amendment, constitute such
respective officers of ALATENN RESOURCES, INC. and that the statements set
forth in the foregoing Articles of Amendment are true and correct.

WITNESS, my hand and seal this 31st day of October, 1984.

/s/ M.D. Prouty, Jr.
------------------------
M.D. Prouty, Jr.
President

Subscribed and sworn to
before me this the 31st.
day of October, 1984.

/s/ Shirley Mullins
- ----------------------------
Notary Public

My Commission Expires:3/9/85

23
55

THIS INSTRUMENT PREPARED BY:

B. G. MINISMAN, JR.
ATTORNEY AT LAW
BERKOWITZ, LEFKOVITS, ISOM & KUSHNER
A PROFESSIONAL CORPORATION
1600 SOUTHTRUST TOWER
BIRMINGHAM, ALABAMA 35203

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ALATENN RESOURCES, INC.

Pursuant to the provisions of Code of Alabama Sec. 10-2B-10.06 (1994), the
undersigned Corporation hereby files the following Articles of Amendment to its
Articles of Incorporation:

1. The name of the Corporation is:

AlaTenn Resources, Inc.

2. The amendment so adopted is as follows:

Article IX of the Articles of Incorporation, as amended, is hereby amended
by adding the following as Section 9.02:

9.02. A director of the Corporation shall have no personal liability
to the Corporation or its shareholders for money damages for any action
taken, or any failure to take any action, as a director, except liability
for (i) the amount of any financial benefit received by a director to
which he or she is not entitled; (ii) an intentional infliction of harm on
the Corporation or the shareholders; (iii) a violation of Section
10-2B-8.33 of the Alabama Business Corporation Act as the same now exists
or may hereafter be amended; (iv) an intentional violation of criminal
law; or (v) a breach of the director's duty of loyalty to the Corporation
or its shareholders. If the Alabama Business Corporation Act, or any
successor statute thereto, is hereafter amended to authorize the further
elimination or limitation of the liability of a director of a corporation,
then the liability of a director of the Corporation, in addition to the
limitations on liability provided herein, shall be limited to the fullest
extent permitted by the Alabama Business Corporation Act, as amended, or
any successor statute thereto. No amendment to or repeal of this

Section 9.02 shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to such
amendment or repeal.

Except as hereinabove amended, the Articles of Incorporation of the
Corporation, as amended, are continued in full force and effect.

3. The number of shares of the Corporation outstanding at the time of the
adoption of the amendment was 2,115,484 common shares, and the number of shares
entitled to vote thereon at the meeting of shareholders held on May 1, 1995 was
2,115,484 common shares. The number of shares represented at the meeting of
shareholders on May 1, 1995 was 1,754,702 common shares.

4. The foregoing amendment to the Articles of Incorporation of the
Corporation was adopted by the shareholders of the Corporation on May 1, 1995.
The number of shares voting for the amendment was 1,671,897 common shares, and
the number of shares voting against the amendment was 54,956 common shares.

5. The amendment does not provide for an exchange, reclassification or
cancellation of issued shares.

This the 5th day of May, 1995.

ALATENN RESOURCES, INC.

By:/s/ Jerry A. Howard
-----------------------------
Chairman of the Board,
President and Chief Executive
Officer