Form of Director Indemnification Agreement

Exhibit 10.3


DIRECTOR INDEMNIFICATION AGREEMENT

This Director Indemnification Agreement, dated this 28th day of April 2004 (this " Agreement" ), is made by and between AGL Resources Inc., a Georgia corporation (the " Company" ), and _________________ (" Indemnitee" ).

RECITALS :

A. Section 14-2-801 of the Georgia Business Corporation Code (" GBCC" ) provides that the business and affairs of a corporation shall be managed by or under the direction of its board of directors.

B. By virtue of the managerial prerogatives vested in the directors of a Georgia corporation, directors act as fiduciaries of the corporation and its shareholders.

C. Thus, it is critically important to the Company and its shareholders that the Company be able to attract and retain the most capable persons reasonably available to serve as directors of the Company.

D. In recognition of the need for corporations to be able to induce capable and responsible persons to accept positions in corporate management, Sections 14-2-850 through 14-2-859 of the GBCC provide for the indemnification of the directors and officers of a corporation and specifically contemplate that contracts may be entered into between a corporation and the members of the board of directors and officers of the corporation with respect to indemnification of such directors and officers, and further authorizes corporations to purchase and maintain insurance for the benefit of their directors and officers.

E. Section 14-2-851 of the GBCC authorizes a corporation to indemnify its directors who are determined to have met a particular standard of conduct set forth in that section. However, Section 14-2-856(a) of the GBCC provides that, if authorized by its articles of incorporation, a corporation may indemnify its directors without regard to the limitations in other sections of the GBCC, including the limitation in Section 14-2-851 of the GBCC, which requires a determination that a director seeking indemnification must first be determined to have met the statutorily prescribed standard of conduct. Section 14-2-856(b), however, prohibits a corporation from indemnifying a director for liability incurred in a proceeding in which the director is adjudged liable to the corporation, or is subjected to injunctive relief in favor of the corporation, (i) for a breach of duty invo lving appropriation of a business opportunity of the corporation, (ii) for an act or omission that involves intentional misconduct or a knowing violation of law, (iii) for any transaction from which the director received an improper personal benefit, or (iv) under Section 14-2-832 of the GBCC for approval of an unlawful distribution.

F. Pursuant to Article IX of the Company' s articles of incorporation, directors of the Company are entitled to indemnification under Section 14-2-856 of the GBCC.

G. The number of lawsuits challenging the judgment and actions of directors of Georgia corporations, the costs of defending those lawsuits, and the threat to directors' personal assets have all materially increased over the past several years, chilling the willingness of capable individuals to undertake the responsibilities imposed on corporate directors.

H. Indemnitee is a director of the Company and his/her willingness to serve in such capacity is predicated, in substantial part, upon the Company' s willingness to indemnify him/her in accordance with the principles reflected above, to the fullest extent permitted by the laws of the State of Georgia, and upon the other undertakings set forth in this Agreement.

I. Therefore, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee' s continued service as a director of the Company and to enhance Indemnitee' s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company' s articles of incorporation or bylaws (collectively, the " Constituent Documents" ), any change in the composition of the Company' s Board of Directors (the " Board" ) or any change-in-control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancement of Expenses (as defined in Section 1(c)) to Indemnitee as set forth in this Agreement and for the continued coverage of Indemnitee under the Company' s directors' and officers' liability insurance policies.

J. In light of the considerations referred to in the preceding recitals, it is the Company' s intention and desire that the provisions of this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to Indemnitee hereunder.

AGREEMENT :

NOW, THEREFORE, the parties hereby agree as follows:

1.

Certain Definitions. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:

(a)

" Claim" means (i) any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law, and (ii) any inquiry or investigation, whether made, instituted or conducted by the Company or any other party, including without limitation any federal, state or other governmental entity, that Indemnitee determines might lead to the institution of any such claim, demand, action, suit or proceeding.

(b)

" Controlled Affiliate" means any corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, that is directly or indirectly controlled by the Company. For purposes of this definition, " control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity or enterprise, whether through the ownership of voting securities, through other voting rights, by contract or otherwise; provided that direct or indirect beneficial ownership of capital stock or other interests in an entity or enterprise entitling the holder to cast 20% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such entity or enterprise shall be deemed to constitute control for purposes of this definition.

(c)

" Expenses" means attorneys' and experts' fees and expenses and all other costs and expenses paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on appeal), any Claim.

(d)

" Indemnifiable Claim" means any Claim based upon, arising out of or resulting from (i) any actual, alleged or suspected act or failure to act by Indemnitee in his or her capacity as a director, officer, employee or agent of the Company (including his or her capacity as a member or chair of a committee of the Board), or as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or agent, (ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or an y other entity or enterprise referred to in clause (i) of this sentence, or (iii) Indemnitee' s status as a current or former director, officer, employee or agent of the Company (including his or her status as a member or chair of a committee of the Board) or as a current or former director, officer, employee, member, manager, trustee or agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence or any actual, alleged or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon Indemnitee by reason of such status. In addition to any service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to be serving or to have served at the request of the Company as a director, officer, employee, member, manager, trustee or agent of another entity or enterprise if Indemnitee is or was serving as a director, officer, employee, member, manager, agent, trustee or ot her fiduciary of such entity or enterprise and (i) such entity or enterprise is or at the time of such service was a Controlled Affiliate, (ii) such entity or enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate, or (iii) the Company or a Controlled Affiliate directly or indirectly caused Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity.

(e)

" Indemnifiable Losses" means any and all Losses relating to, arising out of or resulting from any Indemnifiable Claim.

(f)

" Losses" means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other) and amounts paid in settlement, including without limitation all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.

2.

Indemnification Obligation. The Company shall indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted by the laws of the State of Georgia in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Indemnifiable Losses resulting from or arising out of any Indemnifiable Claim that shall have been finally disposed of (whether by judgment, order, injunction, settlement with or without court approval, conviction, plea of nolo contendere or its equivalent, or any other means), to the extent that Indemnitee shall not have been adjudged liable to the Company, or subjected to injunctive relief in favor of the Company, (i) for a breach of duty involving appropriation of a business opportunity of the Compan y; ( ...