1998 Voluntary Early Retirement Plan For Officers

AGL RESOURCES INC.


1998 VOLUNTARY EARLY RETIREMENT PLAN FOR OFFICERS


THIS DOCUMENT CONSTITUTES THE OFFICIAL PLAN DOCUMENT
AS WELL AS THE SUMMARY PLAN DESCRIPTION OF THIS PLAN.


1998


AGL RESOURCES INC.
1998 VOLUNTARY EARLY RETIREMENT PLAN FOR OFFICERS


On this 1st day of May, 1998, AGL RESOURCES INC., a corporation duly organized and existing under the laws of the State of Georgia (the "Company"), hereby establishes the AGL RESOURCES INC. 1998 VOLUNTARY EARLY RETIREMENT PLAN FOR OFFICERS (the "Plan").


STATEMENT OF PURPOSE


A. The primary purpose of the Plan is to recognize the contributions made to the Company and its participating affiliates by certain officers and to reward those contributions by providing eligible officers with an opportunity to voluntarily elect early retirement; and


B. The Plan is intended to be an unfunded nonqualified deferred compensation plan maintained by the Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees (within the meaning of Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended), as appropriate, and a severance welfare benefit plan and shall be construed in all respects in accordance with such intended purposes.


C. The Company, at its sole discretion, may establish a trust fund to hold and invest the amounts necessary to fund the Plan. Any such trust fund shall be established under a trust agreement which meets the requirements of a "rabbi trust," pursuant to guidelines issued by the Internal Revenue Service.


D. Regardless of the establishment of a trust fund, all assets of the Plan shall remain assets of the contributing companies and shall be subject to the general creditors of the contributing companies. Participants and Beneficiaries shall have only the rights of unsecured creditors with respect to any assets of the Plan.


E. In order to establish the Plan with the purposes and goals as hereinabove described, the Company hereby sets forth the terms and provisions of the Plan as follows:


TABLE OF CONTENTS


Page


ARTICLE I DEFINITIONS..................................................1
1.1 Administrative Committee.....................................1
1.2 Affiliate....................................................1
1.3 Board........................................................1
1.4 Code.........................................................1
1.5 Contributions................................................1
1.6 Company......................................................1
1.7 Effective Date...............................................1
1.8 Election Period..............................................1
1.9 Eligible Employee............................................1
1.10 Employee.....................................................1
1.11 ERISA........................................................1
1.12 Joint Annuitant..............................................1
1.13 Named Fiduciary..............................................2
1.14 Participant..................................................2
1.15 Plan.........................................................2
1.16 Plan Year....................................................2
1.17 Retirement Plan..............................................2
1.18 Spouse or Surviving Spouse...................................2
1.19 Trust or Trust Agreement.....................................2
1.20 Trustee......................................................2
1.21 Trust Fund...................................................2


ARTICLE II ELIGIBILITY..................................................2
2.1 Eligibility Requirements.....................................2
(a) Voluntary Election..................................2
(b) Cessation of Eligibility Upon Reemployment..........2
2.2 Participation Election.......................................3


ARTICLE III CONTRIBUTIONS................................................3
3.1 Contributions................................................3
3.2 Participant Contributions....................................3


ARTICLE IV TRUST FUND...................................................3
4.1 Establishment of Trust Fund..................................3
4.2 Investment of Funds..........................................3


ARTICLE V PAYMENT OF VOLUNTARY EARLY RETIREMENT BENEFITS...............4
5.1 Benefit Payments Upon Election of Voluntary Early Retirement.4
(a) General Rule Concerning Benefits Payable............4
(1) Supplemental Retirement Benefit............4
(2) Social Security Bridge Payment.............4
(b) Form and Timing of Benefit Payments.................4
5.2 Death of a Participant.......................................4


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ARTICLE VI OTHER EARLY RETIREMENT BENEFITS..............................5
6.1 Other Early Retirement Benefits..............................5
(a) Retiree Medical/Dental Coverages....................5
(b) Basic Life Insurance Coverage.......................6
(c) GRIP Life Insurance Coverage........................6
(d) Executive Allowance Fund............................6
(e) Automobile Leases...................................6
(f) Nonqualified Stock Options and Restricted Stock.....6
(g) Outplacement Services...............................6


ARTICLE VII RESTRICTIVE COVENANTS AND GENERAL RELEASE....................6
7.1 Consideration for Early Retirement Benefits..................6
(a) Covenant Not to Compete.............................6
(b) Nondisclosure and Confidentiality...................7
(c) Nonsolicitation.....................................7
(d) General Release.....................................7
7.2 Failure of Participant to Comply.............................8


ARTICLE VIII ADMINISTRATION...............................................8
8.1 Administrative Committee; Appointment and Term of Office.....8
8.2 Organization of Administrative Committee.....................8
8.3 Powers and Responsibility....................................8
8.4 Records of Administrative Committee..........................9
8.5 Reporting and Disclosure.....................................9
8.6 Construction of the Plan.....................................9
8.7 Assistants and Advisers.....................................10
8.8 Bonding.....................................................10
8.9 Indemnification.............................................10
8.10 Unclaimed Benefits..........................................10
8.11 Claims......................................................11
(a) Procedure..........................................11
(b) Review Procedure...................................11
(c) Satisfaction of Claims.............................11


ARTICLE IX GENERAL INFORMATION.........................................12


ARTICLE X ALLOCATION OF AUTHORITY AND RESPONSIBILITIES................12
10.1 Company and Board...........................................12
(a) General Responsibilities...........................12
(b) Allocation of Authority............................13
10.2 Administrative Committee....................................13
10.3 Trustee.....................................................13
10.4 Limitations on Obligations of Fiduciaries...................13
10.5 Delegation..................................................13
10.6 Multiple Fiduciary Roles....................................13


ARTICLE XI AMENDMENT, TERMINATION AND ADOPTION.........................14
11.1 Amendment...................................................14
11.2 Termination.................................................14
(a) Right to Terminate.................................14
(b) Dissolution of Trust...............................14


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ARTICLE XII MISCELLANEOUS...............................................14
12.1 Nonalienation of Benefits and Spendthrift Clause............14
12.2 Headings....................................................14
12.3 Construction, Controlling Law...............................14
12.4 Legally Incompetent.........................................15
12.5 Heirs, Assigns and Personal Representatives.................15
12.6 Unsecured Creditor Rights...................................15
12.7 Legal Action................................................15
12.8 Severability................................................15
12.9 Exclusive Benefit; Refund of Contributions..................15
12.10 Plan Expenses...............................................15


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ARTICLE I


DEFINITIONS


For purposes of the Plan, the following terms, when used with an initial capital letter, shall have the meanings set forth below unless a different meaning plainly is required by the context.


1.1 Administrative Committee shall mean the committee designated by the Board which shall act on behalf of the Company to administer the Plan; provided, the Company may act in lieu of the Administrative Committee as it deems appropriate or desirable.


1.2 Affiliate shall mean, as of any date, any company, person or organization which, on such date, (A)is a member of the same controlled group of corporations [within the meaning of Code 414(b)] as the Company; (B) is a trade or business (whether or not incorporated) which controls, is controlled by or is under common control with [within the meaning of Code 414(c)] the Company; (C)is a member of an affiliated service group [as defined in Code 414(m)] which includes the Company; or (D)is required to be aggregated with the Company pursuant to regulations promulgated under Code 414(o).


1.3 Board shall mean the board of directors of the Company. A reference to the board of directors of any Affiliate of the Company shall specify it as such.


1.4 Code shall mean the Internal Revenue Code of 1986, as amended, and any succeeding federal tax provisions.


1.5 Contributions shall mean the contributions made by the Company or its Affiliates to pay the benefits under the Plan.


1.6 Company shall mean the AGL Resources Inc., a Georgia corporation with its principal office in Atlanta, Georgia, and its successors.


1.7 Effective Date shall mean May 1, 1998, the date that this Plan initially shall be effective.


1.8 Election Period shall mean the 45-day period beginning on the date that an Eligible Employee is officially notified by the Company's President and Chief Executive Officer that he is eligible to participate in the Plan.


1.9 Eligible Employee shall mean any elected corporate officer of the Company and its Affiliates (including the President of Chattanooga Gas Company but specifically excluding David R. Jones) who as of May 1, 1998: (i) has annual base salary in an amount equal to or in excess of the compensation amount (as adjusted for cost-of-living increases) designated by the Internal Revenue Service for determining "highly compensated employee" under Code Section 414(q) or who was designated as a management employee by the Company or an Affiliate, and (ii) has reached age 50.


1.10 Employee shall mean any individual who is a common law employee of the Company and its Affiliates (including officers, but excluding directors who are not officers or otherwise employees).


1.11 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended.


1.12 Joint Annuitant shall mean any person named to receive a survivor benefit under a joint and survivor annuity form of payment properly elected by a Participant pursuant to the terms of the Retirement Plan.


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1.13 Named Fiduciary shall mean the Company, the Board, the Trustee (if any), and the Administrative Committee.


1.14 Participant shall mean any Eligible Employee who elects to participate in the Plan within the Election Period.


1.15 Plan shall mean the AGL Resources Inc. 1998 Voluntary Early Retirement Plan for Officers as contained herein and all amendments thereto. The Plan is intended to be an unfunded nonqualified deferred compensation plan for the benefit of a select group of management or highly compensated employees.


1.16 Plan Year shall mean the 12-month period ending on each December 31.


1.17 Retirement Plan shall mean the AGL Resources Inc. Retirement Plan, as it may be amended from time to time.


1.18 Spouse or Surviving Spouse shall mean, with respect to a Participant, the person who is treated as married to such Participant under the laws of the state in which the Participant resides. The determination of a Participant's Spouse or Surviving Spouse shall be made as of the earlier of the date as of which benefit payments from the Plan to such Participant are made or commence (as applicable) or the date of such Participant's death. In addition, a Participant's former spouse shall be treated as his Spouse or Surviving Spouse to the extent provided under a qualified domestic relations order, as defined in Code 414(p).


1.19 Trust or Trust Agreement shall mean the separate agreement between the Company and the Trustee, if any, governing the creation of a Trust Fund, and all amendments thereto.


1.20 Trustee shall mean the party or parties so designated from time to time pursuant to the Trust Agreement, if any.


1.21 Trust Fund shall mean the total amount of cash and other property held by the Trustee (or any nominee thereof) at any time under the Trust Agreement.


ARTICLE II


ELIGIBILITY


2.1 Eligibility Requirements.


(a) Voluntary Election. Each Eligible Employee may elect during the Election Period to become a Participant of the Plan. No elections may be made after the Election Period, unless the Administrative Committee shall determine, at its sole discretion, to establish a new election period.


(b) Cessation of Eligibility Upon Reemployment. If a Participant in the Plan should be reemployed by the Company or any Affiliate, his active participation in the Plan shall cease immediately, and he shall not be eligible for the Plan upon his eventual retirement unless the Administrative Committee shall establish a new election period for which he is eligible.


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2.2 Participation Election.


In order to become a Participant, an Eligible Employee must enter into an Early Retirement Agreement between himself and the Company, which shall include an agreement to the terms of Article VII hereof.


ARTICLE III


CONTRIBUTIONS


3.1 Contributions.


Contributions necessary for the payment of a Participant's benefits under the Plan shall be paid from the general assets of the Company or an Affiliate by which the Participant is employed upon his eligibility for the Plan.


3.2 Participant Contributions.


Participants shall not be permitted to make any contributions to the Plan.


ARTICLE IV


TRUST FUND


4.1 Establishment of Trust Fund.


At the Company's discretion, a nonqualified trust may be established to hold and invest any Contributions made to fund the benefits under the Plan. If any such trust shall be established, it shall meet the requirements established by the Internal Revenue Service for a "rabbi trust," so that all assets held by the trust remain assets of the contributing Company or Affiliate and remain subject to claims of the general creditors of such contributing Company or Affiliate. Any such Contributions shall be transferred to the Trustee in the form of cash or Company Stock or a combination thereof, as the Company or Administrative Committee may determine from time to time.


4.2 Investment of Funds.


In accordance with instructions from the Administrative Committee, the Trustee shall invest Contributions to the Plan.


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ARTICLE V


PAYMENT OF VOLUNTARY EARLY RETIREMENT BENEFITS


5.1 Benefit Payments Upon Election of Voluntary Early Retirement.


(a) General Rule Concerning Benefits Payable. In accordance with the terms of subsection (b) hereof, if a Participant voluntarily elects to take early retirement during the Election Period to commence retirement, unless otherwise specified in the Participant's Early Retirement Agreement, he shall receive the benefits described in subparagraphs (1) and (2) below:


(1) Supplemental Retirement Benefit. In addition to the monthly
benefit to which the Participant is entitled under the Retirement
Plan, he shall also receive a monthly Supplemental Retirement Benefit
under the Plan equal to the difference between:


(A) his actual monthly benefit payable under the Retirement
Plan; and


(B) the amount that would have been payable under the
Retirement Plan if: (i) the Participant had up to five
(5) additional years of age, not to exceed age 62; and
(ii) the Participant had completed an equivalent number
of additional Years of Eligibility Service with the
Company or and Affiliate as are added on to his age
under subparagraph (i) hereof, as of the date of his
early retirement.


(2) Social Security Bridge Payment. If the Participant is less than
age 62 on his early retirement date, the Participant shall receive a
monthly Social Security Bridge payment in the amount of One Thousand
Three Hundred Dollars ($1,300.00) to supplement his early retirement
income through and including the month in which he actually reaches
age 62.


(b) Form and Timing of Benefit Payments. Monthly benefits under subsection (a)(1) above shall be payable in the same form and in the same manner as the form elected by the Participant for the payment of his benefits under the Retirement Plan (i.e., if the Participant elected a 75% Joint and Survivor Life Annuity as his form of payment under the Retirement Plan, the Supplemental Retirement Benefit described in subsection (a)(1) will also be paid in the form of a 75% Joint and Survivor Annuity), and the duration of payments of the Supplemental Retirement Benefit shall be determined by the form elected. Monthly payments of the Social Security Bridge payments described in subsection (a)(2) above shall be paid in cash through and including the month during which the Participant reaches age 62, at which point the Social Security Bridge payments will cease. All payments under this Section shall commence as soon as administratively feasible after the Participant's early retirement date.


5.2 Death of a Participant.


Upon the death of a Participant, the form of payment selected by him under the Retirement Plan and applicable to the Supplemental Retirement Benefit under the Plan shall provide for survivor benefits, if any. Otherwise, no death benefits shall be payable under the Plan. If a Participant dies before reaching age 62, the Social Security bridge payments shall cease as of the month of death.


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ARTICLE VI


OTHER EARLY RETIREMENT BENEFITS


6.1 Other Early Retirement Benefits.


Unless specified otherwise below, upon his early retirement date, each Participant shall cease to participate in the Company's employee benefit plans, or be eligible for certain continuation of coverage under such plans, all pursuant to the terms and conditions of the plan documents. In addition to the monthly cash benefits described in Article V, each Participant who voluntarily elects during the Election Period to take early retirement shall also be entitled to the following benefits:


(a) Retiree Medical/Dental Coverages.


(1) If a Participant would have completed 25 years of service
with the Company and/or its Affiliates upon his attainment of age
62, he and his dependents who are under age 65 shall receive
coverage under the Company's group medical and dental plans until
the Participant and his spouse each reach age 65. The cost of the
Participant's coverage will be paid by the Company (or its
Affiliate that last employed the Participant). The Participant
shall pay premiums for the cost of coverage for his dependents
under the age of 65 at the same rate as other Company retirees
pay for dependent coverage. However, the Company reserves the
right to amend or terminate such group health and dental plans at
its discretion and reserves the right to change, increase or
decrease the amount of the retiree premiums for this coverage.
The Participant shall, however, continue to be treated as any
other retiree with regard to the coverages and the amounts of
premiums charged for the coverages.


(2) If a Participant would not have completed 25 years of service
with the Company and/or its Affiliates upon attainment of age 62,
he and his dependents shall receive coverage under the Company's
group health and dental plans. The Participant shall pay the full
cost of his coverage (without any Company subsidy), and he shall
pay premiums for the cost of coverage for his dependents under
the age of 65 at the same rate as other Company retirees pay for
dependent coverage until the Participant and his spouse each
reach age 65. However, the Company reserves the right to amend or
terminate such group health and dental plans at its discretion
and reserves the right to change, increase or decrease the amount
of the retiree premiums for this coverage. The Participant shall
be treated as any other Company retiree with regard to the
coverages and the amounts of premiums charged for the coverages.


(3) Coverages under this subsection (a) shall be provided only to
the Spouse and dependents of a Participant who were covered under
the respective plans of the Company and/or its Affiliates on the
date of the Participant's early retirement.


(4) Upon a Participant and/or his spouse reaching age 65,
coverage under the Company's group medical and dental plans will
coordinate with Medicare coverage. At that time, the Company will
provide coverage under a Medicare supplementary coverage plan,
which will be a secondary payor to Medicare.


(5) If a Participant becomes employed by another company, and as
such an employee becomes covered under that company's group
health insurance plan, then the group health coverage provided by
that new employer shall become primary (or


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secondary if the Participant is then eligible for Medicare), and
the retiree medical/dental coverage provided by the Company shall
pay only after such coverage.


(b) Basic Life Insurance Coverage. Premiums for the Participant's life insurance coverage under the Company's Group Life Insurance Plan will continue to be paid by the Company for the life of the Participant.


(c) GRIP Life Insurance Coverage. Premiums for the Participant's policy under the GRIP Life Insurance Plan will continue to be paid by the Company and treated as taxable income to the Participant. The policy will be paid in full in the year in which the policy has been in effect for ten years or upon the Participant's reaching age 65, whichever is later.


(d) Executive Allowance Fund. Each Participant will be entitled to continued use of the full amount of his Executive Allowance Fund for the remainder of 1998 without proration. The Participant shall reimburse the Company for any expenses incurred by the Participant in excess of his Executive Allowance for the year.


(e) Automobile Leases. Any Participant who is leasing an automobile through the Company's Executive Allowance Fund as of his early retirement date may elect (i) to personally assume the lease payments as of his early retirement date (ii) return the automobile to the Company for other Company use as of his early retirement date, or (iii) continue to pay the lease payments through his Executive Allowance Fund account th ...