SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification Number
1-14174 AGL RESOURCES INC. 58-2210952
(A Georgia Corporation)
303 PEACHTREE STREET, NE
ATLANTA, GEORGIA 30308
404-584-9470
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 and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1998.
Common Stock, $5.00 Par Value
Shares Outstanding at June 30, 1998 ...............................57,165,252
<PAGE>
AGL RESOURCES
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1998
Table of Contents
Item Page
Number Number
PART I -- FINANCIAL INFORMATION
1 Financial Statements
Condensed Consolidated Income Statements 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 15
PART II -- OTHER INFORMATION
1 Legal Proceedings 24
5 Other Information 24
6 Exhibits and Reports on Form 8-K 30
SIGNATURES 31
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<TABLE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS, NINE MONTHS, AND TWELVE MONTHS ENDED
JUNE 30, 1998 AND 1997
(MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
Three Months Nine Months Twelve Months
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1998 1997 1998 1997
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Operating Revenues $ 247.0 $ 216.7 $1,133.2 $1,093.0 $1,327.8 $1,267.3
Cost of Gas 150.6 117.5 717.5 664.3 819.7 749.3
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Operating Margin 96.4 99.2 415.7 428.7 508.1 518.0
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Other Operating Expenses 87.6 84.1 271.1 264.4 356.2 345.7
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Operating Income 8.8 15.1 144.6 164.3 151.9 172.3
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Other Income 0.6 2.3 8.8 8.4 10.7 11.0
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Income Before Interest and Income Taxes 9.4 17.4 153.4 172.7 162.6 183.3
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Interest Expense and Preferred Stock Dividends
Interest expense 13.0 12.5 41.3 39.8 53.7 52.0
Dividends on preferred stock of subsidiaries 1.5 1.5 5.2 3.7 7.7 4.8
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Total interest expense and preferred stock
dividends 14.5 14.0 46.5 43.5 61.4 56.8
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Income (Loss) Before Income Taxes (5.1) 3.4 106.9 129.2 101.2 126.5
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Income Taxes (3.9) 2.0 37.3 49.2 34.9 48.6
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Net Income (Loss) $ (1.2) $ 1.4 $ 69.6 $ 80.0 $ 66.3 $ 77.9
===================================================================================================================================
Basic Earnings (Loss) Per Share of Common Stock $ (0.02) $ 0.03 $ 1.22 $ 1.43 $ 1.17 $ 1.40
Diluted Earnings (Loss) Per Share of Common Stock $ (0.02) $ 0.03 $ 1.22 $ 1.43 $ 1.16 $ 1.39
Cash Dividends Paid Per Share of Common Stock $ 0.27 $ 0.27 $ 0.81 $ 0.81 $ 1.08 $ 1.075
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS)
<CAPTION>
(Unaudited)
June 30, September 30,
<S> <C> <C> <C>
ASSETS 1998 1997 1997
- ------------------------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 9.5 $ 4.3 $ 4.8
Receivables (less allowance for uncollectible accounts
of $5.7 at June 30, 1998, $4.8 at June 30,
1997, and $2.6 at September 30, 1997) 138.5 124.2 93.9
Inventories
Natural gas stored underground 84.5 95.4 151.8
Liquefied natural gas 16.6 15.1 17.5
Materials and supplies 7.4 7.8 8.2
Other 5.0 4.3 6.0
Deferred purchased gas adjustment 9.0 8.5
Other 2.3 9.3 2.0
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 263.8 269.4 292.7
- ------------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment
Utility plant 2,129.3 2,041.5 2,069.1
Less: accumulated depreciation 683.4 638.7 648.8
- ------------------------------------------------------------------------------------------------------------------------
Utility plant - net 1,445.9 1,402.8 1,420.3
- ------------------------------------------------------------------------------------------------------------------------
Nonutility property 118.1 105.5 105.8
Less: accumulated depreciation 33.0 29.7 29.5
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Nonutility property - net 85.1 75.8 76.3
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Total property, plant and equipment - net 1,531.0 1,478.6 1,496.6
- ------------------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Unrecovered environmental response costs 73.0 44.4 55.0
Investments in joint ventures 37.4 32.5 32.7
Unrecovered Integrated Resource Plan costs 1.2 4.5 2.0
Other 28.6 45.6 46.0
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Total deferred debits and other assets 140.2 127.0 135.7
- ------------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,935.0 $ 1,875.0 $ 1,925.0
========================================================================================================================
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS)
<CAPTION>
(Unaudited)
June 30, September 30,
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION 1998 1997 1997
- ------------------------------------------------------------------------------------------------------------------------
Current Liabilities
Accounts payable-trade $ 77.3 $ 65.7 $ 65.1
Short-term debt 10.4 33.5 29.5
Redemption requirements on preferred stock 14.3 44.5
Customer deposits 30.9 29.1 29.2
Interest 19.3 18.9 29.6
Taxes 25.3 32.9 19.1
Deferred purchased gas adjustment 12.0
Other 27.4 29.6 26.4
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 202.6 224.0 243.4
- ------------------------------------------------------------------------------------------------------------------------
Accumulated Deferred Income Taxes 198.6 180.8 191.7
- ------------------------------------------------------------------------------------------------------------------------
Long-Term Liabilities
Accrued environmental response costs 47.0 31.3 37.3
Accrued postretirement benefits costs 37.4 36.7 34.3
Deferred credits 59.5 61.0 61.9
- ------------------------------------------------------------------------------------------------------------------------
Total long-term liabilities 143.9 129.0 133.5
- ------------------------------------------------------------------------------------------------------------------------
Capitalization
Long-term debt 660.0 584.5 660.0
Subsidiary obligated mandatorily redeemable
preferred securities 74.3 74.3 74.3
Preferred stock of subsidiary, cumulative $100 par or
stated value, shares issued and outstanding of
0.6 at June 30, 1997 44.5
Common stock, $5 par value, shares issued and
outstanding of 57.2 at June 30, 1998, 56.5 at 655.6 637.9 622.1
June 30, 1997, and 56.6 at September 30, 1997
- ------------------------------------------------------------------------------------------------------------------------
Total capitalization 1,389.9 1,341.2 1,356.4
- ------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capitalization $ 1,935.0 $ 1,875.0 $ 1,925.0
========================================================================================================================
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
AGL RESOURCES INC. AND SUBISIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS AND TWELVE MONTHS ENDED JUNE 30, 1998 AND 1997
(MILLIONS)
(UNAUDITED)
<CAPTION>
Nine Months Twelve Months
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net income $ 69.6 $ 80.0 $ 66.3 $ 77.9
Adjustments to reconcile net income to
net cash flow from operating activities
Depreciation and amortization 54.1 53.3 71.3 70.1
Deferred income taxes 3.9 10.6 11.8 24.5
Other 0.1 0.7 (0.4) 0.3
Changes in certain assets and liabilities 69.8 14.0 38.1 (35.1)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash flow from operating
activities 197.5 158.6 187.1 137.7
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Cash Flows from Financing Activities
Sale of common stock, net of expenses 0.4 1.1 1.0 1.4
Sale of preferred securities, net of expenses 74.3 74.3
Sale of long-term debt 30.0 75.5 30.0
Short-term borrowings, net (19.1) (118.5) (23.1) (38.4)
Redemptions and purchase fund requirements
of preferred securities (44.5) (59.2)
Dividends paid on common stock (40.4) (37.9) (51.8) (50.2)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash flow from financing
activities (103.6) (51.0) (57.6) 17.1
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Cash Flows from Investing Activities
Utility plant expenditures (72.3) (94.5) (101.1) (135.3)
Non-utility capital expenditures (13.2) (17.9) (17.9) (17.9)
Cost of removal, net of salvage (1.4) (0.6) (2.4) (0.8)
Cash received from joint ventures 2.0 1.9 1.3 2.5
Investment in joint ventures (4.3) (0.9) (4.2) (1.2)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash flow from investing
activities (89.2) (112.0) (124.3) (152.7)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 4.7 (4.4) 5.2 2.1
Cash and cash equivalents
at beginning of period 4.8 8.7 4.3 2.2
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
at end of period $ 9.5 $ 4.3 $ 9.5 $ 4.3
=================================================================================================================================
Cash Paid During the Year for
Interest $ 51.6 $ 46.9 $ 53.5 $ 51.2
Income taxes $ 20.2 $ 19.3 $ 29.1 $ 28.3
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
AGL RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Principles of Consolidation
AGL Resources Inc. (AGL Resources), a Georgia corporation, is the
holding company for Atlanta Gas Light Company (AGLC), AGLC's wholly owned
natural gas utility subsidiary, Chattanooga Gas Company (Chattanooga), and
several nonutility subsidiaries. AGLC comprises substantially all of AGL
Resources' assets, revenues, and earnings. The consolidated financial
statements of AGL Resources include the financial statements of AGLC,
Chattanooga, and the nonutility subsidiaries. Intercompany balances and
transactions have been eliminated.
2. Subsidiaries
Unless noted specifically or otherwise required by the context,
references to AGL Resources include AGLC, AGL Interstate Pipeline Company
(AGL Interstate Pipeline), AGL Peaking Services, Inc. (AGL Peaking
Services), and AGL Resources' nonutility subsidiaries. AGL Resources
engages in natural gas distribution through AGLC and AGLC's wholly owned
subsidiary, Chattanooga. AGLC is a public utility that distributes and
transports natural gas in Georgia and Tennessee and is subject to
regulation by the Georgia Public Service Commission (Georgia Commission)
and the Tennessee Regulatory Authority (TRA), with respect to its rates for
service, maintenance of its accounting records, and various other matters.
The consolidated financial statements are prepared in accordance with
generally accepted accounting principles, which give appropriate
recognition to the rate-making and accounting practices and policies of the
Georgia Commission and the TRA.
AGL Resources engages in nonutility business activities through the
following wholly owned subsidiaries: AGL Energy Services, Inc. (AGL Energy
Services), a gas supply services company; AGL Investments, Inc. (AGL
Investments), a subsidiary established to develop and manage certain
nonutility businesses; and AGL Resources Service Company. AGL Energy
Services has one nonutility subsidiary, Georgia Gas Company. AGL
Investments has six wholly owned nonutility subsidiaries: AGL Propane, Inc.
(formerly known as Georgia Gas Service Company) (AGL Propane); AGL Consumer
Services, Inc.; AGL Gas Marketing, Inc.; AGL Power Services, Inc.; AGL
Energy Wise Services, Inc. and Trustees Investments, Inc.
On December 1, 1997, AGL Resources, through its subsidiary AGL
Interstate Pipeline, entered into a joint venture with a subsidiary of
Transcontinental Gas Pipe Line Corporation, Transcumberland Pipeline
Company, known as Cumberland Pipeline Company, to provide interstate
pipeline services to customers in Georgia and Tennessee. On December 15,
1997, AGL Resources, through its subsidiary AGL Peaking Services, and
Southern, a subsidiary of Sonat Inc., entered into an agreement to jointly
construct, own and operate a new liquefied natural gas peaking facility,
Etowah LNG, in Polk County, Georgia.
In addition, through its wholly owned subsidiary Atlanta Gas Light
Services, Inc. (Atlanta Gas Light Services), AGL Resources entered into a
joint venture on July 14, 1998 with a subsidiary of Dynegy, Inc. (Dynegy),
Dynegy Hub Services, Inc., and with a subsidiary of Piedmont Natural Gas
Company (Piedmont), Piedmont Energy Company. The joint venture, SouthStar
Energy Services, LLC (SouthStar Energy), was entered into for the purpose
of selling on a non-regulated basis natural gas, propane, fuel oil,
electricity and related services to industrial, commercial and residential
customers in the Southeast. Atlanta Gas Light Services' investment in
SouthStar Energy will be accounted for under the equity method of
accounting.
3. Unbundling and AGLC Rate Filing
The Natural Gas Competition and Deregulation Act (Georgia Gas Act)
was signed into law on April 14, 1997. The Act provides a legal framework
for comprehensive deregulation of many aspects of the natural gas business
in Georgia.
On November 26, 1997, AGLC filed with the Georgia Commission notice
of its election to be subject to this new law and to establish separate
rates for unbundled services. AGLC filed contemporaneously an application
with the Georgia Commission to have its distribution rates, charges,
classifications and services regulated pursuant to performance-based
regulation. Following hearings held in this proceeding, the Georgia
Commission issued a comprehensive order in its decision regarding AGLC's
filing of election and application for new rates on June 30, 1998. In doing
so, the Georgia Commission set the rates AGLC will charge customers and
marketers for natural gas, firm delivery and ancillary services during the
transition to competition.
The Georgia Gas Act provides a transition period leading to effective
competition in all natural gas markets. AGLC, as an electing distribution
company, will unbundle all services to its natural gas customers, allocate
firm delivery capacity to certificated marketers selling the gas commodity
and create a secondary market for interruptible transportation capacity.
Certificated marketers, including unregulated affiliates of AGLC, will
compete to sell natural gas to all customers at market-based prices. AGLC
will continue to provide intrastate delivery of gas to end users through
its existing system, subject to continued rate regulation by the Georgia
Commission. The Georgia Commission's order contains a provision to true-up
any over-recovery or under-recovery that may exist at the time such
purchased gas adjustment (PGA) provisions are discontinued. Accordingly,
AGLC will no longer defer any over-recoveries or under-recoveries of gas
costs when the regulated PGA provisions are discontinued. In addition, the
Georgia Commission will continue to regulate safety, access and quality of
service for all aspects of delivery service.
Key decisions adopted in the Georgia Commission's order were as
follows: (1) a $7.4 million rate decrease for service rendered on or after
July 1, 1998; (2) an 11.0% rate of return on common equity; (3) a
requirement that AGLC file ancillary service rates to separate the services
of meter reading, billing, billing inquiries, payment processing and
payment collection into separate distinct rates based on fully allocated
costs of AGLC; (4) a requirement that AGLC provide balancing services,
storage services, and peaking services on an unbundled basis; (5) a
requirement that AGLC offer services that are integral to the safety of its
delivery system with its delivery rates, on an unbundled basis; (6) a
requirement that AGLC redetermine its rates based on guidelines prescribed
by the Georgia Commission; (7) denial of a comprehensive performance-based
rate regulation plan; (8) a requirement that during the transition period,
any customers wanting to return to AGLC commodity sales service should be
allowed to do so; (9) a requirement that AGLC require marketers to pay AGLC
for fixed charges in advance of service; (10) a requirement that 90% of the
revenues generated from interruptible service will go to a universal
service fund and the remaining 10% will remain with AGLC; (11) a
requirement that AGLC conduct its business in such a manner that does not
give preference to any marketer consistent with Code of Conduct procedures
AGLC must file with the Georgia Commission; (12) the imposition of a six
month waiting period, after certification of at least five nonaffiliated
marketers, prior to discontinuing the regulated PGA; and (13) a requirement
that AGLC have a fully operational electronic bulletin board, by which AGLC
will provide marketers with equal and timely access to information relevant
to the availability of firm distribution service, in order for AGLC to open
its markets by November 1, 1998.
On July 10, 1998, AGLC filed with the Georgia Commission a petition
for reconsideration and oral argument concerning certain issues addressed
by the Georgia Commission's order. Among other decisions, AGLC disagreed
with delaying the timing of deregulating the PGA and the Georgia
Commission's ruling that a comprehensive alternative form of regulation for
delivery service was not required under the provisions of the Georgia Gas
Act. On August 4, 1998, the Georgia Commission voted to reconsider the June
30, 1998 order and has scheduled oral arguments for August 18. AGLC cannot
predict the outcome of any rehearing nor determine the ultimate effect, if
any, such proceedings may have on AGLC at this time.
The Georgia Gas Act provides marketing standards and rules of
business practice to ensure the benefits of a competitive natural gas
market are available to all customers on AGLC's system. The act imposes on
marketers an obligation to serve with a corresponding universal service
fund that provides a funding mechanism for recovery of uncollectible
accounts and enables AGLC to expand its facilities and serve the public
interest. Pursuant to the Georgia Gas Act, the Georgia Commission issued
rules and regulations on December 30, 1997, for random assignment of firm
customers to marketers for customers who ultimately do not select a
marketer after competition is adequately developed. A total of 28 retail
marketing companies, including unregulated affiliates of AGLC, have filed
with the Georgia Commission separate certificate of authority applications
to sell natural gas to firm customers connected to AGLC's delivery system.
Under Georgia Law, the Georgia Commission must certificate this initial
group of marketers that meet the established requirements no later than
October 15, 1998. Certificated marketers may begin offering natural gas
sales services to customers of AGLC by November 1998.
AGL Resources has determined that the continued application of
Statement of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation" (SFAS 71) remains appropriate. The
order continues regulation of PGA by the Georgia Commission during the
initial phase of the transition period. However, after this period, PGA
rates will no longer be subject to approval by the Georgia Commission.
4. Interim Financial Statements
In the opinion of management, the unaudited condensed consolidated
financial statements included herein reflect all normal recurring accruals
necessary for a fair statement of the results of the interim periods
reflected. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted from these condensed consolidated
financial statements pursuant to applicable rules and regulations of the
Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the annual reports on Form 10-K of AGL Resources for the fiscal
years ended September 30, 1997, and September 30, 1996. Certain 1997
amounts have been reclassified for comparability with 1998 amounts.
5. Earnings
AGL Resources' principal business is the distribution of natural gas
to customers in central, northwest, northeast and southeast Georgia and the
Chattanooga, Tennessee area through its natural gas distribution
subsidiary, AGLC. Since consumption of natural gas is dependent to a large
extent on weather, the majority of AGL Resources' income is realized during
the winter months. Earnings for three-month and nine-month periods are not
indicative of the earnings for a twelve-month period.
6. Environmental Matters - AGLC
AGLC has identified nine sites in Georgia where it currently owns all
or part of a manufactured gas plant (MGP) site. In addition, AGLC has
identified three other sites in Georgia which AGLC does not own, but that
may have been associated with the operation of MGPs by AGLC or its
predecessors.
Those sites are potentially subject to a variety of regulatory
programs. AGLC's response to MGP sites in Georgia is proceeding under two
state regulatory programs: the Georgia Hazardous Waste Management Act
(HWMA) and the Hazardous Site Response Act (HSRA). AGLC is planning to
undertake some degree of response action, under one or both of those
programs, at most of the Georgia sites.
AGLC also has identified three sites in Florida which may have been
associated with AGLC or its predecessors. AGLC does not own any of the
former MGP sites in Florida. At one site, AGLC has entered into an
Administrative Order of Consent along with four other potentially
responsible parties to further investigate this site. At another site, AGLC
has received a "Special Notice Letter" from the U. S. Environmental
Protection Agency (EPA), and is negotiating the scope of a response with
both EPA and the current owner.
AGLC has estimated the investigation and remediation expenses likely
to be associated with the former MGP sites. First, AGLC has identified
several sites where it has concluded that no significant response actions
are reasonably likely in the foreseeable future and therefore has not made
any cost projections for these sites. Second, since response cost
liabilities are often spread among potentially responsible parties, AGLC's
ultimate liability will, in some cases, be limited to AGLC's equitable
share of such expenses under the circumstances. Therefore, where reasonably
possible, AGLC has attempted to estimate the range of AGLC's equitable
share, given current cost sharing arrangements, combined with AGLC's
current knowledge of relevant facts, including the current methods of
equitable apportionment and the solvency of potential contributors. Where
such an estimation was not reasonably possible, AGLC has estimated a range
of expenses without adjustment for AGLC's equitable share. Finally, AGLC
has, with the assistance of outside consultants, prepared estimates of the
range of future investigation and remediation costs for those sites where
further action appears likely.
Applying these concepts to those sites where some future action
presently appears reasonably possible, AGLC currently estimates that the
future cost to AGLC of investigating and remediating the former MGP sites
could be as low as $47 million or as high as $81.3 million. That range does
not include other expenses, such as unasserted property damage claims, for
which AGLC may be held liable, but for which neither the existence nor the
amount of such liabilities can be reasonably forecast. Within the stated
range of $47 million to $81.3 million, no amount within the range can be
identified reliably as a better estimate than any other estimate.
Therefore, a liability at the low end of that range has been recorded in
the financial statements.
AGLC has two means of recovering the expenses associated with the
former MGP sites. First, the Georgia Commission has approved the recovery
by AGLC of Environmental Response Costs, as defined, pursuant to an
Environmental Response Cost Recovery Rider (ERCRR). For purposes of the
ERCRR, Environmental Response Costs include investigation, testing,
remediation and litigation costs and expenses or other liabilities relating
to or arising from MGP sites. A regulatory asset in the amount of $73.0
million has been recorded in the financial statements to reflect the
recovery of those costs through the ERCRR. Second, AGLC intends to seek
recovery of appropriate costs from its insurers and other potentially
responsible parties.
In connection with the ERCRR, the staff of the Georgia Commission has
undertaken a financial and management process audit related to the MGP
sites, cleanup activities at the sites, and environmental response costs
that have been incurred for purposes of the ERCRR. The Georgia Commission
conducted hearings on April 16 and 17, 1998 to consider three issues
relating to the ERCRR. Specifically, the Georgia Commission considered
whether the term "Environmental Response Costs" should include punitive
damages, whether AGLC should be required to provide an annual accounting
for revenue recovered from customers through the ERCRR, and whether a
schedule should be established for site remediation. Additional hearings
relating to these issues are expected to be scheduled in the near future.
On February 10, 1995, a class action lawsuit captioned Trinity
Christian Methodist Episcopal Church, et al. v. Atlanta Gas Light Company,
No. 95-RCCV-93, was filed in the Superior Court of Richmond County,
Georgia, seeking to recover for damage to property owned by persons
adjacent to and near the former MGP site in Augusta, Georgia. On December
13, 1996, the parties reached a preliminary settlement, which was approved
by the Court on April 15, 1997. Pursuant to the settlement, there is a
claims process before an umpire to determine either the full fair market
value of properties tendered to AGLC or the diminution in fair market value
of properties not tendered to AGLC. Settlements were paid to 188 property
owners in the class totaling approximately $2.9 million, including legal
fees and expenses of the plaintiffs. One settlement of approximately
$64,000, including attorney's fees, is pending reconsideration. AGLC filed
motions to vacate six settlements totaling approximately $4.3 million.
Orders were entered denying the motions to vacate. AGLC filed notices of
appeal with the Georgia Court of Appeals seeking to reverse the denial of
the motions to vacate. On March 25, 1998, the Georgia Court of Appeals
affirmed the ruling of the lower court. Pursuant to the Court of Appeals
decision, six settlements totaling $4.9 million, including attorney's fees
and post judgement interest, have been paid; and are recoverable pursuant
to the terms of the ERCRR.
7. Alternative Fuels and Competitive Pricing
AGLC competes to supply natural gas to interruptible customers who
are capable of switching to alternative fuels, including propane, fuel and
waste oils, electricity and, in some cases, combustible wood by-products.
AGLC also competes to supply gas to interruptible customers who might seek
to bypass its distribution system.
Prior to the Georgia Commission's rate case order of June 30, 1998,
AGLC filed and currently is providing service pursuant to 56 Negotiated
Contracts. Additionally, AGLC is providing service pursuant to 7 Special
Contracts involving long-term contracts to compete with alternative fuels
where physical bypass is not the relevant competition. On February 17,
1998, the Georgia Commission nullified two Negotiated Contracts and one
Special Contract based on an interpretation of a provision of the Georgia
Gas Act that would preclude the Georgia Commission from approving any such
contracts on or after the date AGLC filed its notice of election to be
subject to the Act. In an administrative session on May 5, 1998, however,
the Georgia Commission reversed its earlier decision to nullify those
contracts and authorized AGLC to continue to enter into future Special
Contracts and Negotiated Contracts provided the initial term of any such
contract did not exceed three years and provided all such future contracts
include market out provisions. A written order reflecting the Georgia
Commission's decision was issued on May 21, 1998.
The Georgia Commission's rate case order of June 30, 1998, approving
the new tariff, effectively superceded its Bypass order of February 17,
1995, that had permitted AGLC to negotiate contracts
(Negotiated Contracts) with customers who have the option of bypassing
AGLC's facilities (Bypass Customers) to receive natural gas from other
suppliers. That change affects service rendered on or after July 1, 1998.
As a result of the Georgia Commission's order, AGLC will not enter into
future Negotiated Contracts.
AGLC can price distribution services to interruptible customers three
ways. First, multiple rates are established under the rate schedules of
AGLC's tariff approved by the Georgia Commission. Additionally, if an
existing tariff rate does not produce a price competitive with a customer's
relevant competitive alternative, AGLC may discount service under a
provision of the tariff approved by the Georgia Commission on June 30, 1998
or through Special Contracts approved by the Georgia Commission.
On November 27, 1996, the TRA approved an experimental rule allowing
Chattanooga to negotiate contracts with large commercial and industrial
customers who have long-term competitive options, including bypass. The
experimental rule provides that before any such customer is allowed a
discounted rate, both the large customer and Chattanooga must petition the
TRA for prior approval of the rates set forth in the contract. On October
7, 1997, the TRA denied petitions filed by Chattanooga and four large
customers for discounted rates pursuant to the experimental rule upon a
finding that customer bypass was not imminent. On January 14, 1998,
however, the Federal Energy Regulation Commission (FERC) issued an order
authorizing the bypass of Chattanooga by Southern Natural Gas Company
(Southern) to serve an interruptible customer. AGLC has reached a
settlement with the customer thereby avoiding bypass.
8. Earnings Per Share
In February 1997 the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard No. 128, "Earnings Per
Share" (SFAS 128), which establishes standards for computing and presenting
earnings per share. AGL Resources adopted SFAS 128 in October 1997.
Earnings per share are based on the weighted average number of common
and common stock equivalent shares outstanding. The average number of
common shares used in the calculation of basic earnings per share and the
weighted average number of shares and common stock equivalent shares used
in the calculation of diluted earnings per share for the three-month,
nine-month and twelve-month periods ended June 30, 1998 and 1997, were as
follows (in millions):
Basic Diluted
Three-months ended
June 30, 1998 57.1 57.2
June 30, 1997 56.2 56.3
Nine-months ended
June 30, 1998 56.9 57.0
June 30, 1997 56.0 56.1
Twelve-months ended
June 30, 1998 56.8 56.9
June 30, 1997 55.9 56.0
The only common stock equivalent shares are those related to stock
options outstanding during the respective years whose exercise price was
less than the average market price of the common shares for the respective
periods. Additional options to purchase common stock were outstanding, but
were not included in the computation of diluted earnings per share because
the exercise price of those options was greater than the average market
price of the common shares for the respective periods.
9. Accounting Developments
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130) and
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (SFAS 131). SFAS 130
establishes standards for the reporting and displaying of comprehensive
income and its components (revenues, expenses, gains, and losses) in a full
set of general-purpose financial statements. SFAS 131 establishes standards
for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. AGL Resources will adopt SFAS 130
and SFAS 131 in fiscal year 1999.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. AGL
Resources will adopt SFAS 133 in fiscal year 1999.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". SOP 98-1
provides guidance on accounting for the costs of computer software
developed or obtained for internal use. AGL Resources will adopt SOP 98-1
in fiscal year 2000.
Management does not expect these new pronouncements to have a
significant impact on the presentation of AGL Resources' consolidated
financial statements.
During November 1997, the Emerging Issues Task Force (EITF) published
Issue No. 97-13 "Accounting for Costs Incurred in Connection with a
Consulting Contract or an Internal Project That Combines Business Process
Reengineering and Information Technology Transformation." Issue No. 97-13
addresses costs which have been incurred by organizations related to
advances in computer technologies. Some of the costs which have been
incurred include consulting fees paid for business process reengineering
and information technology transformation. The EITF concluded that these
costs should be expensed as incurred rather than capitalized. The EITF
required items previously capitalized to be written off during the quarter
which includes November 20, 1997. The impacts of applying the effects of
this consensus were not significant to the financial results for the
nine-month period ended June 30, 1998.
10. Year 2000
The widespread use by businesses and governments, including AGL
Resources, of computer software that relies on two digits, rather than four
digits, to define the applicable year may cause computers,
computer-controlled systems and equipment with embedded software to
malfunction when processing data across the year 2000 date. In order to
assess the potential impact of this "year 2000" issue on its business,
operations and financial condition, AGL Resources has established a central
office to coordinate and report on a continuing basis with regard to the
assessment, remediation planning and plan implementation processes of AGL
Resources directed to "year 2000". AGL Resources has engaged a nationally
recognized consultant to assist AGL Resources in its assessment and
remediation planning activities.
AGL Resources is continuing its assessment of the impact of "year
2000" across its operations, including its customer and vendor base.
Further, AGL Resources continues to develop and implement remediation plans
pursuant to established processes to avoid or, in some instances reduce to
an acceptable level, the impact of "year 2000" on its operations.
AGL Resources intends to continue to develop and implement
remediation plans and to devote the resources necessary to achieve a level
of readiness for "year 2000" in a timely manner. Presently, AGL Resources
believes that its assessment, remediation planning and plan implementation
processes will be effective to timely achieve "year 2000" readiness.
As of June 30, 1998, AGL Resources' accumulated expenditures in
connection with its "year 2000" assessment, remediation planning and plan
implementation processes were $2.1 million. Pending completion of its "year
2000" assessments, AGL Resources cannot as yet estimate the remaining costs
to achieve "year 2000" readiness in a timely manner. At present, the cost
estimates associated with achieving "year 2000" readiness are not expected
to significantly impact AGL Resources' consolidated financial statements.
In the June 30, 1998 rate case order of the Georgia Commission regarding
AGLC, the Georgia Commission provided that "year 2000" costs of AGLC should
be amortized over a period of five years, beginning October 1, 1998. (See
Note 3 to Notes to Condensed Consolidated Financial Statements -
"Unbundling and AGLC Rate Filing".)
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides for the
use of cautionary statements accompanying forward-looking statements.
Disclosures provided contain forward-looking statements concerning, among
other things, deregulation, restructuring, environmental remediation and
"year 2000" readiness.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are
not limited to, the following: changes in price and demand for natural gas
and related products; uncertainty as to state and federal legislative and
regulatory issues; the effects of competition, particularly in markets
where prices and providers historically have been regulated; changes in
accounting policies and practices; uncertainty with regard to environmental
issues, and competitive issues in general; the inability of AGL Resources
to accurately estimate its costs to achieve "year 2000" readiness; the
inability of AGL Resources, or a portion of AGL Resources' customer base
generating a material part of its revenue, or that portion of AGL
Resources' vendor base providing critical services or products to AGL
Resources, to timely achieve "year 2000" readiness in a manner that does
not have a material adverse impact on the operations or revenues of AGL
Resources; and the inability of financial institutions and the United
States Postal Service providing payment and payment delivery services for
AGL Resources' customers to timely deliver payments to AGL Resources for
its products and services.
Results of Operations
Three-Month Periods Ended June 30, 1998 and 1997
Explained below are the major factors that had a significant effect
on results of operations for the three-month period ended June 30, 1998,
compared with the same period in 1997.
Operating revenues increased 14.0% for the three-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to
increased volumes of gas sold to customers outside of the utility's
distribution system and increased volumes of gas sold to interruptible
power plant customers as a result of unusually warm weather during the
months of May and June 1998.
AGLC balances the cost of gas with revenues collected from customers
under the purchased gas provisions of its rate schedules. Under-recoveries
or over-recoveries of AGLC's gas costs are deferred and recorded as current
assets or liabilities, thereby eliminating the effect that recovery of gas
costs would otherwise have on net income. Cost of gas increased 28.2% for
the three-month period ended June 30, 1998, compared with the same period
in 1997 primarily due to increased volumes of gas sold to customers outside
of the utility's distribution system and increased volumes of gas sold to
interruptible power plant customers as a result of unusually warm weather
during the months of May and June 1998.
Operating margin decreased 2.8% for the three-month period ended June
30, 1998, compared with the same period in 1997 primarily due to decreased
recovery through a rate rider of expenses associated with an Integrated
Resource Plan (IRP). That decrease was offset partly by increased margins
from utility operations as a result of growth in the number of customers
served.
Operating expenses increased 4.2% for the three-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to (1)
start-up marketing expenses of a nonutility retail energy marketing
subsidiary and (2) charges related to recent management restructuring. The
increase in operating expenses was offset partly by decreased expenses
associated with the IRP. AGLC balances IRP expenses which are included in
operating expenses with revenues collected under the rate rider, thereby
eliminating the effect that recovery of IRP expenses would otherwise have
on net income.
Other income decreased $1.7 million for the three-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to the
contribution of certain assets to a private charitable foundation
established by AGL Resources during June 1998. That decrease was offset
partly by increased income from AGL Resources' energy marketing joint
ventures.
Interest expense increased $0.5 million for the three-month period
ended June 30, 1998, compared with the same period in 1997 primarily due to
increased amounts of long-term debt outstanding during the period. The
increase in interest expense was offset partly by decreased amounts of
short-term debt outstanding.
Income taxes decreased $5.9 million for the three-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to
decreased taxable income.
Net loss for the three-month period ended June 30, 1998, was $1.2
million, compared with net income of $1.4 million for the same period in
1997. Basic and diluted loss per share of common stock was $0.02 for the
three-month period ended June 30, 1998, compared with basic and diluted
earnings per share of $0.03 for the same period in 1997. The decreases in
net income and earnings per share were primarily due to increased operating
expenses.
Nine-month Periods Ended June 30, 1998 and 1997
Explained below are the major factors that had a significant effect
on results of operations for the nine-month period ended June 30, 1998,
compared with the same period in 1997.
Operating revenues increased 3.7% for the nine-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to an
increase in the cost of gas supply recovered from customers under the
purchased gas provisions of AGLC's rate schedules, as explained in the
following paragraph, as a result of (1) increased volumes of gas sold due
to weather that was 28.4% colder than during the same period in 1997, and
(2) increased volumes of gas sold to customers outside of the utility's
distribution system. The increase in operating revenues was offset partly
by (1) decreased recovery through a rate rider of expenses associated with
an IRP and (2) decreased consumption patterns attributable to AGLC's firm
service customers that are not related to weather conditions.
AGLC balances the cost of gas with revenues collected from customers
under the purchased gas provisions of its rate schedules. Under-recoveries
or over-recoveries of AGLC's gas costs are deferred and recorded as current
assets or liabilities, thereby eliminating the effect that recovery of gas
costs would otherwise have on net income. Cost of gas increased 8.0% for
the nine-month period ended June 30, 1998, compared with the same period in
1997 primarily due to (1) increased volumes of gas sold as a result of
weather that was 28.4% colder than during the same period in 1997 and (2)
increased volumes of gas sold to customers outside of the utility's
distribution system.
Operating margin decreased 3.0% for the nine-month period ended June
30, 1998, compared with the same period in 1997 primarily due to (1)
decreased recovery though a rate rider of expenses associated with an IRP
and (2) decreased consumption patterns attributable to AGLC's firm-service
customers that are not related to weather conditions. The decrease in
operating margin was offset partly by margins resulting from propane
operations acquired in February and June, 1997. Weather Normalization
Adjustment Riders (WNARs), approved by the Georgia Commission and the TRA,
stabilized operating margin at the level which would occur with normal
weather for the nine-month periods ended June 30, 1998 and 1997. As a
result of the WNARs, weather conditions experienced do not have a
significant impact on the comparability of operating margin.
Operating expenses increased 2.5% for the nine-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to (1)
increased distribution maintenance expenses, (2) start-up marketing
expenses of a nonutility retail energy marketing subsidiary, (3) charges
related to recent management restructuring and (4) operating expenses of
propane operations acquired during February and June, 1997. The increase in
operating expenses was offset partly by decreased expenses associated with
the IRP. AGLC balances IRP expenses which are included in operating
expenses with revenues collected under the rate rider, thereby eliminating
the effect that recovery of IRP expenses would otherwise have on net
income.
Other income increased $0.4 million for the nine-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to
increased income from AGL Resources' energy marketing joint ventures. That
increase was offset partly by (1) the contribution of certain assets to a
private charitable foundation established by AGL Resources during June 1998
and (2) a decrease in certain carrying costs recovered from utility
customers. The decreased carrying costs are attributable to decreased
expenses associated with the IRP.
Interest expense increased $1.5 million for the nine-month period
ended June 30, 1998, compared with the same period in 1997 primarily due to
increased amounts of long-term debt outstanding during the period. The
increase in interest expense was offset partly by decreased amounts of
short-term debt outstanding.
Dividends on preferred stock of subsidiaries increased $1.5 million
for the nine-month period ended June 30, 1998, compared with the same
period in 1997 primarily due to dividend requirements related to the
issuance of $75 million principal amount of Capital Securities in June 1997
as more fully described below within the caption "Financial Condition."
Income taxes decreased $11.9 million for the nine-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to
decreased taxable income.
Net income for the nine-month period ended June 30, 1998, was $69.6
million, compared with net income of $80.0 million for the same period in
1997. Basic and diluted earnings per share were $1.22 for the nine-month
period ended June 30, 1998, compared with basic and diluted earnings per
share of $1.43 for the same period in 1997. The decreases in net income and
earnings per share were primarily due to (1) increased operating expenses
and (2) decreased operating margin. The decreases in net income and
earnings per share were offset partly by increased income from AGL
Resources' energy marketing joint ventures.
Twelve-Month Periods Ended June 30, 1998 and 1997
Explained below are the major factors that had a significant effect
on results of operations for the twelve-month period ended June 30, 1998,
compared with the same period in 1997.
Operating revenues increased 4.8% for the twelve-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to
increased operating revenues attributable to (1) an increase in the cost of
gas supply recovered from customers under the purchased gas provisions of
AGLC's rate schedules, as explained in the following paragraph, as a result
of increased volumes of gas sold due to weather that was 28.4% colder than
during the same period in 1997, (2) increased revenues from a nonutility
retail energy marketing subsidiary and (3) increased revenues from propane
operations acquired in February and June, 1997. The increase in operating
revenues was offset substantially by (1) decreased recovery through a rate
rider of expenses associated with an IRP and (2) decreased consumption
patterns attributable to AGLC's firm-service customers that are not related
to weather conditions.
AGLC balances the cost of gas with revenues collected from customers
under the purchased gas provisions of its rate schedules. Under-recoveries
or over-recoveries of AGLC's gas costs are deferred and recorded as current
assets or liabilities, thereby eliminating the effect that recovery of gas
costs would otherwise have on net income. Cost of gas increased 9.4% for
the twelve-month period ended June 30, 1998, compared with the same period
in 1997 primarily due to (1) increased volumes of gas sold as a result of
weather that was 28.4% colder than during the same period in 1997, (2)
increased cost of gas attributable to a nonutility retail energy marketing
subsidiary and (3) increased cost of gas attributable to propane operations
acquired in February and June, 1997.
Operating margin decreased 1.9% for the twelve-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to (1)
decreased recovery through a rate rider of expenses associated with an IRP
and (2) decreased consumption patterns attributable to AGLC's firm-service
customers that are not related to weather conditions. The decrease in
operating margin was offset partly by an increase in operating margin
attributable to (1) propane operations acquired in February and June, 1997
and (2) a nonutility gas supply services subsidiary. WNARs, approved by the
Georgia Commission and the TRA, stabilized operating margin at the level
which would occur with normal weather for the twelve-month periods ended
June 30, 1998 and 1997. As a result of the WNARs, weather conditions
experienced do not have a significant impact on the comparability of
operating margin.
Operating expenses increased 3.0% for the twelve-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to (1)
increased distribution maintenance expense, (2) start-up marketing expenses
of a nonutility retail energy marketing subsidiary, (3) operating expenses
of propane operations acquired during February and June, 1997 and (4)
increased depreciation expense recorded as a result of increased
depreciable property. The increase in operating expenses was offset partly
by decreased expenses associated with the IRP. AGLC balances IRP expenses
which are included in operating expenses with revenues collected under the
rate rider, thereby eliminating the effect that recovery of IRP expenses
would otherwise have on net income.
Other income decreased $0.3 million for the twelve-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to (1)
increased carrying costs on portions of recoveries of environmental
response costs from insurance carriers and third parties, (2) decreased
recoveries of environmental response costs from insurance carriers and
third parties and (3) the contribution of certain assets to a private
charitable foundation established by AGL Resources during June 1998. Those
decreases were substantially offset by increased income from AGL Resources'
energy marketing joint ventures.
Interest expense increased 3.3% for the twelve-month period ended
June 30, 1998, compared with the same period in 1997 primarily due to
increased amounts of long-term debt outstanding during the period. The
increase in interest expense was offset partly by decreased amounts of
short-term debt outstanding.
Dividends on preferred stock of subsidiaries increased $2.9 million
for the twelve-month period ended June 30, 1998, compared with the same
period in 1997 primarily due to dividend requirements related to the
issuance of $75 million principal amount of Capital Securities in June 1997
as more fully described below within the caption "Financial Condition."
Income taxes decreased $13.7 million for the twelve-month period
ended June 30, 1998, compared with the same period in 1997 primarily due to
decreased taxable income.
Net income for the twelve-month period ended June 30, 1998, was $66.3
million, compared with net income of $77.9 million for the same period in
1997. Basic and diluted earnings per share of common stock were $1.17 and
$1.16, respectively, for the twelve-month periods ended June 30, 1998, and
1997, compared with basic and diluted earnings per share of $1.40 and
$1.39, respectively, for the same periods in 1997. The decreases in net
income and earnings per share were primarily due to increased operating
expenses. The decreases in net income and earnings per share were offset
partly by increased income from AGL Resources' energy marketing joint
ventures.
Financial Condition
AGL Resources' primary gas utility business is highly seasonal in
nature and typically shows a substantial increase in accounts receivable
from customers from September 30 to June 30 as a result of colder weather.
The utility also uses gas stored underground and liquefied natural gas to
serve its customers during periods of colder weather. As a result, accounts
receivable increased $44.6 million and inventory of gas stored underground
and liquefied natural gas decreased $68.2 million during the nine-month
period ended June 30, 1998. Accounts receivable increased $14.3 million
from June 30, 1997 to June 30, 1998, primarily due to increased operating
revenues. Inventory of gas stored underground decreased $10.9 million from
June 30, 1997 to June 30, 1998 primarily due to increased volumes of gas
withdrawn from storage as a result of weather that was 28.4% colder during
the twelve-month period ended June 30, 1998, compared with the same period
in 1997.
Accounts payable increased $12.2 million and $11.6 million during the
nine and twelve month periods ended June 30, 1998, respectively, primarily
due to an increase in accounts payable to gas suppliers.
The gas purchasing practices of AGLC are subject to review by the
Georgia Commission under legislation enacted by the Georgia General
Assembly (Gas Supply Plan Legislation). The Gas Supply Plan Legislation
establishes procedures for review and approval, in advance, of gas supply
plans for gas utilities and gas cost adjustment factors applicable to firm
service customers of gas utilities. Pursuant to AGLC's approved Gas Supply
Plan for fiscal year 1998, gas supply purchases are being recovered under
the purchased gas provisions of AGLC's rate schedules. The plan also allows
recovery from the customers of AGLC of Federal Energy Regulatory
Commission's (FERC) Order No. 636 transition costs that are currently being
charged by AGLC's pipeline suppliers.
Based on filings with the FERC by its pipeline suppliers, AGLC
currently estimates that its total portion of transition costs associated
with the FERC's Order No. 636 from all of its pipeline suppliers will be
approximately $106.1 million. Approximately $97.6 million of such costs has
been incurred by AGLC as of June 30, 1998, and is being recovered from its
customers under the purchased gas provisions of AGLC's rate schedules.
AGLC's Gas Supply Plan for fiscal year 1998 includes limited gas
supply hedging activities. AGLC is authorized to enter into an expanded
program to hedge up to one half of its estimated monthly winter wellhead
purchases and establish a price for those purchases at an amount other than
the beginning of the month index price to create an additional element of
diversification and price stability. The financial results of all hedging
activities are passed through to firm service customers under the purchased
gas provisions of AGLC's rate schedules. Accordingly, there is no earnings
impact as a result of the hedging program.
On July 31, 1998, AGLC filed with the Georgia Commission its annual
Gas Supply Plan for approval. AGLC's filing under the Georgia Gas Act to
become an electing distribution company resulted in certain changes between
the 1998 and 1999 Plans. Revenues from off-system sales and capacity
release are no longer credited to the PGA, but rather to a universal
service fund. Further, all storage carrying costs are included in the PGA
factors. Becoming an electing distribution company has an impact on the PGA
factors necessary to assure a smooth transition to competition and to avoid
imbalances in either over-or under-recoveries of gas costs. As a result of
these changes, AGLC proposed certain modifications to the PGA. Those
modifications are to have a separate demand and commodity component for the
PGA. The Demand Component would be designed to recover all of fixed costs
and the Commodity Component would recover commodity or variable costs.
As noted above, AGLC recovers the cost of gas under the purchased gas
provisions of its rate schedules. AGLC was in an under-recovery position of
$8.5 million as of September 30, 1997, an under-recovery position of $9
million as of June 30, 1997, and an over-recovery position of $12 million
as of June 30, 1998. Under the provisions of the utility's rate schedules,
any under-recoveries or over-recoveries of purchased gas costs are included
in current assets or liabilities and have no effect on net income. See Note
3 to Notes to Condensed Consolidated Financial Statements in this Form
10-Q.
The expenditures for plant and other property totaled $85.5 million
for the nine-month and $119.0 million for the twelve-month periods ended
June 30, 1998, respectively.
AGLC has accrued liabilities of $47 million as of June 30, 1998,
$31.3 million as of June 30, 1997, and $37.3 million as of September 30,
1997, for estimated future expenditures covering investigation and
remediation of MGP sites which are expected to be made over a period of
several years. The Georgia Commission has approved the recovery by AGLC of
Environmental Response Costs pursuant to the ERCRR. In connection with the
ERCRR, the staff of the Georgia Commission has undertaken a financial and
management process audit related to the MGP sites, cleanup activities at
the sites and environmental response costs that have been incurred for
purposes of the ERCRR.
The Georgia Commission conducted hearings on April 16 and 17, 1998 to
consider three issues relating to the ERCRR. Specifically, the Georgia
Commission considered whether the term "Environmental Response Costs"
should include punitive damages, whether AGLC should be required to provide
an annual accounting for revenue recovered from customers through the
ERCRR, and whether a schedule should be established for site remediation.
Additional hearings relating to this issue are expected to be scheduled in
the near future. See Note 6 to Notes to Condensed Consolidated Financial
Statements in this Form 10-Q.
In June 1997, AGL Capital Trust, a Delaware business trust (the
Trust), of which AGL Resources owns all of the common voting securities,
issued and sold to certain initial investors $75 million in principal
amount of 8.17% Capital Securities (liquidation amount $1,000 per Capital
Security), the proceeds of which were used to purchase from AGL Resources
8.17% Junior Subordinated Deferrable Interest Debentures due June 1, 2037.
The Capital Securities are subject to mandatory redemption upon repayment
of the Junior Subordinated Debentures on the stated maturity date of June
1, 2037, upon the earlier occurrence of certain events or upon the optional
prepayment by AGL Resources on or after June 1, 2007. AGL Resources has
fully and unconditionally guaranteed all of the Trust's obligations with
respect to the Capital Securities. Net proceeds to AGL Resources from the
sale of the Junior Subordinated Debentures of $74.3 million was used to
repay short-term debt, to redeem certain of AGLC's outstanding issues of
preferred stock and for other corporate purposes.
On August 15, 1997, AGLC redeemed its 4.5% Cumulative Preferred
Stock, 4.72% Cumulative Preferred Stock, 5% Cumulative Preferred Stock,
7.84% Cumulative Preferred Stock, and 8.32% Cumulative Preferred Stock at
the call price in effect for each issue for an aggregate principal amount
of $14.7 million. Those issues of preferred stock have been retired in
full. On December 1, 1997, AGLC redeemed its 7.70% depositary preferred
shares at the redemption price of $100 per share for an aggregate principal
amount of $44.5 million.
Long-term debt outstanding increased $75.5 million during the
twelve-month period ended June 30, 1998, as a result of the issuance in
July 1997 by AGLC of the remaining $75.5 million of $300 million aggregate
principal amount of Medium-Term Notes Series C. Net proceeds from the
issuance of Medium-Term Notes were used to fund capital expenditures, to
repay short-term debt and for other corporate purposes.
Short-term debt decreased $19.1 million for the nine-month period
ended June 30, 1998 primarily due to net cash flow from operating
activities. Short-term debt decreased $23.1 million for the twelve-month
period ended June 30, 1998 primarily due to the issuance of Capital
Securities and long-term debt.
Prior to the Georgia Commission's rate case order of June 30,1998,
AGLC filed and currently is providing service pursuant to 56 Negotiated
Contracts. Additionally, AGLC is providing service pursuant to 7 Special
Contracts involving long-term contracts to compete with alternative fuels
where physical bypass is not the relevant competition. On February 17,
1998, the Georgia Commission nullified two Negotiated Contracts and one
Special Contract based on an interpretation of a provision of the Georgia
Gas Act that would preclude the Georgia Commission from approving any such
contracts on or after the date AGLC filed its notice of election to be
subject to the Act. In an administrative session on May 5, 1998, however,
the Georgia Commission reversed its earlier decision to nullify those
contracts and authorized AGLC to continue to enter into future Special
Contracts and Negotiated Contracts provided the initial term of any such
contract did not exceed three years and provided all such future contracts
include market out provisions. A written order reflecting the Georgia
Commission's decision was issued on May 21, 1998.
The Georgia Commission's rate case order of June 30, 1998 effectively
superceded its Bypass order of February 17, 1995, that had permitted AGLC
to negotiate contracts (Negotiated Contracts) with customers who have the
option of bypassing AGLC's facilities (Bypass Customers) to receive natural
gas from other suppliers. That change affects service rendered on or after
July 1, 1998. As a result of the Georgia Commission's order, AGLC will not
enter into future Negotiated Contracts.
On November 27, 1996, the TRA approved an experimental rule allowing
Chattanooga to negotiate contracts with large commercial or industrial
customers who have long-term competitive options, including bypass. The
experimental rule provides that before any such customer is allowed a
discounted rate, both the large customer and Chattanooga must petition the
TRA for approval of the rates set forth in the contract. On October 7,
1997, the TRA denied petitions filed by Chattanooga and four large
customers for discounted rates pursuant to the experimental rule upon a
finding that customer bypass was not imminent. On January 14, 1998,
however, the FERC issued an order authorizing the bypass of Chattanooga by
Southern to serve an interruptible customer. AGLC has reached a settlement
with the customer thereby avoiding bypass.
The Georgia Gas Act was signed into law on April 14, 1997. The Act
provides a legal framework for comprehensive deregulation of many aspects
of the natural gas business in Georgia. On November 26, 1997, AGLC filed
with the Georgia Commission notice of its election to be subject to this
new law and to establish separate rates for unbundled services. AGLC filed
contemporaneously an application with the Georgia Commission to have its
distribution rates, charges, classifications and services regulated
pursuant to performance-based regulation. Following hearings held in this
proceeding, the Georgia Commission issued a comprehensive order in its
decision regarding AGLC's filing of election and application for new rates
on June 30, 1998. In doing so, the Georgia Commission set the rates AGLC
will charge customers and marketers for natural gas, firm delivery and
ancillary services during the transition to competition. See Note 3 to
Notes to Condensed Consolidated Financial Statements in this Form 10-Q.
On May 1, 1997, Chattanooga filed a rate proceeding with the TRA
seeking an increase in revenues of $4.4 million annually. Requested
revenues from the rate increase would be used to improve and expand
Chattanooga's natural gas distribution system; to recover increased
operation, maintenance and tax expenses; and to provide a reasonable return
to investors. Hearings in this proceeding were held in February 1998. On
July 21, 1998, the TRA directed Chattanooga to decrease rates by $1.2
million. Upon receipt of a written order, Chattanooga will evaluate its
options with respect to the rate case. AGLC cannot predict the outcome of
this regulatory proceeding nor determine the ultimate effect, if any, such
proceeding may have on Chattanooga at this time.
Year 2000
The widespread use by businesses and governments, including AGL
Resources, of computer software that relies on two digits, rather than four
digits, to define the applicable year may cause computers,
computer-controlled systems and equipment with embedded software to
malfunction when processing data across the year 2000 date. In order to
assess the potential impact of this "year 2000" issue on its business,
operations and financial condition, AGL Resources has established a central
office to coordinate and report on a continuing basis with regard to the
assessment, remediation planning and plan implementation processes of AGL
Resources directed to "year 2000". AGL Resources has engaged a nationally
recognized consultant to assist AGL Resources in its assessment and
remediation planning activities.
AGL Resources is continuing its assessment of the impact of "year
2000" across its operations, including its customer and vendor base.
Further, AGL Resources continues to develop and implement remediation plans
pursuant to established processes to avoid or, in some instances reduce to
an acceptable level, the impact of "year 2000" on its operations.
AGL Resources intends to continue to develop and implement
remediation plans and to devote the resources necessary to achieve a level
of readiness for "year 2000" in a timely manner. Presently, AGL Resources
believes that its assessment, remediation planning and plan implementation
processes will be effective to timely achieve "year 2000" readiness.
As of June 30, 1998, AGL Resources' accumulated expenditures in
connection with its "year 2000" assessment, remediation planning and plan
implementation processes were $2.1 million. Pending completion of its "year
2000" assessments, AGL Resources cannot as yet estimate the remaining costs
to achieve "year 2000" readiness in a timely manner. At present, the cost
estimates associated with achieving "year 2000" readiness are not expected
to significantly impact AGL Resources' consolidated financial statements.
In the June 30, 1998 rate case order of the Georgia Commission regarding
AGLC, the Georgia Commission provided that "year 2000" costs of AGLC should
be amortized over a period of five years, beginning October 1, 1998. (See
Note 3 to Notes to Condensed Consolidated Financial Statements -
"Unbundling and AGLC Rate Filing".)
Accounting Developments
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130) and Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131). SFAS 130 establishes standards for the reporting
and displaying of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. SFAS 131 establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information
about operating segments in interim financial reports issued to
shareholders. AGL Resources will adopt SFAS 130 and SFAS 131 in fiscal year
1999.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. AGL
Resources will adopt SFAS 133 in fiscal year 1999.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". SOP 98-1
provides guidance on accounting for the costs of computer software
developed or obtained for internal use. AGL Resources will adopt SOP 98-1
in fiscal year 2000.
Management does not expect these new pronouncements to have a
significant impact on the presentation of AGL Resources' consolidated
financial statements.
During November 1997, the EITF published Issue No. 97-13 "Accounting
for Costs Incurred in Connection with a Consulting Contract or an Internal
Project That Combines Business Process Reengineering and Information
Technology Transformation." Issue No. 97-13 addresses costs which have been
incurred by organizations related to advances in computer technologies.
Some of the costs which have been incurred include consulting fees paid for
business process reengineering and information technology transformation.
The EITF concluded that these costs should be expensed as incurred rather
than capitalized. The EITF required items previously capitalized to be
written off during the quarter which includes November 20, 1997. The
impacts of applying the effects of this consensus were not significant to
the financial results for the nine-month period ended June 30, 1998.
(The remainder of this page was intentionally left blank.)
<PAGE>
PART II -- OTHER INFORMATION
"Part II -- Other Information" is intended to supplement information
contained in the Annual Report on Form 10-K for the fiscal year ended
September 30, 1997, and should be read in conjunction therewith.
ITEM 1. LEGAL PROCEEDINGS
See Item 5.
ITEM 5. OTHER INFORMATION
Shareholders' Proposals for Presentation at the 1999 Annual Meeting
Shareholders who wish to present business at the 1999 Annual Meeting
of Shareholders (1999 Annual Meeting) are required to provide notice to the
Corporate Secretary of their intent to do so on or before August 25, 1998,
and such notice must provide the information set forth in the AGL Resources
Inc. Bylaws. A copy of these Bylaw requirements will be provided upon
written request to the Corporate Secretary, AGL Resources Inc., 303
Peachtree Street, loc 1080, Atlanta, Georgia 30308. This deadline applies
to all shareholder proposals sought to be considered at the 1999 Annual
Meeting (including those sought to be included in the Proxy Statement for
the 1999 Annual Meeting).
Federal Regulatory Matters
FERC Order 636 Transition Costs Settlement Agreements. Based on
filings with the FERC by its pipeline suppliers, AGLC currently estimates
that its total portion of transition costs associated with the FERC's Order
No. 636 from all of its pipeline suppliers will be approximately $106.1
million. Approximately $97.6 million of such costs has been incurred by
AGLC as of June 30, 1998, and is being recovered from its customers under
the purchased gas provisions of AGLC's rate schedules.
FERC Rate Proceedings. AGLC participates in various rate proceedings
before the FERC involving applications for rate changes filed by its
pipeline suppliers. These proceedings typically involve numerous issues
concerning the pipeline's cost of service, allocation of costs to different
services, and rate design. A variety of cost allocation and rate design
proposals typically are advanced by the pipeline's customers, making it
impossible to forecast the precise effect of any given rate change filing
on AGLC's operations. AGLC is authorized to recover the costs paid to its
pipeline suppliers from its customers through the purchased gas provisions
of its rate schedules. To the extent that these cases have not been
settled, as described below, the rates filed in these proceedings have been
accepted, and made effective subject to refund and the outcome of the FERC
proceedings.
Transco. On June 12, 1998, the FERC issued an order approving a
partial settlement in Transco's current rate case. Among other things, the
partial settlement resolves cost of service, cost allocation, and rate
design issues and provides for a reduction in the cost of service
underlying Transco's filed rates of approximately $103.3 million. The
settlement also provides for changes to Transco's cashout mechanism. The
settlement reserved for litigation issues primarily relating to Transco's
rate of return on equity. The reserved issues currently are pending before
a FERC administrative law judge.
Bear Creek Storage. Tennessee Gas Pipe Line (Tennessee) currently
provides a no-fee exchange service for Southern Natural Gas Company
(Southern) in connection with the Bear Creek Storage facility, which is
jointly owned by Tennessee and Southern and which is used by Southern to
provide no-notice firm transportation service to its customers, including
AGLC. On June 11, 1998, the FERC issued an order rejecting a proposal by
Tennessee to terminate the no-fee arrangement and replace it with service
under Tennessee's generally applicable firm transportation rate schedule,
at the generally applicable rate for firm transportation service. AGLC
opposed Tennessee's proposal, which could have threatened Southern's
ability to provide no-notice transportation service and would, at a
minimum, have resulted in increased rates for such service. Tennessee has
not sought rehearing, and the FERC's order is therefore final.
AGLC Waiver Request. On May 1, 1998, AGLC filed a request for
clarification and waiver of certain FERC policies governing transfer of
firm interstate pipeline capacity by holders of such capacity. AGLC filed
the request in order to facilitate the transfer of its firm interstate
pipeline capacity to marketers, as part of the unbundling of its local
distribution system pursuant to the Georgia Gas Act, more fully described
below. On July 31, 1998, the FERC issued an order granting AGLC's requested
waiver for a period of one year, subject to filing certain provisions of
its state tariff with the FERC.
Etowah LNG. On April 20, 1998, Etowah LNG filed an application with
the FERC seeking authority to construct a new Liquefied Natural Gas (LNG)
storage facility in Polk County, Georgia, and to provide an LNG peaking
service. AGLC has entered into precedent agreements to subscribe to the new
LNG peaking service upon authorization by the FERC. Etowah LNG's
application is pending before the FERC.
AGLC cannot predict the outcome of those federal proceedings nor
determine the ultimate effect, if any, such proceedings may have on AGLC.
State Regulatory Matters
Unbundling and AGLC Rate Filing. The Georgia Gas Act was signed into
law on April 14, 1997. The Act provides a legal framework for comprehensive
deregulation of many aspects of the natural gas business in Georgia.
On November 26, 1997, AGLC filed with the Georgia Commission notice
of its election to be subject to this new law and to establish separate
rates for unbundled services. AGLC filed contemporaneously an application
with the Georgia Commission to have its distribution rates, charges,
classifications and services regulated pursuant to performance-based
regulation. Following hearings held in this proceeding, the Georgia
Commission issued a comprehensive order in its decision regarding AGLC's
filing of election and application for new rates on June 30, 1998. In doing
so, the Georgia Commission set the rates AGLC will charge customers and
marketers for natural gas, firm delivery and ancillary services during the
transition to competition.
The Georgia Gas Act provides a transition period leading to effective
competition in all natural gas markets. AGLC, as an electing distribution
company, will unbundle all services to its natural gas customers, allocate
firm delivery capacity to certificated marketers selling the gas commodity
and create a secondary market for interruptible transportation capacity.
Certificated marketers, including unregulated affiliates of AGLC, will
compete to sell natural gas to all customers at market-based prices. AGLC
will continue to provide intrastate delivery of gas to end users through
its existing system, subject to continued rate regulation by the Georgia
Commission. The Georgia Commission's order contains a provision to true-up
any over-recovery or under-recovery that may exist at the time such
purchased gas adjustment (PGA) provisions are discontinued. Accordingly,
AGLC will no longer defer any over-recoveries or under-recoveries of gas
costs when the regulated PGA provisions are discontinued. In addition, the
Georgia Commission will continue to regulate safety, access and quality of
service for all aspects of delivery service.
Key decisions adopted in the Georgia Commission's order were as
follows: (1) a $7.4 million rate decrease for service rendered on or after
July 1, 1998; (2) an 11.0% rate of return on common equity; (3) a
requirement that AGLC file ancillary service rates to separate the services
of meter reading, billing, billing inquiries, payment processing and
payment collection into separate distinct rates based on fully allocated
costs of AGLC; (4) a requirement that AGLC provide balancing services,
storage services, and peaking services on an unbundled basis; (5) a
requirement that AGLC offer services that are integral to the safety of its
delivery system with its delivery rates, on an unbundled basis; (6) a
requirement that AGLC redetermine its rates based on guidelines prescribed
by the Georgia Commission; (7) denial of a comprehensive performance-based
rate regulation plan; (8) a requirement that during the transition period,
any customers wanting to return to AGLC commodity sales service should be
allowed to do so; (9) a requirement that AGLC require marketers to pay AGLC
for fixed charges in advance of service; (10) a requirement that 90% of the
revenues generated from interruptible service will go to a universal
service fund and the remaining 10% will remain with AGLC; (11) a
requirement that AGLC conduct its business in such a manner that does not
give preference to any marketer consistent with Code of Conduct procedures
AGLC must file with the Georgia Commission; (12) the imposition of a six
month waiting period, after certification of at least five nonaffiliated
marketers, prior to discontinuing the regulated PGA; and (13) a requirement
that AGLC have a fully operational electronic bulletin board, by which AGLC
will provide marketers with equal and timely access to information relevant
to the availability of firm distribution service, in order for AGLC to open
its markets by November 1, 1998.
On July 10, 1998, AGLC filed with the Georgia Commission a petition
for reconsideration and oral argument concerning certain issues addressed
by the Georgia Commission's order. Among other decisions, AGLC disagreed
with delaying the timing of deregulating the PGA and the Georgia
Commission's ruling that a comprehensive alternative form of regulation for
delivery service was not required under the provisions of the Georgia Gas
Act. On August 4, 1998, the Georgia Commission voted to reconsider the June
30, 1998 order and has scheduled oral arguments for August 18. AGLC cannot
predict the outcome of any rehearing nor determine the ultimate effect, if
any, such proceedings may have on AGLC at this time.
The Georgia Gas Act provides marketing standards and rules of
business practice to ensure the benefits of a competitive natural gas
market are available to all customers on AGLC's system. The act imposes on
marketers an obligation to serve with a corresponding universal service
fund that provides a funding mechanism for recovery of uncollectible
accounts and enables AGLC to expand its facilities and serve the public
interest. Pursuant to the Georgia Gas Act, the Georgia Commission issued
rules and regulations on December 30, 1997, for random assignment of firm
customers to marketers for customers who ultimately do not select a
marketer after competition is adequately developed. A total of 28 retail
marketing companies, including unregulated affiliates of AGLC, have filed
with the Georgia Commission separate certificate of authority applications
to sell natural gas to firm customers connected to AGLC's delivery system.
Under Georgia Law, the Georgia Commission must certificate this initial
group of marketers that meet the established requirements no later than
October 15, 1998. Certificated marketers may begin offering natural gas
sales services to customers of AGLC by November 1998.
AGL Resources has determined that the continued application of
Statement of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation" (SFAS 71) remains appropriate. The
order continues regulation of PGA by the Georgia Commission during the
initial phase of the transition period. However, after this period, PGA
rates will no longer be subject to approval by the Georgia Commission.
AGLC supported the regulatory initiatives provided for by the Georgia
Gas Act for several reasons. AGLC currently makes no profit on the purchase
and sale of gas because actual gas procurement costs are passed through to
customers under the purchased gas provisions of AGLC's rate schedules.
Earnings are provided through revenues received for intrastate
transportation of the commodity. Consequently, allowing AGLC to cease its
sales service function and the associated sales obligation will not affect
AGLC's ability to earn a return on its distribution system investment.
Atlanta Gas Light Company - Pipeline Safety. On January 8, 1998, the
Georgia Commission issued a Procedural and Scheduling Order to establish a
schedule for certain hearings and pre-hearings in connection with alleged
pipeline safety violations. The Georgia Commission granted a stay of the
Procedural Schedule to allow the Georgia Commission and AGLC to engage in
discussions to determine whether the issues presented in the proceeding
could be resolved between the parties by compromise and settlement. On June
10, 1998, AGLC and the Pipeline Safety Unit Staff of the Georgia Commission
entered into an agreement on the details of a 10-year replacement program
for portions of AGLC's cast iron and bare steel pipeline system. The
agreement permits AGLC to recover the costs related to the program net of
any cost savings. The Georgia Commission voted to approve the agreement on
July 21, 1998.
Chattanooga Gas Company - Rate Filing. On May 1, 1997, Chattanooga
filed a rate proceeding with the TRA seeking an increase in revenues of
$4.4 million annually. Requested revenues from the rate increase would be
used to improve and expand Chattanooga's natural gas distribution system;
to recover increased operation, maintenance and tax expenses; and to
provide a reasonable return to investors. Hearings in this proceeding were
held in February 1998. On July 21, 1998, the TRA directed Chattanooga to
decrease rates by $1.2 million. Upon receipt of a written order,
Chattanooga will evaluate its options with respect to the rate case. AGLC
cannot predict the outcome of this state regulatory proceeding nor
determine the ultimate effect, if any, such proceeding may have on
Chattanooga at this time.
Other. On April 23, 1998, six prospective energy marketing companies
filed a complaint with the Georgia Commission against Atlanta Gas Light
Services and AGLC. The complaint alleged that the use of the name Atlanta
Gas Light Services would provide an unfair advantage and stifle competition
in Georgia's upcoming retail natural gas market, and that it violated the
affiliate standards of the Georgia Gas Act. The Georgia Commission
subsequently ordered Atlanta Gas Light Services to cease and desist use of
references to its affiliation with AGL Resources and AGLC or any other
subsidiary or affiliate of AGL Resources. On July 17, 1998, however, a
superior court judge issued an order staying the Georgia Commission's
name-change order, pending outcome of the review proceeding.
Environmental Matters
AGLC has identified nine sites in Georgia where it currently owns all
or part of an MGP site. In addition, AGLC has identified three other sites
in Georgia which AGLC does not own, but that may have been associated with
the operation of MGPs by AGLC or its predecessors.
Those sites are potentially subject to a variety of regulatory
programs. AGLC's response to MGP sites in Georgia is proceeding under two
state regulatory programs, HWMA and HSRA, as previously defined in Note 6
to Notes to Condensed Consolidated Financial Statements in this Form 10-Q.
AGLC is planning to undertake some degree of response action, under one or
both of those programs, at most of the Georgia sites.
AGLC also has identified three sites in Florida which may have been
associated with AGLC or its predecessors. AGLC does not own any of the
former MGP sites in Florida. At one site, AGLC has entered into an
Administrative Order of Consent along with four other potentially
responsible parties to further investigate this site. At another site, AGLC
has received a "Special Notice Letter" from the EPA, and is negotiating the
scope of a response with both EPA and the current owner.
AGLC has estimated the investigation and remediation expenses likely
to be associated with the former MGP sites. First, AGLC has identified
several sites where it has concluded that no significant response actions
are reasonably likely in the foreseeable future and therefore has not made
any cost projections for these sites. Second, since response cost
liabilities are often spread among potentially responsible parties, AGLC's
ultimate liability will, in some cases, be limited to AGLC's equitable
share of such expenses under the circumstances. Therefore, where reasonably
possible, AGLC has attempted to estimate the range of AGLC's equitable
share, given current cost sharing arrangements, combined with AGLC's
current knowledge of relevant facts, including the current methods of
equitable apportionment and the solvency of potential contributors. Where
such an estimation was not reasonably possible, AGLC has estimated a range
of expenses without adjustment for AGLC's equitable share. Finally, AGLC
has, with the assistance of outside consultants, prepared estimates of the
range of future investigation and remediation costs for those sites where
further action appears likely.
Applying these concepts to those sites where some future action
presently appears reasonably possible, AGLC currently estimates that the
future cost to AGLC of investigating and remediating the former MGP sites
could be as low as $47 million or as high as $81.3 million. That range does
not include other expenses, such as unasserted property damage claims, for
which AGLC may be held liable, but for which neither the existence nor the
amount of such liabilities can be reasonably forecast. Within the stated
range of $47 million to $81.3 million, no amount within the range can be
identified reliably as a better estimate than any other estimate.
Therefore, a liability at the low end of that range has been recorded in
the financial statements.
AGLC has two means of recovering the expenses associated with the
former MGP sites. First, the Georgia Commission has approved the recovery
by AGLC of Environmental Response Costs, as defined, pursuant to an ERCRR.
For purposes of the ERCRR, Environmental Response Costs include
investigation, testing, remediation and litigation costs and expenses or
other liabilities relating to or arising from MGP sites. A regulatory asset
in the amount of $73.0 million has been recorded in the financial
statements to reflect the recovery of those costs through the ERCRR.
Second, AGLC intends to seek recovery of appropriate costs from its
insurers and other potentially responsible parties.
In connection with the ERCRR, the staff of the Georgia Commission has
undertaken a financial and management process audit related to the MGP
sites, cleanup activities at the sites, and environmental response costs
that have been incurred for purposes of the ERCRR. The Georgia Commission
conducted hearings on April 16 and 17, 1998 to consider three issues
relating to the ERCRR. Specifically, the Georgia Commission considered
whether the term "Environmental Response Costs" should include punitive
damages, whether AGLC should be required to provide an annual accounting
for revenue recovered from customers through the ERCRR, and whether a
schedule should be established for site remediation. Additional hearings
relating to these issues are expected to be scheduled in the near future.
On February 10, 1995, a class action lawsuit captioned Trinity
Christian Methodist Episcopal Church, et al. v. Atlanta Gas Light Company,
No. 95-RCCV-93, was filed in the Superior Court of Richmond County,
Georgia, seeking to recover for damage to property owned by persons
adjacent to and near the former MGP site in Augusta, Georgia. On December
13, 1996, the parties reached a preliminary settlement, which was approved
by the Court on April 15, 1997. Pursuant to the settlement, there is a
claims process before an umpire to determine either the full fair market
value of properties tendered to AGLC or the diminution in fair market value
of properties not tendered to AGLC. Settlements were paid to 188 property
owners in the class totaling approximately $2.9 million, including legal
fees and expenses of the plaintiffs. One settlement of approximately
$64,000, including attorney's fees, is pending reconsideration. AGLC filed
motions to vacate six settlements totaling approximately $4.3 million.
Orders were entered denying the motions to vacate. AGLC filed notices of
appeal with the Georgia Court of Appeals seeking to reverse the denial of
the motions to vacate. On March 25, 1998, the Georgia Court of Appeals
affirmed the ruling of the lower court. Pursuant to the Court of Appeals
decision, six settlements totaling $4.9 million, including attorney's fees
and post judgement interest, have been paid; and are recoverable pursuant
to the terms of the ERCRR.
Other Legal Proceedings
With regard to other legal proceedings, AGL Resources is a party, as
both plaintiff and defendant, to a number of other suits, claims and
counterclaims on an ongoing basis. Management believes that the outcome of
all litigation in which it is involved will not have a material adverse
effect on the consolidated financial statements of AGL Resources.
Joint Ventures
Through its wholly owned subsidiary Atlanta Gas Light Services, Inc.
(Atlanta Gas Light Services), AGL Resources entered into a joint venture on
July 14, 1998 with a subsidiary of Dynegy, Inc. (Dynegy), Dynegy Hub
Services, Inc., and with a subsidiary of Piedmont Natural Gas Company
(Piedmont), Piedmont Energy Company. The joint venture, SouthStar Energy
Services, LLC (SouthStar Energy), was entered into for the purpose of
selling on a non-regulated basis natural gas, propane, fuel oil,
electricity and related services to industrial, commercial and
residential customers in the Southeast. The joint venture initially sought
to operate under the name Atlanta Gas Light Services. On April 23, 1998,
six prospective energy marketing companies filed a complaint with the
Georgia Commission against Atlanta Gas Light Services and AGLC. The
complaint alleged that the use of the name Atlanta Gas Light Services
would provide an unfair advantage and stifle competition in Georgia's
upcoming retail natural gas market, and that it violated the affiliate
standards of the Georgia Gas Act. The Georgia Commission subsequently
ordered Atlanta Gas Light Services to cease and desist use of references to
its affiliation with AGL Resources and AGLC or any other subsidiary or
affiliate of AGL Resources. On July 17, 1998, however, a superior court
judge issued an order staying the Georgia Commission's name-change order,
pending outcome of the review proceeding. The joint venture filed for
certification as a retail marketer on July 15, 1998.
On December 1, 1997, AGL Resources, through its subsidiary AGL
Interstate Pipeline, entered into a joint venture with a subsidiary of
Transcontinental Gas Pipe Line Corporation (Transco) Transcumberland
Pipeline Company, known as Cumberland Pipeline Company (Cumberland), to
provide interstate pipeline services to customers in Georgia and Tennessee.
The transaction is subject to various regulatory approvals. Initially, the
135-mile Cumberland pipeline will include existing pipeline infrastructure
owned by the two companies extending from Walton County, Georgia, to
Catoosa County, Georgia. Projected to enter service by November 1, 2000,
Cumberland will be positioned to serve AGLC, Chattanooga and other markets
throughout the eastern Tennessee Valley, northwest Georgia and northeast
Alabama. Affiliates of Transco and AGL Resources each will own 50% of
Cumberland, and an affiliate of Transco will serve as operator. The
companies announced an open season from March 30, 1998 to May 29, 1998 for
subscriptions for capacity on Cumberland, and the project will be submitted
to the FERC for approval during fiscal year 1998.
On December 15, 1997, AGL Resources, through its subsidiary AGL
Peaking Services, and Southern, a subsidiary of Sonat Inc., entered into an
agreement to jointly construct, own and operate a new liquefied natural gas
peaking facility, Etowah LNG (Etowah), in Polk County, Georgia. The
transaction is subject to regulatory approvals. AGL Peaking Service and
Southern each will own 50% of Etowah, the operations of which will be
subject to jurisdiction of the FERC.
The proposed plant will connect directly into AGLC's and Southern's
pipelines. Etowah will provide natural gas storage and peaking services to
AGLC and other southeastern customers. The new facility will cost
approximately $90 million, with 2.5 billion-cubic-feet of natural gas
storage capacity and 300 million-cubic-feet per day of vaporization
capacity. Affiliates of AGL Resources will manage the construction of the
facility and operate it.
Southern will provide administrative services.
The companies held an open season from December 1, 1997 to January
30, 1998 for Etowah subscriptions for peaking services, and subscriptions
for 71% of the total firm peak service capacity were received. A
certificate application was filed by the companies with the FERC on April
20, 1998. Subject to receiving timely FERC approval, construction will
begin in early 1999 in order to provide peaking services during the
2001-2002 winter heating season.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3 Bylaws, as amended and restated on August 7, 1998.
10.1 Executive Compensation Plans and Arrangements.
10.1.a AGL Resources Inc. 1998 Voluntary Early Retirement Plan for
Officers, together with form of Early Retirement Agreement.
10.1.b AGL Resources Inc. 1998 Severance Plan for Officers,
together with form of Separation Agreement.
10.2 Precedent Agreement dated April 16, 1998 between Etowah LNG
Company, LLC and Atlanta Gas Light Company
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
On June 26, 1998, AGL Resources filed a Current Report on Form 8-K dated
June 25, 1998, containing: "Item 5 - Other Events" and Exhibit 99 - Form of
Press Release, dated June 25, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
AGL Resources Inc.
(Registrant)
Date August 14, 1998 /s/ J. Michael Riley
J. Michael Riley
Senior Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Exhibit
3 Bylaws, as amended and restated on August 7, 1998.
10.1 Executive Compensation Plans and Arrangements.
10.1.a AGL Resources Inc. 1998 Voluntary Early Retirement Plan
for Officers, together with form of Early Retirement Agreement.
10.1.b AGL Resources Inc. 1998 Severance Plan for Officers, together
with form of Separation Agreement.
10.2 Precedent Agreement dated April 16, 1998 between Etowah LNG
Company, LLC and Atlanta Gas Light Company
27.1 Financial Data Schedule.
BYLAWS
OF
AGL RESOURCES INC.
ARTICLE I
SHAREHOLDERS
SECTION 1.1. Date, Time and Place of Meetings. Annual and special meetings
of the Shareholders shall be held on such date and at such time and place,
within or without the State of Georgia, as may be stated in the notice of the
meeting, or in a duly executed waiver of notice thereof. If no designation is
made, the place of the meeting shall be the principal executive offices of the
Corporation.
SECTION 1.2. Annual Meetings. The annual meeting of the Shareholders of the
Corporation shall be held each year for the purposes of electing Directors and
of transacting such other business as properly may be brought before the
meeting. To be properly brought before the meeting, business must be brought
before the meeting (i) by or at the direction of the Board of Directors or (ii)
by any Shareholder of the Corporation entitled to vote at the meeting who
complies with the procedures set forth in Section 1.2 of this Article; provided,
in each case, that such business proposed to be conducted is, under the law, an
appropriate subject for Shareholder action.
For business to be properly brought before an annual meeting by a
Shareholder, the Shareholder must give timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a Shareholder's notice must be
received by the Secretary at the principal executive offices of the Corporation
at least 120 calendar days before the first anniversary of the date that the
Corporation's proxy statement was released to Shareholders in connection with
the previous year's annual meeting of Shareholders. However, if no annual
meeting of Shareholders was held in the previous year or if the date of the
annual meeting of Shareholders has been changed by more than 30 calendar days
from the date contemplated at the time of the previous year's proxy statement,
the notice shall be received by the Secretary at the principal executive offices
of the Corporation not fewer than the later of (i) 150 calendar days prior to
the date of the contemplated annual meeting or (ii) the date which is 10
calendar days after the date of the first public announcement or other
notification to the Shareholders of the date of the contemplated annual meeting.
Such Shareholder's notice to the Secretary shall set forth with respect to
any proposal such Shareholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting; (ii)
the name and address, as they appear on the Corporation's books, of the
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Shareholder proposing such business; (iii) the class and number of shares of the
Corporation which are beneficially owned by such Shareholder; (iv) the dates
upon which the Shareholder acquired such shares; (v) documentary support for any
claim of beneficial ownership; (vi) any material interest of such Shareholder in
such business; (vii) a statement in support of the matter and, for proposals
sought to be included in the Corporation's proxy statement, any other
information required by Securities and Exchange Commission Rule 14a-8; and
(viii) as to each person whom the Shareholder proposes to nominate for election
or reelection as Director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors
in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a Director if elected, and evidence satisfactory to the
Corporation that such nominee has no interests that would limit their ability to
fulfill their duties of office).
In addition, if the Shareholder intends to solicit proxies from the
shareholders of the Corporation, such Shareholder shall notify the Corporation
of this intent in accordance with Securities and Exchange Commission Rule 14a-4
and/or Rule 14a-8.
SECTION 1.3. Special Meetings. The Corporation shall hold a special meeting
of Shareholders on call of the Board of Directors or the Executive Committee,
the Chairman of the Board of Directors, the President, or, upon delivery to the
Corporation's Secretary of a signed and dated written demand for the meeting
describing the purpose or purposes for the meeting, on call of the holders of
100% of the votes entitled to be cast on any issue proposed to be considered at
the proposed special meeting. Only business within the purpose or purposes
described in the notice of special meeting required by Section 1.5 below may be
conducted at a special meeting of the Shareholders.
For business to be properly brought before a special meeting by a
Shareholder, the Shareholder must give timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a Shareholder's notice must be
received by the Secretary at the principal executive offices of the Corporation
at least 120 calendar days prior to the date of the special meeting.
Such Shareholder's notice to the Secretary shall set forth with respect to
any proposal such Shareholder proposes to bring before the special meeting (i) a
brief description of the business desired to be brought before the special
meeting and the reasons for conducting such business at the special meeting;
(ii) the name and address, as they appear on the Corporation's books, of the
Shareholder proposing such business; (iii) the class and number of shares of the
Corporation which are beneficially owned by such Shareholder; (iv) the dates
upon which the Shareholder acquired such shares; (v) documentary support for any
claim of beneficial ownership; (vi) any material interest of such Shareholder in
such business; (vii) a statement in support of the matter and, for proposals
sought to be included in the Corporation's proxy statement, any other
information required by Rule 14a-8; and (viii) if the Shareholders requesting
the special meeting propose to nominate one or more persons for election or
reelection as Director, all information relating to such person that is required
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to be disclosed in solicitations of proxies for election of Directors in an
election contest, or is otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a Director if elected, and evidence reasonably satisfactory to the
Corporation that such nominee has no interests that would limit their ability to
fulfill their duties of office).
In addition, if the Shareholder intends to solicit proxies from the
shareholders of the Corporation, such Shareholder shall notify the Corporation
of this intent in accordance with Securities and Exchange Commission Rule 14a-4
and/Rule or 14a-8.
SECTION 1.4. Determination of Validity of Notice of Shareholder Proposal
for Business. The chairman of a meeting may, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of Sections 1.2 and 1.3 of this Article, and,
if he should so determine, he shall so declare to the meeting and any such
business so determined to be not properly brought before the meeting shall not
be transacted, or in the case of persons so nominated, not be eligible for
election.
SECTION 1.5. Notice of Meetings. The Secretary or an Assistant Secretary
shall deliver, either personally or by mailing it, postage prepaid, a written
notice of the place, day, and time of all meetings of the Shareholders not less
than ten (10) nor more than sixty (60) days before the meeting date to each
Shareholder of record entitled to vote at such meeting. Unless otherwise
required or permitted by law, written notice is effective when mailed, if mailed
with postage prepaid and correctly addressed to the Shareholder's address shown
in the Corporation's current record of Shareholders. It shall not be necessary
that notice of an annual meeting include a description of the purpose or
purposes for which the meeting is called. In the case of a special meeting, the
purpose or purposes for which the meeting is called shall be included in the
notice of the special meeting. If an annual or special Shareholders' meeting is
adjourned to a different date, time, or place, notice of the new date, time, or
place need not be given if the new date, time, or place is announced at the
meeting before adjournment. However, if a new record date for the adjourned
meeting is or must be fixed under Section 1.9 herein, notice of the adjourned
meeting must be given to persons who are Shareholders as of the new record date.
SECTION 1.6. Record Date. The Board of Directors, in order to determine the
Shareholders entitled to notice of or to vote at any meeting of the Shareholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
shall fix in advance a record date that may not be more than seventy (70) days
before the meeting or action requiring a determination of Shareholders. Only
such Shareholders as shall be Shareholders of record on the date fixed shall be
entitled to such notice of or to vote at such meeting or any adjournment
thereof, or to receive payment of any such dividend or other distribution or
allotment of any rights, or to exercise any such rights in respect of stock, or
to take any such other lawful
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action, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid. The
record date shall apply to any adjournment of the meeting except that the Board
of Directors shall fix a new record date for the adjourned meeting if the
meeting is adjourned to a date more than 120 days after the date fixed for the
original meeting.
SECTION 1.6. Shareholders' List for Meeting. After fixing a record date for
a meeting, the Corporation shall prepare an alphabetical list of the names of
all Shareholders who are entitled to notice of the Shareholders' meeting. The
list shall be arranged by voting group (and within each voting group by class or
series of shares) and show the address of and number of shares held by each
Shareholder. The Corporation shall make the Shareholders' list available for
inspection by any Shareholder, his agent, or his attorney at the time and place
of the meeting.
SECTION 1.8. Quorum. Subject to any express provision of law or the
Articles of Incorporation, a majority of the votes entitled to be cast by all
shares voting together as a group shall constitute a quorum for the transaction
of business at all meetings of the Shareholders. Whenever a class of shares or
series of shares is entitled to vote as a separate voting group on a matter, a
majority of the votes entitled to be cast by each voting group so entitled shall
constitute a quorum for purposes of action on any matter requiring such separate
voting. Once a share is represented, either in person or by proxy, for any
purpose at a meeting other than solely to object to holding a meeting or
transacting business at the meeting, it is deemed present for quorum purposes
for the remainder of the meeting and for any adjournment of that meeting unless
a new record date is set for the adjourned meeting.
SECTION 1.9. Adjournment of Meetings. The holders of a majority of the
voting shares represented at a meeting, or the Chairman of the Board or the
President, whether or not a quorum is present, shall have the power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each Shareholder of record entitled to vote at the adjourned meeting.
SECTION 1.10. Vote Required. When a quorum exists, action on a matter
(other than the election of Directors) by a voting group is approved if the
votes cast within the voting group favoring the action exceed the votes cast
opposing the action, unless the Articles of Incorporation, a bylaw authorized by
the Articles of Incorporation or express provision of law requires a greater
number of affirmative votes. Unless otherwise provided in the Articles of
Incorporation, Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present. Shareholders do not have the right to cumulate their votes unless the
Articles of Incorporation so provide.
SECTION 1.11. Voting Entitlement of Shares. Unless otherwise provided in
the Articles of Incorporation, each Shareholder, at every meeting of the
Shareholders, shall be entitled
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to cast one vote, either in person or by written proxy, for each share standing
in his or her name on the books of the Corporation as of the record date. A
Shareholder may vote his shares in person or by proxy. An appointment of proxy
is effective when received by the Secretary of the Corporation or other officer
or agent authorized to tabulate votes and is valid for eleven (11) months unless
a longer period is expressly provided in the appointment of proxy form. An
appointment of proxy is revocable by the Shareholder unless the appointment form
conspicuously states that it is irrevocable and the appointment is coupled with
an interest.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1. General Powers. Subject to the Articles of Incorporation, and
Bylaws approved by the Shareholders, all corporate powers shall be exercised by
or under the authority of, and the business and affairs of the Corporation
managed under the direction of, the Board of Directors.
SECTION 2.2. Number and Tenure. The Board of Directors shall consist of at
least five (5) members and not more than fifteen (15) members, the exact number
of Directors to be fixed from time to time by resolution of the Board of
Directors of the Corporation. No decrease in the number or minimum number of
Directors, through amendment of the Articles of Incorporation or of the Bylaws
or otherwise, shall have the effect of shortening the term of any incumbent
Director. The Board of Directors shall be divided into three classes as nearly
equal in number as possible, with the term of office of one class expiring each
year. At the first annual meeting of shareholders, the Directors shall be
divided into three classes, as nearly equal in size as may be, with the
Directors of one class to be elected to hold office for a term expiring at the
third annual meeting following the election and until their successors shall
have been duly elected and qualified; with the Directors of the second class to
be elected to serve for a term expiring at the second annual meeting following
the election and until their successors shall have been duly elected and
qualified; and the Directors of the third class to be elected to serve for a
term expiring at the first annual meeting following the election and until their
successors shall have been duly elected and qualified. Thereafter, Directors
shall be elected for terms of three years, and until their successors have been
duly elected and qualified or until there is a decrease in the number of
Directors.
SECTION 2.3. Qualifications of Directors. Directors shall be natural
persons who have attained the age of 18 years who shall own at least 100 shares
of the Common Stock of the Corporation but need not be residents of the State of
Georgia.
SECTION 2.3.1. Re-election After Termination of Principal Employment. If
any Director ceases to hold the position in his or her principal employment
profession, trade or calling that he or she held at he beginning of the current
term for which he or she was elected a Director,
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such person shall not be eligible for re-election to the Board of Directors
after the expiration of such current term unless the Board of Directors decides
that such person should be eligible for re-election.
SECTION 2.3.2. Terminating Events; Honorary Directors. Any Director who
either (i) attains his or her seventieth (70th) birthday or (ii) retires from or
discontinues his or her employment with the Corporation, whichever first occurs,
shall thereafter, upon completion of the term for which he or she was elected a
Director, cease to be an active Director; provided, however, anyone who, upon
his or her retirement is Chairman of the Board or President of the Corporation
may, notwithstanding the above provisions of this Section, continue to serve as
an active Director until his attains his seventieth (70th) birthday, and
thereafter until completion of the term for which he or she was elected a
Director.
SECTION 2.3.3. Honorary Directors. Upon appointment by the Board of
Directors, a Director who ceases to be an active Director because of age or
retirement, or any other person who shall be so elected by the Board of
Directors, shall become an Honorary Director for such term or terms as the Board
of Directors may determine, but subject to removal from the position of Honorary
Director at any time at the pleasure of the Board. Except for the regular
November meeting of the Board of Directors, Honorary Directors will not be
expected to attend meetings of the Board unless specially invited. The expenses
of Honorary Directors in attending such November meeting or any other meeting of
the Board of Directors to which they are specially invited will be reimbursed by
the Corporation but they will not receive fees for attending such meetings.
Honorary Directors may participate in an advisory capacity in all discussions
and deliberations of the Board of Directors, but shall have no vote at the
meetings which they attend in accordance with the foregoing provisions. An
Honorary Director shall not be included in any calculation of the number of
active Directors authorized and serving under Section 2.2.
SECTION 2.4. Vacancies. Unless the Articles of Incorporation provide
otherwise, if a vacancy occurs on the Board of Directors, including a vacancy
resulting from an increase in the number of Directors, the vacancy may be filled
only by the Board of Directors, or, if the Directors remaining in office
constitute fewer than a quorum of the Board, by the affirmative vote of a
majority of all Directors remaining in office. If the vacant office was held by
a Director elected by a voting group of Shareholders, only the remaining
Directors elected by that voting group are entitled to vote to fill the vacancy.
SECTION 2.5. Meetings. The Board of Directors shall meet annually, without
notice of the date, time, place or purpose of the meeting, immediately following
and at the same place as the annual meeting of Shareholders. Regular meetings of
the Board of Directors or any committee may be held between annual meetings
without notice at such time and at such place, within or without the State of
Georgia, as from time to time shall be determined by the Board or committee, as
the case may be. A majority of the Board of Directors, the Chairman of the
Board, the President or the Executive Committee may call a special meeting of
the Directors at any time by giving each Director two (2) days notice of the
date, time and place of the meeting. Such notice may be given orally or in
writing in accordance with the provisions of Section 4.1. Unless otherwise
provided in
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the Articles of Incorporation, these Bylaws or by law, neither the business to
be transacted at, nor the purpose of, any regular or special meeting need be
specified in the notice or any waiver of notice.
SECTION 2.6. Quorum and Voting. At all meetings of the Board of Directors
or any committee thereof, a majority of the number of Directors prescribed, or
if no number is prescribed, the number in office immediately before the meeting
begins, shall constitute a quorum for the transaction of business. The
affirmative vote of a majority of the Directors present at any meeting at which
there is a quorum at the time of such act shall be the act of the Board or of
the committee, except as might be otherwise specifically provided by statute or
by the Articles of Incorporation or Bylaws. In the absence of a quorum, the
Directors present by majority vote may adjourn the meeting from time to time
without notice other than by verbal announcement at the meeting until a quorum
shall attend. At any such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
as originally notified.
SECTION 2.7. Action Without Meeting. Unless the Articles of Incorporation
or Bylaws provide otherwise, any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if the action is taken by all members of the Board or committee, as
the case may be. The action must be evidenced by one or more written consents
describing the action taken, signed by each Director, and filed with the minutes
of the proceedings of the Board or committee or filed with the corporate
records.
SECTION 2.8. Remote Participation in a Meeting. Unless otherwise restricted
by the Articles of Incorporation or the Bylaws, any meeting of the Board of
Directors may be conducted by the use of any means of communication by which all
Directors participating may simultaneously hear each other during the meeting. A
Director participating in a meeting by this means is deemed to be present in
person at the meeting.
SECTION 2.9. Compensation of Directors. The Board of Directors may fix the
compensation of the Directors for their services as Directors. Compensation
shall be fixed from time to time by a resolution of the Board of Directors, and
may be on the basis of an annual sum or a fixed sum for attendance at each
regular or special meeting and every adjournment thereof, or a combination of
these methods. Members may be reimbursed for all reasonable traveling expenses
incurred in attending meetings. No provision of these Bylaws shall be construed
to preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 2.10. Removal of Directors by Shareholders. Subject to the
requirements of Section 14-2-808 of the Georgia Business Corporation Code (the
"Code") for the removal of Directors elected by cumulative voting, voting group
or staggered terms, any one or more Directors may be removed from office, only
with cause, at any meeting of Shareholders with respect to which notice of such
purpose has been given, by the affirmative vote of the holder or holders of a
majority of the outstanding shares of the Corporation.
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SECTION 2.11. Nomination of Directors. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of Shareholders (i) by the Board of
Directors or at the direction of the Board by any nominating committee or person
appointed by the Board or (ii) by any Shareholder of the Corporation entitled to
vote for the election of Directors at the meeting who complies with the notice
procedures set forth in Sections 1.2 and 1.3 of Article I of these Bylaws. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. Such notice to the Secretary shall set forth the information
required in Section 1.2 and 1.3 of Article I of these Bylaws. The Corporation
may require any proposed nominee to furnish such other information as reasonably
may be required by the Corporation to determine the eligibility of such proposed
nominee to serve as a Director of the Corporation. The chairman of the meeting
may, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedures, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
SECTION 2.15. Indemnification. The indemnification authorized in the
Articles of Incorporation shall be subject to the following provisions and
procedures:
SECTION 2.15.1. Determination of Eligibility for Indemnification. In the
case of actions brought by or in the right of the Corporation, a Director's
right to indemnification as authorized in the Articles of Incorporation shall be
determined:
(i) If there are two or more directors not at the time parties to the
proceeding ("Disinterested Directors"), by the board of directors by a
majority vote of all the Disinterested Directors (a majority of whom shall
for such purpose constitute a quorum), or by a majority of the members of a
committee of two or more Disinterested Directors appointed by such a vote;
(ii) By special legal counsel:
(a) Selected in the manner prescribed in paragraph (i) of this
subsection; or
(b) If there are fewer than two Disinterested Directors, the
Board of Directors (in which selection directors who do not
qualify as Disinterested Directors may participate); or
(iii) By the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director may not be voted on the determination.
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SECTION 2.15.2. Rights Not Exclusive. The rights to indemnification and
advance of expenses granted in the Articles of Incorporation and in these Bylaws
are not exclusive, and do not limit the Corporation's power to pay or reimburse
expenses to which a Director may be entitled, whether by agreement vote of
shareholders or Disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office, and
do not limit the Corporation's power to pay or reimburse expenses incurred by a
Director in connection with his appearance as a witness in a proceeding at a
time when he has not been made a named defendant or respondent to the
proceeding.
SECTION 2.15.3. Insurance. The Corporation and its officers shall have the
power to purchase and maintain insurance on behalf of an individual who is or
was a Director, officer, employee or agent of the Corporation or who, while a
Director, officer, employee, or agent of the Corporation, is or was serving as a
Director, officer, partner, trustee employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise against liability asserted against or incurred by him in
that capacity or arising from his status as a Director, officer, employee or
agent, whether or not the Corporation would have the power to indemnify him
against the same liability under the provisions of these Bylaws.
SECTION 2.15.4. Reports to Shareholders. If the Corporation indemnifies or
advances expenses to a Director, otherwise than by action of the shareholders or
by an insurance carrier pursuant to insurance maintained by the Corporation
shall report the indemnification or advance in writing to the shareholders with
or before the notice of the next annual shareholders' meeting.
ARTICLE III
COMMITTEES
SECTION 3.1. Committees. The Board of Directors may, by resolution,
designate from among its members one or more committees, each committee to
consist of one or more Directors, except that committees appointed to take
action with respect to indemnification of Directors, Directors' conflicting
interest transactions or derivative proceedings shall consist of two or more
Directors qualified to serve pursuant to the Code. Any such committee, to the
extent specified by the Board of Directors, Articles of Incorporation or Bylaws,
shall have and may exercise all of the authority of the Board of Directors in
the management of the business affairs of the Corporation, except that it may
not (i) approve or propose to Shareholders action that the Code requires to be
approved by Shareholders; (ii) fill vacancies on the Board of Directors or any
of its committees; (iii) amend the Articles of Incorporation; (iv) adopt, amend,
or repeal Bylaws; or (v) approve a plan of merger not requiring Shareholder
approval. All action by any committee shall be reported to the Board of
Directors at its meeting next succeeding such action, and shall be subject to
revision and alteration by the Board of Directors, except that no rights of
third person shall be affected by any such revision or alteration. Vacancies in
any committee shall be filled by the Board of Directors.
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SECTION 3.2. Meetings of Committees. Regular meetings of any committee may
be held without notice at such time and at such place, within or without the
State of Georgia, as from time to time shall be determined by such committee.
The Chairman of the Board of Directors, the President, the Board of Directors or
the committee by vote at a meeting, or by two members of any committee in
writing without a meeting, may call a special meeting of any such committee at
any time by giving each such committee member two (2) days notice of the date,
time and place of the meeting. Such notice may be given orally or in writing in
accordance with the provisions of Section 4.1. Unless otherwise provided in the
Articles of Incorporation, these Bylaws or by law, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of any such
committee need be specified in the notice or any waiver of notice.
SECTION 3.3. Quorum of Committee. At all meetings of any committee a
majority of the total number of its members shall constitute a quorum for the
transaction of business. Except in cases in which it is by law, by the Articles
of Incorporation, by these Bylaws, or by resolution of the Board of Directors
otherwise provided, a majority of such quorum shall decide any questions that
may come before the meeting. In the absence of a quorum, the members of the
committee present by majority vote may adjourn the meeting from time to time,
without notice other than by verbal announcement at the meeting, until a quorum
shall attend.
SECTION 3.4. Compensation of Committee Members. The Board of Directors may
fix the compensation of the Directors for their services as members of
committees of the Board of Directors. Compensation shall be fixed from time to
time by a resolution of the Board of Directors, and may be on the basis of an
annual sum or a fixed sum for attendance at each regular or special meeting and
every adjournment thereof, or a combination of these methods. Members of
committees shall be reimbursed for all reasonable traveling expenses incurred in
attending meetings. No provision of these Bylaws shall be construed to preclude
any Director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 3.5. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board of Directors, may designate an
Executive Committee of three or more Directors, which designation shall include
the Chairman of the Board of Directors and the President. Each Director of the
Corporation who is not designated as a member of the Executive Committee hereby
is designated as an alternate member of the Executive Committee, who may act in
the place and stead of any absent member or members at any meeting of such
Executive Committee in the event (i) a quorum of the Executive Committee is not
present and (ii) the Chairman of the Board or, in his absence, the President,
appoints such alternate member to act for that meeting as a member of the
Executive Committee; and such alternate member shall serve only at the meeting
for which such appointment is made, but shall have at that meeting all the
powers of a regular member of the Executive Committee. During the intervals
between the meetings of the Board of Directors the Executive Committee shall
have and may exercise all of the authority of the Board of Directors in the
management of the business affairs of the Corporation to the extent authorized
by the resolution providing for such Executive Committee or by subsequent
resolution adopted by a majority of the whole Board of Directors, except that it
may not (i) approve or propose to
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Shareholders action that the Code requires to be approved by Shareholders; (ii)
fill vacancies on the Board of Directors or any of its committees; (iii) amend
the Articles of Incorporation; (iv) adopt, amend, or repeal bylaws; or (v)
approve a plan of merger not requiring Shareholder approval.
SECTION 3.5.1. Honorary Members of Executive Committee. Upon appointment by
the Board of Directors, a Director who ceases to be an active Director because
of age or retirement, and who at the time has been a member of the Executive
Committee for twelve or more years, shall become an Honorary Member of the
Executive Committee for such term or terms as the Board of Directors may
determine, but subject to removal from the position of Honorary Member of the
Executive Committee at any time at the pleasure of the Board. Honorary Members
of the Executive Committee shall receive the customary fees for attending
regular meetings, and may participate in an advisory capacity in all discussions
and deliberations of the Executive Committee, but shall have no vote at the
meetings which they attend in accordance with the foregoing provisions. An
Honorary Member shall not be included in any calculation of the number of active
Directors authorized and serving under Section 3.5.
SECTION 3.6. Audit Committee. The Board of Directors, by resolution adopted
by a majority of the whole Board of Directors, may designate an Audit Committee
of four (4) or more Directors. The members of the Audit Committee shall serve at
the pleasure of the Board of Directors or until their successors shall be duly
designated. Each Director of the Corporation who is not designated as a member
of the Audit Committee hereby is designated as an alternate member of the Audit
Committee, who may act in the place and stead of any absent member or members at
any meeting of such Audit Committee in the event (i) a quorum of the Audit
Committee is not present and (ii) the Chairman of the Board or, in his absence,
the President, appoints such alternate member to act for that meeting as a
member of the Audit Committee; and such alternate member shall serve only at the
meeting for which such appointment is made, but shall have at that meeting all
the powers of a regular member of the Audit Committee. The Audit Committee shall
consider the choice of the independent public accountants for the Corporation,
shall review the planned scope of the audit and the results of their
examinations of the financial statements of the Corporation, their opinions
thereon and their recommendations with respect to accounting, internal controls
and other matters, shall convey information to and from the Board of Directors
and its independent public accountants and auditors, shall be available for
discussions of internal auditing problems and procedures, and shall make their
report to the Board of Directors or the Executive Committee, or to both. The
Audit Committee shall keep full and fair accounts of its transactions. All
action by the Audit Committee shall be reported to the Board of Directors at its
meeting next succeeding such action, and shall be subject to revision and
alteration by the Board of Directors; provided that no rights of third persons
shall be affected by any such revision or alteration. Vacancies in the Audit
Committee shall be filled by the Board of Directors.
SECTION 3.7. Nominating and Compensation Committee. The Board of Directors,
by resolution adopted by a majority of the whole Board of Directors, may
designate a Nominating and Compensation Committee of four (4) or more Directors.
The members of the Nominating and Compensation Committee shall serve at the
pleasure of the Board of Directors or
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until their successors shall be duly designated. Each Director of the
Corporation who is not designated as a member of the Nominating and Compensation
Committee hereby is designated as an alternate member of the Nominating and
Compensation Committee, who may act in the place and stead of any absent member
or members at any meeting of such Nominating and Compensation Committee in the
event (i) a quorum of the Nominating and Compensation Committee is not present
and (ii) the Chairman of the Board or, in his absence, the President, appoints
such alternate member to act for that meeting as a member of the Nominating and
Compensation Committee; and such alternate member shall serve only at the
meeting for which such appointment is made, but shall have at that meeting all
the powers of a regular member of the Nominating and Compensation Committee. The
Nominating and Compensation Committee shall review and develop, with the Chief
Executive Officer, management succession and executive development plans;
recommend to the Board for election the officers of the Corporation and Atlanta
Gas Light Company, and the presidents of each of the other principal
subsidiaries of the Corporation; and review the performance of and recommend to
the Board of Directors the appropriate compensation level for such officers,
including base salaries, stock based compensation, other incentive compensation,
and perquisites. The Nominating and Compensation Committee also shall review and
recommend to the Board of Directors any changes in the various benefit programs
of the Corporation; and shall review the level of fees paid and the manner in
which fees are paid to members of the Corporation's Board of Directors and shall
make recommendations for adjustments as appropriate. The Nominating and
Compensation Committee also shall identify and recommend to the Board of
Directors the nominees for the Board. The Nominating and Compensation Committee
shall keep full and fair accounts of its transactions. All action by the
Nominating and Compensation Committee shall be reported to the Board of
Directors at its meeting next succeeding such action, and shall be subject to
revision and alteration by the Board of Directors; provided that no rights of
third persons shall be affected by any such revision or alteration. Vacancies in
the Nominating and Compensation Committee shall be filled by the Board of
Directors.
SECTION 3.8. Corporate Responsibility Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may designate
a Corporate Responsibility Committee of four (4) or more Directors. The members
of the Corporate Responsibility Committee shall serve at the pleasure of the
Board of Directors or until their successors shall be duly designated. Each
Director of the Corporation who is not designated as a member of the Corporate
Responsibility Committee hereby is designated as an alternate member of the
Corporate Responsibility Committee, who may act in the place and stead of any
absent member or members at any meeting of such Corporate Responsibility
Committee in the event (i) a quorum of the Corporate Responsibility Committee is
not present and (ii) the Chairman of the Board or, in his absence, the
President, appoints such alternate member to act for that meeting as a member of
the Corporate Responsibility Committee; and such alternate member shall serve
only at the meeting for which such appointment is made, but shall have at that
meeting all the powers of a regular member of the Corporate Responsibility
Committee. The Corporate Responsibility Committee shall make periodic reviews of
pension plans (including the investment of funds); it shall identify and monitor
broad governmental, social and environmental trends that could affect the
Corporation's performance and the related interests of its employees,
shareholders, customers and the general
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public; it shall review and monitor matters relating to employee and community
health and safety; and it shall review and monitor corporate policy with respect
to charitable giving. The results of said reviews shall be reported to the Board
of Directors. The Corporate Responsibility Committee shall keep full and fair
accounts of its transactions. All action by the Corporate Responsibility
Committee shall be reported to the Board of Directors at its meeting next
succeeding such action, and shall be subject to revision and alteration by the
Board of Directors; provided that no rights of third persons shall be affected
by any such revision or alteration. Vacancies in the Corporate Responsibility
Committee shall be filled by the Board of Directors.
SECTION 3.9. Strategy and Finance Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may designate
a Strategy and Finance Committee of four (4) or more Directors. The members of
the Strategy and Finance Committee shall serve at the pleasure of the Board of
Directors or until their successors shall be duly designated. Each Director of
the Corporation who is not designated as a member of the Strategy and Finance
Committee hereby is designated as an alternate member of the Strategy and
Finance Committee, who may act in the place and stead of any absent member or
members at any meeting of such Strategy and Finance Committee in the event (i) a
quorum of the Strategy and Finance Committee is not present and (ii) the
Chairman of the Board or, in his absence, the President, appoints such alternate
member to act for that meeting as a member of the Strategy and Finance
Committee; and such alternate member shall serve only at the meeting for which
such appointment is made, but shall have at that meeting all the powers of a
regular member of the Strategy and Finance Committee. The Strategy and Finance
Committee shall consider and make recommendations to the Board relating to short
and long term business objectives and strategies; strategic business
combinations; entry into new businesses; the Corporation's operating plans and
budgets for each fiscal year; the Corporation's capitalization; financing plans,
including short and long term needs for capital; and dividend policy. The
results of said reviews shall be reported to the Board of Directors. The
Strategy and Finance Committee shall keep full and fair accounts of its
transactions. All action by the Strategy and Finance Committee shall be reported
to the Board of Directors at its meeting next succeeding such action, and shall
be subject to revision and alteration by the Board of Directors; provided that
no rights of third persons shall be affected by any such revision or alteration.
Vacancies in the Strategy and Finance Committee shall be filled by the Board of
Directors.
ARTICLE IV
NOTICES
SECTION 4.1. Notice. Whenever, under the provisions of the Articles of
Incorporation or these Bylaws or by law, notice is required to be given to any
Director or Shareholder, such notice may be given in writing, by mail; by
telegram, telex or facsimile transmission; by other form of wire or wireless
communication; or by private carrier. Unless otherwise required or permitted by
law, such notice shall be deemed to be effective at the earliest
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of when received, or when delivered, properly addressed, to the addressee's last
known principal place of business or residence; or five days after the same
shall be deposited in the United States mail if mailed with first-class postage
prepaid and correctly addressed; or on the date shown on the return receipt, if
sent by registered or certified mail, and the receipt is signed by or on behalf
of the addressee. Notice to any Director or Shareholder may also be oral if oral
notice is reasonable under the circumstances. Oral notice is effective when
communicated if communicated in a comprehensible manner. If these forms of
personal notice are impractical, notice may be communicated by a newspaper of
general circulation in the area where published, or by radio, television, or
other form of public broadcast communication.
SECTION 4.2. Waiver of Notice. Whenever any notice is required to be given
under provisions of the Articles of Incorporation or of these Bylaws or by law,
a waiver thereof, signed by the person entitled to notice and delivered to the
Corporation for inclusion in the minutes or filing with the corporate records,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting and of all objections to the place or time of the meeting or the
manner in which it has been called or convened, except when the person attends a
meeting for the express purpose of stating, at the beginning of the meeting, any
such objection and, in the case of a Director, does not thereafter vote for or
assent to action taken at the meeting. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the Shareholders, Directors
or a committee of Directors need be specified in any written waiver of notice;
provided, however, that any waiver of notice of a meeting of Shareholders
required with respect to a plan of merger or a plan of consolidation shall be
effective only upon compliance with Section 14-2-706(c) of the Code or successor
provisions.
ARTICLE V
OFFICERS
SECTION 5.1. Appointment. The Board of Directors at its first meeting
following the Annual Meeting of Shareholders shall elect such officers as it
shall deem necessary, including, for the Corporation and Atlanta Gas Light
Company, a Chairman of the Board, a President, a Secretary, a Treasurer, one or
more Vice Presidents (one or more of whom may be designated Executive Vice
President or Senior Vice President), Assistant Vice Presidents, Assistant
Secretaries and Assistant Treasurers. The Board of Directors at its first
meeting following the Annual Meeting of Shareholders also shall elect, for each
of the Corporation's major subsidiaries, a President. Each of the officers
elected by the Board shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors. Each such officer
shall hold office until the corresponding meeting of the Board of Directors in
the next year and until his successor shall have been duly elected and qualified
or until he shall have resigned or shall have been removed in the manner
provided in Section 5.2 of this Article V. Any number of offices may be held by
the same person unless the Articles of Incorporation or these Bylaws otherwise
provide. The appointment of an officer does not itself create contract rights.
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SECTION 5.2. Resignation and Removal of Officers. An officer may resign at
any time by delivering notice to the Corporation and such resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. The Board of Directors (except in the case of an officer elected
by the Board of Directors) or the Executive Committee or an officer upon whom
such power of removal may have been conferred may remove any officer at any time
with or without cause.
SECTION 5.3. Vacancies. Any vacancy in office resulting from any cause may
be filled by the Board of Directors at any regular or special meeting.
SECTION 5.4. Powers and Duties. Each officer has the authority and shall
perform the duties set forth below or, to the extent consistent with these
Bylaws, the duties prescribed by the Board of Directors or by direction of an
officer authorized by the Board of Directors to prescribe the duties of other
officers.
SECTION 5.4.1. Chairman of the Board of Directors. The Chairman of the
Board of Directors may be chosen from among the Directors of the Corporation and
need not be an Executive Officer or employee of the Corporation. The Chairman
shall preside at all meetings of the Board of Directors. He shall have the usual
powers and duties incident to the office of the chairman of the board of
directors of a corporation and such other powers and duties as from time to time
may be assigned to him by the Board of Directors.
SECTION 5.4.2. Chief Executive Officer. The Board of Directors may
designate as the Chief Executive Officer of the Corporation the President or any
other officer of the Corporation including the Chairman if the Chairman is a
full-time officer and employee of the Corporation. The Chief Executive Officer
of the Corporation shall have general and active management responsibility for
the business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The Chief Executive Officer
shall preside at all meetings of the shareholders. The Chief Executive Officer
shall be the Chairman of the Executive Committee and preside at all meetings of
that committee. Except where by law the signature of the President is required,
the Chief Executive Officer shall have the same powers as the President to sign
all authorized certificates, contracts, bonds, deeds, mortgages and other
instruments. He shall have the usual powers and duties incident to the position
of chief executive officer of a corporation and such other powers and duties as
from time to time may be assigned by the Board of Directors. The Board of
Directors may, or if it does not, the Chief Executive Officer may, from time to
time designate an Executive Officer of the Corporation to assume and perform the
duties and powers of the Chief Executive Officer during the absence or
disability of the Chief Executive Officer.
SECTION 5.4.3. President. The President shall be responsible for the
general supervision of the affairs of the Corporation and general and active
management of the financial affairs of the Corporation. He shall have the power
to make and execute certificates, contracts, bonds, deeds, mortgages and other
instruments on behalf of the Corporation, except in cases in which the signing
thereof shall have been expressly delegated to some other officer or agent of
the
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Corporation and to delegate such power to others. He also shall have such powers
and perform such duties as are specifically imposed on him by law and as may be
assigned to him by the Board of Directors. In the event there is no Chairman of
the Board, the President shall also have all the powers and authority that the
Chairman is given in these Bylaws or otherwise. During the absence or disability
of the Chairman of the Board, the President shall preside at all meetings of the
Shareholders, the Board of Directors and the Executive Committee. He shall have
the usual powers and duties incident to the office of a president of a
corporation and such other powers and duties as from time to time may be
assigned to him by the Board of Directors. If the Board of Directors designates
the President as the Chief Executive Officer of the Corporation, the President
shall also have the powers and duties of the Chief Executive Officer.
SECTION 5.4.4. Vice Presidents. The Executive Vice Presidents shall be
senior in authority among the Vice Presidents. During the absence or disability
of the President, the Board of Directors shall designate which of the Executive
Vice Presidents shall exercise all the powers and discharge all of the duties of
the President, provided, however, that if he is not a Director he shall not
preside at any meetings of the Board of Directors or the Executive Committee.
The Vice Presidents, shall perform such duties as vice presidents customarily
perform and shall perform such other duties and shall exercise such other powers
as the President or the Board of Directors may from time to time designate.
SECTION 5.4.5. Secretary. The Secretary shall attend all meetings of the
Shareholders and all meetings of the Board of Directors and shall record all
votes and minutes of all proceedings in books to be kept for that purpose, and
shall perform like duties for the standing committees when required. He shall
have custody of the corporate seal of the Corporation, shall have the authority
to affix the same to any instrument the execution of which on behalf of the
Corporation under its seal is duly authorized and shall attest to the same by
his signature whenever required. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest to the same by his signature. The Secretary shall give, or cause to be
given, any notice required to be given of any meetings of the Shareholders, the
Board of Directors and of the standing committees when required. The Secretary
shall cause to be kept such books and records as the Board of Directors, the
Chairman of the Board or the President may require and shall cause to be
prepared, recorded, transferred, issued, sealed and canceled certificates of
stock as required by the transactions of the Corporation and its Shareholders.
The Secretary shall attend to such correspondence and shall perform such other
duties as may be incident to the office of a Secretary of a Corporation or as
may be assigned to him by the Board of Directors, the Chairman of the Board or
the President.
SECTION 5.4.6. Treasurer. The Treasurer shall be charged with the
management of financial affairs of the Corporation and shall have charge of and
be responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust
companies, or other depositaries as shall from time to time be selected by the
Board of Directors. He shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation. In general, he shall perform such duties as treasurers usually
perform
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and shall perform such other duties and shall exercise such other powers as the
Board of Directors, the Chairman of the Board or the President may from time to
time designate and shall render to the Chairman of the Board, the President and
to the Board of Directors, whenever requested, an account of the financial
condition of the Corporation.
SECTION 5.4.7. Controller. The Controller shall have charge of and be
responsible for preparation of financial and management reports, budgeting, rate
material, property accounting, taxes and such other duties as are commonly
incident to the office of Controller. The Controller shall have such power and
duties as from time to time may be properly delegated by the President and such
other powers and duties as may from time to time be assigned by the Board of
Directors.
SECTION 5.4.8. Assistant Vice President, Assistant Secretary and Assistant
Treasurer. One or more Assistant Vice Presidents, Assistant Secretaries and
Assistant Treasurers, in the absence or disability of any Vice President, the
Secretary or the Treasurer, respectively, shall perform the duties and exercise
the powers of those offices, and, in general, they shall perform such other
duties as shall be assigned to them by the Board of Directors or by the person
appointing them. Specifically the Assistant Secretaries may affix the corporate
seal to all necessary documents and attest the signature of any officer of the
Corporation.
SECTION 5.4.9. Subordinate Officers. The Board of Directors may elect such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may from time to time
authorize any officer to appoint and remove subordinate officers and prescribe
the powers and duties thereof. The Board of Directors may from time to time
authorize the Chairman of the Board of Directors or the President to appoint any
employee or officer of the Corporation (except the President, the Secretary or
an Assistant Secretary elected by the Board of Directors) as an Assistant
Secretary of the Corporation, to prescribe the powers, term, duties and salary,
if any, of such Assistant Secretary, and to remove any Assistant Secretary thus
appointed.
SECTION 5.5. Officers Holding Two or More Offices. Any two of the above
mentioned offices, except those of President and Secretary or Assistant
Secretary, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument be required by statute, by the Articles of Incorporation or by these
Bylaws to be executed, acknowledge or verified by any two or more officers.
SECTION 5.6. Compensation. The Board of Directors shall have power to fix
the compensation of all officers of the Corporation. It may authorize any
officer, upon whom the power of appointing subordinate officers may have been
conferred, to fix the compensation of such subordinate officers.
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ARTICLE VI
CAPITAL STOCK
SECTION 6.1. Share Certificates. Unless the Articles of Incorporation or
these Bylaws provide otherwise, the Board of Directors may authorize the issue
of some or all of the shares of any or all of its classes or series with or
without certificates. Unless the Code provides otherwise, there shall be no
differences in the rights and obligations of Shareholders based on whether or
not their shares are represented by certificates.
In the event that the Board of Directors authorizes shares with
certificates, each certificate representing shares of stock of the Corporation
shall be in such form as shall be approved by the Board of Directors and shall
set forth upon the face thereof the name of the Corporation and that it is
organized under the laws of the State of Georgia, the name of the person to whom
the certificate is issued, and the number and class of shares and the
designation of the series, if any, the certificate represents. The Board of
Directors may designate any one or more officers to sign each share certificate,
either manually or by facsimile. In the absence of such designation, each share
certificate must be signed by the President or a Vice President and the
Secretary or an Assistant Secretary. If the person who signed a share
certificate, either manually or in facsimile, no longer holds office when the
certificate is issued, the certificate is nevertheless valid.
SECTION 6.2. Record of Shareholders. The Corporation or an agent designated
by the Board of Directors shall maintain a record of the Corporation's
Shareholders in a form that permits preparation of a list of names and addresses
of all Shareholders, in alphabetical order by class or shares showing the number
and class of shares held by each Shareholder. The Corporation shall be entitled
to treat the person in whose name shares are registered in the records of the
Corporation as the owner thereof for all purposes unless it accepts for its
records a nominee certificate naming a beneficial owner of shares other than the
record owner, and shall not otherwise be bound to recognize any equitable or
other claim to or interest in such shares except as may be provided by law.
SECTION 6.3. Lost Certificates. In the event that a share certificate is
lost, stolen, mutilated or destroyed, the Board of Directors may direct that a
new certificate be issued in place of such certificate. When authorizing the
issue of a new certificate, the Board of Directors may require such proof of
loss as it may deem appropriate as a condition precedent to the issuance
thereof, including a requirement that the owner of such lost, stolen or
destroyed certificate, or his legal representative, advertise the same in such
manner as the Board shall require and/or that he give the Corporation a bond in
such sum as the Board may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 6.4. Transfers of Shares. Transfers of shares of the capital stock
of the Corporation shall be made only upon the books of the Corporation by the
registered holder thereof,
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or by his duly authorized attorney, or with a transfer clerk or transfer agent
appointed as provided in Section 6.5 hereof, and, in the case of a share
represented by certificate, on surrender of the certificate or certificates for
such shares properly endorsed and the payment of all taxes thereon. The
Corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends, to vote as
such owner, and for all other purposes, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
SECTION 6.5. Transfer Agents and Registrars. The Board of Directors may
establish such other regulations as it deems appropriate governing the issue,
transfer, conversion and registration of share certificates, including
appointment of transfer agents, clerks or registrars.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1. Indemnification of Officers, Employees and Agents. The
Corporation shall indemnify any officer who was or is made a party to or is
otherwise involved in any threatened, pending or completed action, suit or
proceeding, whether civil, derivative, criminal, administrative or investigative
(hereinafter, a "proceeding") to the same extent as it is obligated to indemnify
any Director of the Corporation, but without being subject to the same
procedural conditions imposed for the indemnification of Directors. The
Corporation may indemnify and advance expenses to an employee or agent who is
not a Director or officer to the extent permitted by the Articles of
Incorporation, the Bylaws or by law.
SECTION 7.2. Seal. The Corporation may have a seal, which shall be in such
form as the Board of Directors may from time to time determine. In the event
that the use of the seal is at any time inconvenient, the signature of an
officer of the Corporation, followed by the word "Seal" enclosed in parentheses,
shall be deemed the seal of the Corporation.
SECTION 7.3. Voting Shares in Other Corporations. In the absence of other
arrangements by the Board of Directors, shares of stock issued by another
corporation and owned or controlled by the Corporation, whether in a fiduciary
capacity or otherwise, may be voted by the President or any Vice President, in
the absence of action by the President, in the same order as they preside in the
absence of the President, or, in the absence of action by the President or any
Vice President, by any other officer of the Corporation, and such person may
execute the aforementioned powers by executing proxies and written waivers and
consents on behalf of the Corporation.
SECTION 7.4. Amendment of Bylaws. These Bylaws may be amended or repealed
and new bylaws may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors unless the Articles of Incorporation
or the Code reserve this power exclusively
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to the Shareholders in whole or in part or the Shareholders, in amending or
repealing the particular bylaw, provide expressly that the Board of Directors
may not amend or repeal that bylaw. Unless the Shareholders have fixed a greater
quorum or voting requirement, these Bylaws also may be altered, amended or
repealed and new bylaws may be adopted, unless such action has been recommended
by the Board of Directors, by an affirmative vote of the holders of at least
two-thirds of all outstanding shares entitled to vote.
SECTION 7.5. Execution of Bonds, Debentures, Evidences of Indebtedness,
Checks, drafts and other Obligations and Orders for Payment. The signatures of
any officer or officers of the Corporation executing a corporate bond, debenture
or other debt security of the Corporation or attesting the corporate seal
thereon, or upon any interest coupons annexed to any such corporate bond,
debenture or other debt security of the Corporation, and the corporate seal
affixed to any such bond, debenture or other debt security of the Corporation,
may be facsimiles, engraved or printed, provided that such bond, debenture or
other debt security of the Corporation is authenticated or countersigned with
the manual signature of an authorized officer of the corporate trustee
designated by the indenture or other agreement under which said security is
issued by a transfer agent, or registered by a registrar, other than the
Corporation itself, or an employee of the Corporation. If the person who signed
such, bond, debenture or other debt security of the Corporation, either manually
or in facsimile, no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
SECTION 7.6. Business Combinations. All of the requirements of Sections
14-2- 1131 to 1133, inclusive, of the Code, as now in effect and as hereafter
from time to time amended, shall be applicable to this Corporation and to any
business combination approved or recommended by the Board of Directors.
ARTICLE VIII
EMERGENCY BYLAWS
SECTION 8.1. Emergency Bylaws. This Article shall be operative during any
emergency resulting from some catastrophic event that prevents a quorum of the
Board of Directors or any committee thereof from being readily assembled (an
"emergency"), notwithstanding any different or conflicting provisions set forth
elsewhere in these Bylaws or in the Articles of Incorporation. To the extent not
inconsistent with the provisions of this Article, the bylaws set forth elsewhere
herein and the provisions of the Articles of Incorporation shall remain in
effect during such emergency, and upon termination of such emergency, the
provisions of this Article shall cease to be operative.
SECTION 8.2. Meetings. During any emergency, a meeting of the Board of
Directors or any committee thereof may be called by any Director, or by the
President, any Vice President, the Secretary or the Treasurer (the "Designated
Officers") of the Corporation. Notice of the time and place of the meeting shall
be given by any available means of communication by the person calling
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the meeting to such of the Directors and/or Designated Officers as may be
feasible to reach. Such notice shall be given at such time in advance of the
meeting as, in the judgement of the person calling the meeting, circumstances
permit.
SECTION 8.3 Quorum. At any meeting of the Board of Directors or any
committee thereof called in accordance with this Article, the presence or
participation of two Directors, one Director and a Designated Officer, or two
Designated Officers shall constitute a quorum for the transaction of business.
SECTION 8.4. Bylaws. At any meeting called in accordance with this Article,
the Board of Directors or committee thereof, as the case may be, may modify,
amend or add to the provisions of this Article so as to make any provision that
may be practical or necessary for the circumstance of the emergency.
SECTION 8.5. Liability. Corporate action taken in good faith in accordance
with the emergency bylaws may not be used to impose liability on a Director,
officer, employee or agent of the Corporation.
SECTION 8.6. Repeal or Change. The provisions of this Article shall be
subject to repeal or change by further action of the Board of Directors or by
action of Shareholders, but no such repeal or change shall modify the provisions
of the immediately preceding section of this Article with regard to action taken
prior to the time of such repeal or change.
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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
<PAGE>
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:
<PAGE>
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 through December 31, 1998, and effective as of
January 1, 1999, either personally assume the lease payments or return the
automobile to the Company for other Company use.
(f) Stock Options and Restricted Stock. The Company shall request the
Committee administering the Company's Long-Term Stock Incentive Plan of 1990 to
extend the operation of the Participant's outstanding stock options so that
vesting may continue to occur, and once vested, the options shall continue to be
exercisable, until the full term of the option or the Participant's attaining
age 62, whichever is first to occur. any outstanding incentive stock options
shall convert to nonqualified stock options on the date three months following
the Participant's early retirement date. However, any outstanding unvested
restricted stock held by the Participant shall lapse as of the date of his early
retirement.
(g) Outplacement Services. Upon the Participant's request, the Company
shall provide up to twelve (12) months of outplacement services for the
Participant through Right Associates.
ARTICLE VII
RESTRICTIVE COVENANTS AND GENERAL RELEASE
7.1 Consideration for Early Retirement Benefits.
In consideration for the payment of the amounts described in Article V
and the early retirement benefits described in Article VI, each Participant
shall agree to the terms of this Section.
(a) Covenant Not to Compete. Each Participant shall covenant and agree
that, during a period beginning on his date of early retirement and ending three
(3) years thereafter, he will not directly or indirectly, on his own behalf or
on behalf of any person or entity, compete with the Company or any Affiliate by
performing activities or duties substantially similar or related to the
functions, activities or duties performed by
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the Participant for the Company or any of its Affiliates for any business entity
engaged in direct competition with the Company or any of its Affiliates. A
business entity shall be considered to be "in direct competition" with the
Company or any of its Affiliates if it is engaged in producing, manufacturing,
distributing, marketing, selling, servicing or repairing products similar to
products produced, manufactured, distributed, marketed, sold, serviced or
repaired by the Company and/or any of its Affiliates, including (but not limited
to) any type of production and distribution of any energy source, whether by
cultivation of natural resources or by technology. This restriction shall apply
only to a restricted territory within a 100-mile radius of any locations, sites
or facilities in which the Company and/or its Affiliates maintains offices,
operations or service contracts or has provided services during the 12-month
period immediately preceding the Participant's early retirement under the Plan.
(b) Nondisclosure and Confidentiality. Each Participant shall
acknowledge and agree that during the term of his employment, he has had access
to trade secrets and other confidential information unique to the business of
the Company and its Affiliates and that the disclosure or unauthorized use of
such trade secrets or confidential information by the Participant would injure
the Company's business. Therefore, each Participant shall agree that he will
not, at any time during which he is receiving any benefits under the Plan, use,
reveal or divulge any trade secrets or any other confidential information which,
while not trade secrets or information unique to the Company's business, is
highly confidential and constitutes a valuable asset of the Company by reason of
the material investment of the Company's time and money in the production of
such information. Each Participant shall agree that he will not use, reveal or
divulge any general confidential or customer-related information.
(c) Nonsolicitation. Due to the Participant's extensive knowledge of
the specifics of the Company's business, and its customers and clients, the
Participant shall agree that during the period he is receiving payments
hereunder, he will not, without the prior written consent of the Company, either
directly or indirectly, on his own behalf or in the service or on behalf of
others, solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, to any business that competes with the Company's Business any
person or entity who transacted business with the Company during the year
preceding the date of his early retirement from the Company. This provision
shall be specific to any and all persons or entities with whom the Participant
has (i) had direct contact, (ii) been a party to marketing or sales strategies
with regard to, or (iii) been privy to marketing or sales strategies with regard
to such persons or entities. For purposes of this provision, the Company's
Business shall include any and all aspects of producing, manufacturing,
distributing, marketing, selling, servicing or repairing products similar to
products produced, manufactured, distributed, marketed, sold, serviced or
repaired by the Company and/or any of its Affiliates, including (but not limited
to) any type of production and distribution of any energy source, whether by
cultivation of natural resources or by technology.
The Participant shall agree that during the period he is receiving
payments and benefits under the Plan, he will not, either directly or
indirectly, on his own behalf or in the service or on behalf of others solicit,
divert or hire away, or attempt to solicit, divert or hire away to any business
that competes with Company's Business any person employed by the Company, or any
person employed by the Company at any time and for any period after the date
which is one (1) year prior to the date of his early retirement from the
Company.
(d) General Release. Each Participant in the Plan shall agree, for
himself, his Joint Annuitant, his Spouse, heirs, executor or administrator,
assigns, insurers, attorneys and other persons or entities acting or purporting
to act on his behalf, to irrevocably and unconditionally release, acquit and
forever discharge the Company, its Affiliates, subsidiaries, directors,
officers, employees, shareholders, partners, agents, representatives,
predecessors, successors, assigns, insurers, attorneys, benefit plans sponsored
by the Company or its Affiliates and said plans' fiduciaries, agents and
trustees, from any and all actions, cause of action, suits, claims, obligations,
liabilities, debts, demands, contentions, damages, judgments, levies and
executions of any kind, whether in law or in equity, known or unknown, which the
Participant has, has had, or may in the future claim to have against the Company
or its Affiliates by reason of, arising out of, related to, or resulting from
Participant's employment with the Company or its Affiliates or the termination
thereof. This release specifically includes without limitation any claims
arising in tort or contract, any claim based on wrongful discharge, any claim
based on breach of contract, any claim
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arising under federal, state or local law prohibiting race, sex, age, religion,
national origin, handicap, disability or other forms of discrimination, any
claim arising under federal, state or local law concerning employment practices,
and any claim relating to compensation or benefits. This specifically includes,
without limitation, any claim which any Participant has or has had under Title
VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended, the Americans with Disabilities Act, as amended, and
the Employee Retirement Income Security Act of 1974, as amended.
7.2 Failure of Participant to Comply.
If, for any reason, a Participant fails to agree to the provisions of
Section 7.1 above, or if any Participant fails to comply with the provisions of
the agreements made under Section 7.1 above, all payments and benefits under the
Plan provided to such Participant, Joint Annuitant or any other person or entity
on his behalf under this Agreement shall immediately cease.
ARTICLE VIII
ADMINISTRATION
8.1 Administrative Committee; Appointment and Term of Office.
(a) The Administrative Committee of this Plan shall be the same as the
members of the Administrative Committee of the Retirement Plan.
(b) The Board shall have the right to remove any member of the
Administrative Committee at any time. A member may resign at any time by
written resignation to the Board. If a vacancy in the Administrative
Committee should occur, a successor may be appointed by the Board.
(c) A written certification shall be given to the Trustee, if any, of
all members of the Administrative Committee together with a specimen
signature of each member. For all purposes hereunder, the Trustee shall be
conclusively entitled to rely upon such certification until the Trustee is
otherwise notified in writing.
8.2 Organization of Administrative Committee.
The Administrative Committee may elect a Chairman and a Secretary from
among its members. In addition to those powers set forth elsewhere in the Plan,
the Administrative Committee may appoint such agents, who need not be members of
such Administrative Committee, as it may deem necessary for the effective
performance of its duties and may delegate to such agents such powers and
duties, whether ministerial or discretionary, as the Administrative Committee
may deem expedient or appropriate. The compensation of such agents who are not
full- time Employees of a Affiliate shall be fixed by the Administrative
Committee and shall be paid by the Company (to be divided equitably among the
Company and its Affiliates) or from the Trust Fund as determined by the
Administrative Committee. The Administrative Committee shall act by majority
vote. Its members shall serve as such without compensation.
8.3 Powers and Responsibility.
The Administrative Committee shall fulfill the duties of
"administrator" as set forth in 3(16) of ERISA and shall have complete control
of the administration of the Plan hereunder, with all powers necessary to enable
it properly to carry out its duties as set forth in the Plan and the Trust
Agreement (if any). The Administrative Committee shall have the following duties
and responsibilities:
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(a) to construe the Plan and to determine all questions that shall
arise thereunder;
(b) to have all powers elsewhere herein conferred upon it;
(c) to decide all questions relating to the eligibility of Employees
to participate in the benefits of the Plan;
(d) to determine the benefits of the Plan to which any Participant or
Joint Annuitant may be
entitled;
(e) to maintain and retain records relating to Participants and Joint
Annuitants;
(f) to prepare and furnish to Participants all information required
under federal law or provisions of the Plan to be furnished to them;
(g) to prepare and furnish to the Trustee sufficient employee data and
the amount of Contributions received from all sources so that the Trustee may
make required payments of benefits;
(h) to prepare and file or publish with the Secretary of Labor, the
Secretary of the Treasury, their delegates and all other appropriate government
officials all reports and other information required under law to be so filed or
published;
(i) to provide directions to the Trustee with respect to methods of
benefit payment and all other matters where called for in the Plan or requested
by the Trustee;
(j) to engage assistants and professional advisers;
(k) to arrange for fiduciary bonding; and
(l) to provide procedures for determination of claims for benefits;
all as further set forth herein.
8.4 Records of Administrative Committee.
(a) Any notice, direction, order, request, certification or
instruction of the Administrative Committee to the Trustee shall be in writing
and shall be signed by a member of the Administrative Committee. The Trustee and
every other person shall be entitled to rely conclusively upon any and all such
notices, directions, orders, requests, certifications and instructions received
from the Administrative Committee and reasonably believed to be properly
executed, and shall act and be fully protected in acting in accordance
therewith.
(b) All acts and determinations of the Administrative Committee shall
be duly recorded by its Secretary or under his supervision, and all such
records, together with such other documents as may be necessary for the
administration of the Plan, shall be preserved in the custody of such Secretary.
8.5 Reporting and Disclosure.
The Administrative Committee shall keep all individual and group
records relating to Participants and Joint Annuitants and all other records
necessary for the proper operation of the Plan. Such records shall be made
available to the Company and its Affiliates and to each Participant and Joint
Annuitant for examination during normal business hours except that a Participant
or Joint Annuitant shall examine only such records as pertain exclusively to the
examining Participant or Joint Annuitant and the Plan and Trust Agreement. The
Administrative Committee shall prepare and shall file as required by law or
regulation all reports, forms, documents and other items required by
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ERISA and every other relevant statute, each as amended, and all regulations
thereunder. This provision shall not be construed as imposing upon the
Administrative Committee the responsibility or authority for the preparation,
preservation, publication or filing of any document required to be prepared,
preserved or filed by the Trustee or by any other Named Fiduciary to whom such
responsibilities are delegated by law or by the Plan.
8.6 Construction of the Plan.
The Administrative Committee shall take such steps as are considered
necessary and appropriate to remedy any inequity that results from incorrect
information received or communicated in good faith or as the consequence of an
administrative error. The Administrative Committee shall interpret the Plan and
shall determine the questions arising in the administration, interpretation and
application of the Plan. The Administrative Committee shall endeavor to act,
whether by general rules or by particular decisions, so as not to discriminate
in favor of or against any person and so as to treat all persons in similar
circumstances uniformly. The Administrative Committee shall correct any defect,
reconcile any inconsistency or supply any omission with respect to the Plan.
8.7 Assistants and Advisers.
(a) The Administrative Committee shall have the right to hire, at the
expense of the Company (to be divided equitably among the Company and its
Affiliates), such professional assistants and consultants as it, in its sole
discretion, deems necessary or advisable. To the extent that the costs for such
assistants and advisers are not so paid by the Company, they shall be paid at
the direction of the Administrative Committee from the Trust Fund as an expense
of the Trust Fund.
(b) The Administrative Committee and the Company shall be entitled to
rely upon all certificates and reports made by an actuary, accountant or
attorney selected pursuant to this 8.7; the Administrative Committee, the
Company, and the Trustee shall be fully protected in respect to any action taken
or suffered by them in good faith in reliance upon the advice or opinion of any
such actuary, accountant or attorney; and any action so taken or suffered shall
be conclusive upon each of them and upon all other persons interested in the
Plan.
8.8 Bonding.
The Administrative Committee shall arrange for fiduciary bonding as is
required by law, but no bonding in excess of the amount required by law shall be
required by the Plan.
8.9 Indemnification.
The Administrative Committee and each member of that Committee shall
be indemnified by the Company against judgment amounts, settlement amounts
(other than amounts paid in settlement to which the Company or one of its
Affiliates does not consent) and expenses reasonably incurred by the Committee
or him in connection with any action to which the Committee or he may be a party
(by reason of his service as a member of the Committee) except in relation to
matters as to which the Committee or he shall be adjudged in such action to be
personally guilty of gross negligence or willful misconduct in the performance
of its or his duties. The foregoing right to indemnification shall be in
addition to such other rights as such Committee or each Committee member may
enjoy as a matter of law or by reason of insurance coverage of any kind. Rights
granted hereunder shall be in addition to and not in lieu of any rights to
indemnification to which such Committee or each Committee member may be entitled
pursuant to the by-laws of the Company. Service on the Administrative Committee
shall be deemed in partial fulfillment of a Committee member's function as an
Employee, officer and/or director of the Company or any Affiliate, if he serves
in such other capacity as well.
8.10 Unclaimed Benefits.
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In the event a Participant becomes entitled to benefits under the Plan
and the Administrative Committee is unable to locate such Participant (after
sending a letter, return receipt requested, to the Participant's last known
address, and after such further diligent efforts as the Administrative Committee
in its sole discretion deems appropriate) within 1 year from the date upon which
he becomes so entitled, the Administrative Committee shall direct that such
benefits be paid to the Participant's Joint Annuitant, and if the Joint
Annuitant cannot be located after reasonable efforts, to the Participant's
Spouse or Surviving Spouse of such Participant; provided, if the distribution is
payable upon the termination of the Plan, the Administrative Committee shall not
be required to wait until the end of such 1-year period. If the Participant, his
Joint Annuitant and the Spouse or Surviving Spouse cannot be located and fail to
claim such benefits by the end of the fifth Plan Year following the Plan Year in
which such Participant becomes entitled to such benefits, then the full benefit
of the Participant shall be deemed abandoned and any Contributions made to pay
that benefit shall be used to reduce the Contributions of the Affiliate or
Companies which employed such Participant; provided, in the event such
Participant, his Joint Annuitant or Spouse is located or makes a claim
subsequent to the forfeiture of the benefit but prior to the expiration of the
time within which any such person's claim to the benefit would expire under
appropriate state law, then the amount of the abandoned benefit (unadjusted for
any investment gains or losses from the time of abandonment) shall be restored
(from Trust earnings or Contributions made by the Company or an Affiliate with
whom the Participant formerly was employed) and paid to such Participant, his
Joint Annuitant or Spouse, as appropriate; and, provided, further, the
Administrative Committee, in its sole discretion, may delay the deemed date of
abandonment of any such benefit for a period longer than the prescribed 5 Plan
Years if it believes that it is in the best interest of the Plan to do so.
8.11 Claims.
(a) Procedure. Claims for benefits under the Plan may be filed with
the Administrative Committee on forms supplied by the Administrative Committee.
The Administrative Committee shall furnish to the claimant written notice of the
disposition of a claim within 90 days after the application therefor is filed;
provided, if special circumstances require an extension of time for processing
the claim, the Administrative Committee shall furnish written notice of the
extension to the claimant prior to the termination of the initial 90-day period,
and such extension shall not exceed one additional, consecutive 90-day period.
In the event the claim is denied, the notice of the disposition of the claim
shall provide the specific reasons for the denial, cites of the pertinent
provisions of the Plan, and, where appropriate, an explanation as to how the
claimant can perfect the claim and/or submit the claim for review.
(b) Review Procedure. Any Participant or Joint Annuitant who has been
denied a benefit, or his duly authorized representative, shall be entitled, upon
request to the Administrative Committee, to appeal the denial of his claim. To
do so, the claimant must make a written request to the Administrative Committee
for further consideration of his position. The claimant, or his duly authorized
representative, may review pertinent documents related to the Plan and in the
Administrative Committee's possession in order to prepare the appeal. The form
containing the request for review, together with a written statement of the
claimant's position, must be filed with the Administrative Committee no later
than 60 days after receipt of the written notification of denial of a claim
provided for in subsection (a). The Administrative Committee's decision shall be
made within 120 days following the filing of the request for review and shall be
communicated in writing to the claimant. If unfavorable, the notice of decision
shall explain the reason or reasons for denial and indicate the provisions of
the Plan or other documents used to arrive at the decision.
(c) Satisfaction of Claims. Any payment to a Participant, Joint
Annuitant or to his legal representative or heirs at law, all in accordance with
the provisions of the Plan, shall to the extent thereof be in full satisfaction
of all claims hereunder against the Trustee, the Administrative Committee and
the Company, any of whom may require such Participant, Joint Annuitant, legal
representative or heirs at law, as a condition to such payment, to execute a
receipt and release therefor in such form as shall be determined by the Trustee,
the Administrative Committee or the Company, as the case may be. If receipt and
release shall be required but execution by such Participant, Joint Annuitant,
legal representative or heirs at law shall not be accomplished, such benefits
may be distributed or paid into any appropriate court or to such other place as
such court shall direct, for disposition in
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accordance with the order of such court, and such distribution shall be deemed
to comply with the requirements of the Plan.
ARTICLE IX
GENERAL INFORMATION
Plan Sponsor: This Plan is sponsored by:
AGL Resources Inc.
303 Peachtree Street
Suite 400
Atlanta, GA 30308
(404) 584-4000
Employer I.D. Number: The Plan Sponsor's employer identification
number is 58-2210952.
Plan Year: This Plan is administered on a calendar year basis.
Type of Plan: This Plan is a combination nonqualified
deferred compensation plan for a select group
of highly compensated and management employees
and a severance plan which is a welfare
benefit plan under ERISA.
Plan Number: This Plan's identification number is 520.
The Plan Administrator: The Plan Administrator's name, address and
telephone number are as follows:
Retirement Plan Administrative Committee
AGL Resources Inc.
P.O. Box 4569
Atlanta, GA 30302
(404) 584-4706
Funding: Benefits are provided from the general assets of
the Company.
Agent for
Service of
Legal Process: Legal process may be served upon the Company at
the Plan Sponsor's address specified above.
ARTICLE X
ALLOCATION OF AUTHORITY AND RESPONSIBILITIES
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10.1 Company and Board.
(a) General Responsibilities. The Company, as Plan sponsor, and
the Board each shall serve as a Named Fiduciary having the following (and only
the following) authority and responsibilities:
(1) To appoint the Trustee and the Administrative Committee
and to monitor each of their performances;
(2) To communicate such information to the Trustee and the
Administrative Committee as each needs for the proper performance
of its duties; and
(3) To provide channels and mechanisms through which the
Administrative Committee and/or the Trustee can communicate with
Participants and Joint Annuitants.
In addition, the Company shall perform such duties as are imposed by law or by
regulation and shall serve as Plan Administrator in the absence of an appointed
Administrative Committee.
(b) Allocation of Authority. In the event any of the areas of
authority and responsibilities of the Company and the Board overlap with that of
any other Plan fiduciary, the Company and the Board shall coordinate with such
other fiduciaries the execution of such authority and responsibilities;
provided, the decision of the Company and the Board with respect to such
authority and responsibilities ultimately shall be controlling.
10.2 Administrative Committee.
The Administrative Committee shall have the authority and
responsibilities imposed by Article VIII hereof. With respect to said authority
and responsibilities, the Administrative Committee shall be a Named Fiduciary,
and as such, shall have no authority or responsibilities other than as granted
in the Plan or as imposed as a matter of law.
10.3 Trustee.
If a Trust is established, the Trustee shall be a Named Fiduciary
with respect to investment of Trust Fund assets and shall have the powers and
duties set forth in the Trust Agreement.
10.4 Limitations on Obligations of Fiduciaries.
No fiduciary shall have authority or responsibility to deal with
matters other than as delegated to it under the Plan, under the Trust Agreement
or by operation of law. A fiduciary shall not in any event be liable for breach
of fiduciary responsibility or obligation by another fiduciary (including Named
Fiduciaries) if the responsibility or authority for the act or omission deemed
to be a breach was not within the scope of such fiduciary's authority or
delegated responsibility.
10.5 Delegation.
Named Fiduciaries shall have the power to delegate specific
fiduciary responsibilities (other than Trustee responsibilities). Such
delegations may be to officers or Employees of the Company or an Affiliate or to
other persons, all of whom shall serve at the pleasure of the Named Fiduciary
making such delegation and, if full- time Employees of the Company or an
Affiliate, without compensation. Any such person may resign by delivering a
written resignation to the delegating Named Fiduciary. Vacancies created by any
reason may be filled by the appropriate Named Fiduciary or the assigned
responsibilities may be reabsorbed or redelegated by the Named Fiduciary.
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<PAGE>
10.6 Multiple Fiduciary Roles.
Any person may hold more than one position of fiduciary
responsibility and shall be liable for each such responsibility separately.
ARTICLE XI
AMENDMENT, TERMINATION AND ADOPTION
11.1 Amendment.
The provisions of the Plan may be amended at any time and from
time to time by resolution of the Board; provided no amendment shall increase
the duties or liabilities of the Trustee, if any, without the consent of such
party.
11.2 Termination.
(a) Right to Terminate. The Company expects the Plan to be
continued indefinitely, but it reserves the right to terminate the Plan, or any
parts thereof, or to completely discontinue Contributions to the Plan at any
time by action of the Board. In either event, the Administrative Committee and
the Trustee shall be promptly advised of such decision in writing. The Plan
shall automatically terminate as of the date on which all benefit payments have
been paid hereunder.
(b) Dissolution of Trust. In the event that the Administrative
Committee decides to dissolve the Trust, as soon as practicable following the
termination of the Plan or the Administrative Committee's decision, whichever is
later, any assets of the Plan shall be converted to cash or other distributable
assets, to the extent necessary to effect a complete distribution of the Trust
assets to the Company or the contributing Affiliates.
ARTICLE XII
MISCELLANEOUS
12.1 Nonalienation of Benefits and Spendthrift Clause.
None of the benefits, payments, proceeds or distributions under
the Plan shall be subject to the claim of any creditor of a Participant or Joint
Annuitant or to any legal process by any creditor of such Participant or of such
Joint Annuitant; and neither such Participant nor any such Joint Annuitant shall
have any right to alienate, commute, anticipate or assign any of the benefits,
payments, proceeds or distributions under the Plan except to the extent
expressly provided herein. If any Participant shall attempt to dispose of his
benefits hereunder or to dispose of the right to receive such benefits, or, in
the event there should be an effort to seize such benefits by attachment,
execution or other legal or equitable process, the Administrative Committee may,
at its discretion, pass and transfer the right to receive the benefits to such
person or persons as may be selected by the Administrative Committee from among
the Joint Annuitant, if any, theretofore designated by the Participant, the
Spouse, children or other dependents of the Participant, in such shares as the
Administrative Committee may determine. Any determinations so made by the
Administrative Committee may be revoked by it at any time, and further
determinations made by it may include the Participant.
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<PAGE>
12.2 Headings.
The headings and subheadings in the Plan have been inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
12.3 Construction, Controlling Law.
In the construction of the Plan, the masculine shall include the
feminine and the feminine the masculine, and the singular shall include the
plural and the plural the singular, in all cases where such meanings would be
appropriate. Unless otherwise specified, any reference to a section shall be
interpreted as a reference to a section of the Plan. The Plan shall be construed
in accordance with the laws of the State of Georgia and applicable federal laws.
12.4 Legally Incompetent.
The Administrative Committee may in its discretion direct that
payment be made and the Trustee shall make payment on such direction, directly
to an incompetent or disabled person, whether incompetent or disabled because of
minority or mental or physical disability, or to the guardian of such person or
to the person having legal custody of such person, without further liability
with respect to or in the amount of such payment either on the part of the
Administrative Committee or the Trustee.
12.5 Heirs, Assigns and Personal Representatives.
The Plan shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties, including each
Participant and Joint Annuitant, present and future.
12.6 Unsecured Creditor Rights.
No Participant or Joint Annuitant shall have any right to, or
interest in, any assets of the Trust Fund other than that of a general unsecured
creditor of the Company.
12.7 Legal Action.
In any action or proceeding involving the assets held with
respect to the Plan or Trust Fund or the administration thereof, the Company,
the Administrative Committee and the Trustee shall be the only necessary parties
and no Participants, Employees, or former Employees of the Company, their
Beneficiaries or any other person having or claiming to have an interest in the
Plan shall be entitled to any notice of process; provided, that such notice as
is required by the Internal Revenue Service and the Department of Labor to be
given in connection with Plan amendments, termination, curtailment or other
activity shall be given in the manner and form and at the time so required. Any
final judgment which is not appealed or appealable that may be entered in any
such action or proceeding shall be binding and conclusive on the parties hereto,
the Administrative Committee and all persons having or claiming to have an
interest in the Plan.
12.8 Severability.
If any provisions of the Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced as if such
provisions had not been included.
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<PAGE>
12.9 Exclusive Benefit; Refund of Contributions.
No part of the Trust Fund shall be used for or diverted to
purposes other than the exclusive benefit of the Participants and their
Beneficiaries, subject, however, to the payment of all costs of maintaining and
administering the Plan and Trust.
12.10 Plan Expenses.
Expenses incurred with respect to administering the Plan shall be
paid by the Trustee from the Trust Fund (if a Trust Fund exists) only to the
extent such costs are not paid by the Company or to the extent the Company
requests that the Trustee reimburse it for its payment of such expenses.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officers and its corporate seal to be affixed
hereto, all as of the date first above written.
AGL RESOURCES INC.
By:
James W. Connally
Vice President Human Resources
AGL Resources Service Company -
As agent for AGL Resources Inc.
[CORPORATE SEAL]
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<PAGE>
AGL RESOURCES INC.
1998 VOLUNTARY EARLY RETIREMENT PLAN FOR OFFICERS
EARLY RETIREMENT AGREEMENT
Acknowledgment
I hereby acknowledge that I have received a copy of the Plan/Summary Plan
Description of the AGL Resources Inc.1998 Voluntary Early Retirement Plan for
Officers. I also acknowledge that I have received:
(1) a copy of this Early Retirement Agreement form; and
(2) a description of the class, unit or group of individuals generally
covered by the Plan, the eligibility factors of the Plan, the job titles and
ages of all individuals eligible for the Plan, and the ages of all individuals
in the same job classifications or organizational unit who are not eligible for
the Plan.
I acknowledge that I have read this Early Retirement Agreement, and I understand
its legal and binding effect. I have had the opportunity to seek, and I have
been advised to seek, legal counsel regarding my decision under the Plan and the
tax impact of any payments made to me under the Plan.
I also acknowledge that I have been given a 45-day period to consider my
acceptance of the terms and conditions of the Plan, and that I have been
informed that after acceptance, I may revoke my acceptance within the following
seven (7) days.
- --------------------------------------------------------------------------------
Effective Date
The effective date of my early retirement from AGL Resources Inc. (the
Company) is __________________________________, 1998.
- --------------------------------------------------------------------------------
Restrictive Covenants
As a condition to my acceptance to participate in the Plan, I agree to the
following restrictive covenants.
Covenant Not to Compete. I hereby covenant and agree that, during a period
beginning on my date of early retirement and ending three (3) years thereafter,
I will not directly or indirectly, on my own behalf or on behalf of any person
or entity, compete with the Company or any of its Affiliates by performing
activities or duties substantially similar or related to the functions,
activities or duties performed by me for the Company or any of its Affiliates
for any business entity engaged in direct competition with the Company or any of
its Affiliates. A business entity shall be considered to be "in direct
competition" with the Company or any of its Affiliates if it is engaged in
producing, manufacturing, distributing, marketing, selling, servicing or
repairing products similar to products produced, manufactured, distributed,
marketed, sold, serviced or repaired by the Company and/or any of its
Affiliates, including (but not limited to) any type of production and
distribution of any energy
Page 1
<PAGE>
source, whether by cultivation of natural resources or by technology. This
restriction shall apply only to a restricted territory within a 100-mile radius
of any locations, sites or facilities in which the Company and/or its Affiliates
maintains offices, operations or service contracts or has provided services
during the 12-month period immediately preceding my early retirement under the
Plan.
Nondisclosure and Confidentiality. I hereby acknowledge and agree that during
the term of my employment, I have had access to trade secrets and other
confidential information unique to the business of the Company and its
Affiliates and that the disclosure or unauthorized use of such trade secrets or
confidential information by me would injure the Company's business. Therefore, I
hereby agree that I will not, at any time during which I am receiving any
benefits under the Plan, use, reveal or divulge any trade secrets or any other
confidential information which, while not trade secrets or information unique to
the Company's business, is highly confidential and constitutes a valuable asset
of the Company by reason of the material investment of the Company's time and
money in the production of such information. I hereby agree that I will not use,
reveal or divulge any general confidential or customer-related information.
Nonsolicitation. Due to the my extensive knowledge of the specifics of the
Company's business, and its customers and clients, I hereby agree that during
the period I am receiving payments hereunder, I will not, without the prior
written consent of the Company, either directly or indirectly, on my own behalf
or in the service or on behalf of others, solicit, divert or appropriate, or
attempt to solicit, divert or appropriate, to any business that competes with
the Company's Business any person or entity who transacted business with the
Company during the year preceding the date of my early retirement from the
Company. This provision shall be specific to any and all persons or entities
with whom I have (i) had direct contact, (ii) been a party to marketing or sales
strategies with regard to, or (iii) been privy to marketing or sales strategies
with regard to such persons or entities. For purposes of this provision, the
Company's Business shall include any and all aspects of producing,
manufacturing, distributing, marketing, selling, servicing or repairing products
similar to products produced, manufactured, distributed, marketed, sold,
serviced or repaired by the Company and/or any of its Affiliates, including (but
not limited to) any type of production and distribution of any energy source,
whether by cultivation of natural resources or by technology.
I hereby agree that during the period I am receiving payments and benefits under
the Plan, I will not, either directly or indirectly, on my own behalf or in the
service or on behalf of others solicit, divert or hire away, or attempt to
solicit, divert or hire away to any business that competes with Company's
Business any person employed by the Company, or any person employed by the
Company at any time and for any period after the date which is one (1) year
prior to the date of my early retirement from the Company.
Penalty. I understand that if I violate any provision of these Restrictive
Covenants, the Company may immediately cease any and all payments and benefits
to me under the Plan.
- --------------------------------------------------------------------------------
General Release and Waiver
In consideration for the payments and benefits that I will receive under the
terms of the 1998 Voluntary Early Retirement Plan for Officers, I hereby agree,
for myself, my Joint Annuitant (if any), my Spouse, heirs, executor or
administrator, assigns, insurers, attorneys and other persons or entities
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<PAGE>
acting or purporting to act on my behalf, to irrevocably and unconditionally
release, acquit and forever discharge the Company, its Affiliates, subsidiaries,
directors, officers, employees, shareholders, partners, agents, representatives,
predecessors, successors, assigns, insurers, attorneys, benefit plans sponsored
by the Company or its Affiliates and said plans' fiduciaries, agents and
trustees, from any and all actions, cause of action, suits, claims, obligations,
liabilities, debts, demands, contentions, damages, judgments, levies and
executions of any kind, whether in law or in equity, known or unknown, which I
have, have had, or may in the future claim to have against the Company or its
Affiliates by reason of, arising out of, related to, or resulting from my
employment with the Company or its Affiliates, my decision to accept the terms
of this early retirement plan, and/or the termination of my employment. This
release specifically includes without limitation any claims arising in tort or
contract, any claim based on wrongful discharge, any claim based on breach of
contract, any claim arising under federal, state or local law prohibiting race,
sex, age, religion, national origin, handicap, disability or other forms of
discrimination, any claim arising under federal, state or local law concerning
employment practices, and any claim relating to compensation or benefits. This
specifically includes, without limitation, any claim which I have or have had
under Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, as amended, the Americans with Disabilities
Act, as amended, and the Employee Retirement Income Security Act of 1974, as
amended. This release and waiver does not relinquish any rights I may have under
any tax-qualified retirement plan sponsored or maintained by the Company or any
of its Affiliates.
- --------------------------------------------------------------------------------
Acceptance
[PLEASE PRINT]
Name _________________________________________________SS No.____________________
First MI Last
I hereby accept participation in the 1998 AGL Resources Inc. Voluntary Early
Retirement Plan and agree to be bound by its terms and conditions. I hereby
agree to the terms of the Restrictive Covenants and General Release and Waiver
contained in this Early Retirement Agreement.
____________________________ ______________________________________
Date Signature
- --------------------------------------------------------------------------------
Received by Company [for Company use only]
____________________________ __________________________________
Date Vice President, Human Resources
Page 3
<PAGE>
AGL RESOURCES INC.
1998 SEVERANCE PLAN FOR OFFICERS
THIS DOCUMENT CONSTITUTES THE OFFICIAL PLAN DOCUMENT
AS WELL AS THE SUMMARY PLAN DESCRIPTION OF THIS PLAN.
1998
<PAGE>
AGL RESOURCES INC.
1998 SEVERANCE PLAN FOR OFFICERS
TABLE OF CONTENTS
Page
I. DEFINITIONS..............................................................1
1.1 "Affiliate"..................................................1
1.2 "Base Pay"...................................................1
1.3 "Code".......................................................1
1.4 "Company"....................................................1
1.5 "ERISA"......................................................1
1.6 "Officer"....................................................1
1.7 "Participant"................................................1
1.8 "Plan".......................................................1
1.9 "Plan Administrator".........................................1
1.10 "Separation".................................................1
1.11 "Separation Benefits"........................................2
1.12 "Termination of Employment"..................................2
II. SEPARATION BENEFITS...................................................2
2.1 Notification of Separation...................................2
2.2 Eligibility for Separation Benefits..........................2
2.3 Amount and Duration of Separation Benefits...................2
(a) Salary Continuation.................................2
(b) Vacation............................................2
(c) Executive Allowance Fund............................2
(d) Automobile. .......................................2
(e) Employee Benefits...................................3
(i) Medical and Dental Insurance Coverage......3
(ii) Life Insurance.............................3
(iii) GRIP Life Insurance........................3
(iv) Accidental Death & Dismemberment Insurance.3
(v) Dependent Life Insurance...................3
(vi) Short-Term Disability and Long-Term
Disability Insurance.......................3
(vii) Flexible Benefits Plan.....................3
(viii) AGL Resources Inc. Retirement Plan.........3
(ix) AGL Resources Inc. Retirement Savings
Plus Plan and Nonqualified Savings Plan....4
(x) AGL Resources Inc. Leveraged Employee
Stock Ownership Plan.......................4
(xi) Survivor Support and Survivor Income Plan..4
(xii) Employee Assistance Plan...................4
(f) Outplacement Services...............................4
(g) Stock Options and Restricted Stock..................4
III. RESTRICTIVE COVENANTS AND GENERAL RELEASE.............................4
3.1 Consideration for Separation Benefits........................4
(a) Covenant Not to Compete.............................4
(b) Nondisclosure and Confidentiality...................5
(c) Nonsolicitation.....................................5
(d) General Release.....................................5
i
<PAGE>
3.2 Failure of Officer to Comply.................................6
IV. ADMINISTRATION OF PLAN................................................6
4.1 Control and Administration...................................6
4.2 Procedure for Review of Denial of Benefits...................6
V. ERISA RIGHTS..........................................................6
VI. GENERAL INFORMATION...................................................7
VII. MISCELLANEOUS.........................................................8
7.1 Amendment or Termination.....................................8
7.2 Miscellaneous................................................8
7.3 Validity.....................................................8
7.4 Plan Exclusive Source of Rights..............................8
ii
<PAGE>
AGL RESOURCES INC.
1998 SEVERANCE PLAN FOR OFFICERS
This 1998 SEVERANCE PLAN FOR OFFICERS is hereby established effective
as of May 1, 1998, pursuant to the authorization of the Board of Directors
of AGL RESOURCES INC., a Georgia corporation (the "Company").
WHEREAS, the Company is implementing certain initiatives during the
calendar year 1998 to effect a reorganization of management of the Company
in order to achieve greater efficiency and effectiveness; and
WHEREAS, as a result of the reorganization, a number of officers will
be displaced; and
WHEREAS, the Company desires to provide assistance to the officers who
are displaced as a result of this reorganization in the form of certain
severance benefits;
NOW, THEREFORE, the Company hereby adopts the following Plan:
I. DEFINITIONS
For purposes of this 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 "Affiliate" shall mean any company, partnership, organization or
other entity that is a member of the same controlled group of corporations
(within the meaning of Code Sections 414(b), (c), (m) or (o)) as the
Company.
1.2 "Base Pay" shall mean an Office's base pay per week at the time
of his Termination of Employment, excluding any incentive or bonus plan
payments.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Company" shall mean AGL Resources Inc.
1.5 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.6 "Officer" shall mean an elected corporate officer of the Company
or any of its Affiliates (including the President of Chattanooga Gas
Company, but specifically excluding David R. Jones).
1.7 "Participant" shall mean any Officer who receives notice of his
Separation from the Company and becomes eligible for the Separation
Benefits under the Plan.
1.8 "Plan" shall mean this AGL Resources Inc.1998 Severance Plan for
Officers, which consists of
this document and any written amendments thereto.
1
<PAGE>
1.9 "Plan Administrator" shall mean the Vice President of Human
Resources of the Company or any other officer as designated by the
Compan's President and Chief Executive Officer.
1.10 "Separation" shall mean the termination of an Officer's
employment by the Company as a result of: (a) the elimination of the
Officer's position; (b) a reorganization of the Company; or (c) changing
Company needs, which shall not include discharge for performance problems,
cause or similar reasons.
1.11 "Separation Benefits" shall mean the benefits to which an Officer
is entitled under Article II of this Plan upon his Termination of
Employment.
1.12 "Termination of Employment" shall mean the termination of an
Officer's employment with the Company due to a Separation. Such Termination
of Employment shall be deemed to have occurred on the last day worked.
II. SEPARATION BENEFITS
2.1 Notification of Separation. Upon his Termination of Employment due
to Separation, an Officer shall receive advance notice in writing of the
effective date of his Termination of Employment (the "date of Termination
of Employment").
2.2 Eligibility for Separation Benefits. An Officer whose employment
by the Company is terminated due to a Termination of Employment is eligible
for Separation Benefits unless the Officer voluntarily terminates
employment with the Company, declines substantially equivalent employment,
as determined by the Company's President and Chief Executive Officer, with
the Company or one of its Affiliates, or, in connection with the sale or
transfer of any portion of the Company's business, is offered or begins
employment with the buyer or transferee. In order to become eligible to
receive benefits under the Plan, the Officer must enter into a Separation
Agreement between himself and the Company, which shall include an agreement
to the terms of Article III hereof.
2.3 Amount and Duration of Separation Benefits. Unless otherwise
specified in his Separation Agreement, upon his Termination of Employment,
an eligible Officer shall be eligible to receive the following:
(a) Salary Continuation. The Officer's Base Pay shall continue to be
paid by the Company (or the employing Affiliate of the Company) for a
period of twelve (12) months following the date of Termination of
Employment. The salary continuation shall be paid on a regular payroll
basis. The Plan Administrator shall provide that payments shall be mailed
to the last known home mailing address of the affected Officers. Any
payment of salary continuation to an Officer shall be subject to normal
withholding rules for state, local and federal income taxes and Social
Security taxes. Amounts payable as salary continuation shall be reduced by
any amounts received by the Officer under workers' compensation insurance
or long-term disability insurance during the period in which the Officer
would be eligible for payment of salary continuation.
(b) Vacation. At the Officer's election, with the Company's approval,
the Officer shall receive payment for any accrued and unused vacation days
accrued through the date of the notice of his Termination of Employment in
the form of a single sum payment made as soon as practicable after the
Office's Termination of Employment. If such an election is not made or
approved, the Office's date of Termination of Employment shall be deemed
to be the date at the end of the period of accrued vacation.
(c) Executive Allowance Fund. The Officer shall be entitled to
continued use of the full amount of his Executive Allowance Fund account
for a twelve-month period following his Termination of
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Employment (with amounts prorated for any partial year). The Officer shall
be required to reimburse the Company for any expenses incurred by the
Officer in excess of his Executive Allowance for any year or partial year.
Any unused amount of the 1999 account shall be reimbursed to the Officer in
cash at the end of the twelve- month period.
(d) Automobile. Any Officer who is leasing an automobile through the
Company's Executive Allowance Fund as of his date of termination may elect
(i) to personally assume the lease payments as of the date of termination,
(ii) return the automobile to the Company for other Company use as of the
date of termination, or (iii) continue to pay the lease payments through
his Executive Allowance Fund account through the 12-month period of EAF
continuation and at the end thereof, either personally assume the lease
payments or return the automobile to the Company for other Company use.
(e) Employee Benefits. Unless otherwise stated below or in the
Officer's Separation Agreement, the Officer's participation in any employee
benefit plan or payroll policy of the Company or its Affiliates shall cease
as of the date of the Officer's Termination of Employment.
(i) Medical and Dental Insurance Coverage. The Officer shall be
eligible to continue to participate in the Company's medical and
dental insurance coverages during the period of salary continuation.
Upon the end of the Office's salary continuation period, he (and his
covered dependents) shall become eligible to elect continuation
coverage under the Company's medical and dental insurance plan for up
to six (6) months. During the period of salary continuation, the
Officer (and his covered dependents) shall pay the same premium for
coverages as active employees (and their covered dependents) pay for
such coverages; provided, that upon the termination of such period,
the Officer (and his covered dependents) shall be subject to the full
COBRA continuation coverage premiums for the following six months.
(The 12-month period of continuation coverage during salary
continuation at Company-subsidized premium rates shall offset the
normal 18 months of COBRA continuation coverage, so that only six
months of the COBRA continuation period will be available after salary
continuation ends.)
(ii) Life Insurance. The Office's elections with regard to the
amount of life insurance coverage shall continue during his period of
payment of salary continuation. Conversion privileges shall be
available to the Officer within a reasonable period of time (and
within the provisions of the life insurance contracts) after his
period of salary continuation ends.
(iii) GRIP Life Insurance. The Company shall pay a prorated
portion of the Officer's premium for coverage under the GRIP plan for
1999 based on the number of months during 1999 for which the Officer
receives salary continuation payments.
(iv) Accidental Death & Dismemberment Insurance. Coverage under
the Company's AD&D policies shall cease upon the Officer's date of
Termination of Employment.
(v) Dependent Life Insurance. Coverage on the life of any
dependent of the Officer under the Company's policies and plans shall
cease upon the date that the Officer's salary continuation payments
cease. Conversion privileges may apply if applicable under the
insurance contracts.
(vi) Short-Term Disability and Long-Term Disability Insurance.
Coverage under the Company's Short-Term Disability Plan and Long-Term
Disability Plan shall cease upon the Officer's date of Termination of
Employment.
(vii) Flexible Benefits Plan. Allocation of Flex Dollars to the
Participant or his accounts in the Flexible Benefits Plan shall cease
at the end of the payroll period following the date of
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Termination of Employment. Otherwise, participation in the Company's
Flexible Benefits Plan, including the Healthcare and Dependent Day
Care Reimbursement Plans, shall cease on the date that the Officer's
salary continuation payments cease. At that time, the Officer may
elect continuation coverage under the Healthcare Reimbursement Plan.
If continuation coverage is elected and the Officer continues to make
contributions, he may continue to submit claims for reimbursement of
eligible expenses incurred after his salary continuation period. The
Officer may continue to submit claims for reimbursement for eligible
dependent care expenses through the end of calendar year 1999, if he
contributed to the Dependent Day Care Reimbursement Account in 1999.
(viii) AGL Resources Inc. Retirement Plan. Upon the date of the
Officer's Termination of Employment, he ceases to accrue years of
service under the Retirement Plan. If the Officer was vested (i.e.,
had at least five years of service) at the time of his Termination of
Employment, he will be eligible to receive retirement payments under
the Retirement Plan upon reaching retirement age (as early as age 55).
If the Officer was less than age 55 at the date of his Termination of
Employment, for purposes of calculating his accrued benefit under the
Retirement Plan, he shall be considered to be age 55 as of that date.
The additional benefit (i.e., the difference between this calculation
(assuming age 55) and the actual calculation of accrued benefits under
the Retirement Plan) shall be paid from the general assets of the
Company. The amount of this additional benefit shall be paid to the
Officer in a single sum present value payment at the end of his salary
continuation period.
(ix) AGL Resources Inc. Retirement Savings Plus Plan and
Nonqualified Savings Plan. Upon the date of the Officer's Termination
of Employment, he shall cease to participate in the RSP. The Officer's
account in the RSP shall continue to be invested pursuant to his
direction until distribution. As soon as practicable after the
Officer's Termination of Employment, the Officer's total account in
the RSP will be payable to him. The Officer may continue to
participate in the NSP through the period of salary continuation.
(x) AGL Resources Inc. Leveraged Employee Stock Ownership Plan.
The Company does not anticipate making any further contributions to
the LESOP. The Officer shall be eligible to receive a distribution of
his account in the LESOP at the same time as all other accounts in the
LESOP are distributed.
(xi) Survivor Support and Survivor Income Plan. The Officer's
coverage under the Company's Survivor Support and Survivor Income Plan
shall cease as of his Termination of Employment.
(xii) Employee Assistance Plan. As a welfare benefit plan, the
EAP is subject to the Office's continuation of his coverage under the
EAP for a period of eighteen months following the date of Termination
of Employment. The Company will pay all premiums on behalf of the
Officer for the continuation coverage period.
(f) Outplacement Services. Each Officer who has a Termination of
Employment covered by this Plan shall be entitled to certain career
transition services, such as planning job search strategies,
evaluating personal strengths and weaknesses, resume preparation and
training in interview techniques, for a period of up to 12 months
through Right Associates.
(g) Stock Options and Restricted Stock. Unless the Company shall
determine otherwise and so specify in the Officer's Severance
Agreement, any outstanding stock options granted to the Officer shall
expire and become unexercisable as of the date of his Termination of
Employment. Any outstanding unvested shares of restricted stock
granted to the Officer shall lapse as of the date of his Termination
of Employment.
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III. RESTRICTIVE COVENANTS AND GENERAL RELEASE
3.1 Consideration for Separation Benefits.
In consideration for the payment of the amounts and benefits described
above, each Officer shall enter into a Separation Agreement in which he
shall agree to the terms of this Section.
(a) Covenant Not to Compete. Each Officer shall covenant and
agree that, during a period beginning on his date of Termination of
Employment and ending three (3) years thereafter, he will not directly
or indirectly, on his own behalf or on behalf of any person or entity,
compete with the Company or any Affiliate by performing activities or
duties substantially similar or related to the functions, activities
or duties performed by the Officer for the Company or any of its
Affiliates for any business entity engaged in direct competition with
the Company or any of its Affiliates. A business entity shall be
considered to be "in direct competition" with the Company or any of
its Affiliates if it is engaged in producing, manufacturing,
distributing, marketing, selling, servicing or repairing products
similar to products produced, manufactured, distributed, marketed,
sold, serviced or repaired by the Company and/or any of its
Affiliates, including (but not limited to) any type of production and
distribution of any energy source, whether by cultivation of natural
resources or by technology. This restriction shall apply only to a
restricted territory within a 100-mile radius of any locations, sites
or facilities in which the Company and/or its Affiliates maintains
offices, operations or service contracts or has provided services
during the 12-month period immediately preceding the Office's
Termination of Employment under the Plan.
(b) Nondisclosure and Confidentiality. Each Officer shall
acknowledge and agree that during the term of his employment, he has
had access to trade secrets and other confidential information unique
to the business of the Company and its Affiliates and that the
disclosure or unauthorized use of such trade secrets or confidential
information by the Officer would injure the Company's business.
Therefore, each Officer shall agree that he will not, at any time
during which he is receiving any benefits under the Plan, use, reveal
or divulge any trade secrets or any other confidential information
which, while not trade secrets or information unique to the Company's
business, is highly confidential and constitutes a valuable asset of
the Company by reason of the material investment of the Company's time
and money in the production of such information. Each Officer shall
agree that he will not use, reveal or divulge any general confidential
or customer-related information.
(c) Nonsolicitation. Due to the Office's extensive knowledge of
the specifics of the Company's business, and its customers and
clients, the Officer shall agree that during the period he is
receiving payments hereunder and for a period of one year (1) year
thereafter, he will not, without the prior written consent of the
Company, either directly or indirectly, on his own behalf or in the
service or on behalf of others, solicit, divert or appropriate, or
attempt to solicit, divert or appropriate, to any business that
competes with the Compan's Business any person or entity who
transacted business with the Company during the year preceding the
date of his Termination of Employment from the Company. This provision
shall be specific to any and all persons or entities with whom the
Officer has (i) had direct contact, (ii) been a party to marketing or
sales strategies with regard to, or (iii) been privy to marketing or
sales strategies with regard to such persons or entities. For purposes
of this provision, the Company's Business shall include any and all
aspects of producing, manufacturing, distributing, marketing, selling,
servicing or repairing products similar to products produced,
manufactured, distributed, marketed, sold, serviced or repaired by the
Company and/or any of its Affiliates, including (but not limited to)
any type of production and distribution of any energy source, whether
by cultivation of natural resources or by technology.
The Officer shall agree that during the period he is receiving
payments and benefits under the Plan and for a period of one (1) year
thereafter, he will not, either directly or indirectly, on his own behalf
or in the service or on behalf of others solicit, divert or hire away, or
attempt to solicit, divert or hire away to any business that competes with
Compan's Business any person employed by the Company, or any person
employed by the
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Company at any time and for any period after the date which is one (1) year
prior to the date of his Termination of Employment from the Company.
(d) General Release. Each Officer in the Plan shall agree, for
himself, his Joint Annuitant, his Spouse, heirs, executor or administrator,
assigns, insurers, attorneys and other persons or entities acting or
purporting to act on his behalf, to irrevocably and unconditionally
release, acquit and forever discharge the Company, its Affiliates,
subsidiaries, directors, officers, employees, shareholders, partners,
agents, representatives, predecessors, successors, assigns, insurers,
attorneys, benefit plans sponsored by the Company or its Affiliates and
said plans' fiduciaries, agents and trustees, from any and all actions,
cause of action, suits, claims, obligations, liabilities, debts, demands,
contentions, damages, judgments, levies and executions of any kind, whether
in law or in equity, known or unknown, which the Officer has, has had, or
may in the future claim to have against the Company or its Affiliates by
reason of, arising out of, related to, or resulting from Office's
employment with the Company or its Affiliates or the termination thereof.
This release specifically includes without limitation any claims arising in
tort or contract, any claim based on wrongful discharge, any claim based on
breach of contract, any claim arising under federal, state or local law
prohibiting race, sex, age, religion, national origin, handicap, disability
or other forms of discrimination, any claim arising under federal, state or
local law concerning employment practices, and any claim relating to
compensation or benefits. This specifically includes, without limitation,
any claim which any Officer has or has had under Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act,
as amended, the Americans with Disabilities Act, as amended, and the
Employee Retirement Income Security Act of 1974, as amended.
3.2 Failure of Officer to Comply.
If, for any reason, an Officer fails to agree to the provisions of
Section 3.1 above, or if any Officer fails to comply with the provisions of
the agreements made under Section 3.1 above, all payments and benefits
under the Plan provided to such Officer or any other person or entity on
his behalf under this Plan shall immediately cease.
IV. ADMINISTRATION OF PLAN
4.1 Control and Administration. This Plan shall be administered on
behalf of the Company by the Plan Administrator who shall have sole
authority for determining benefit entitlement under this Plan and for
interpreting the terms thereof. In addition, the Plan Administrator shall
have full discretion and authority to interpret this Plan and to make all
determinations required for the administration of Separation Benefits under
this Plan, including the issuance of appropriate notification with respect
to Termination of Employment and the amount of the Separation Benefits. The
decisions of the Plan Administrator shall be conclusive and binding on all
parties. The Plan Administrator shall be the "named fiduciary" of this Plan
for purposes of ERISA.
4.2 Procedure for Review of Denial of Benefits. Any former Officer who
believes he or she is entitled to a benefit hereunder which has not been
received may file a claim in writing with the Plan Administrator. The Plan
Administrator may require such claimant to submit additional documentation,
if necessary, in support of the initial claim. Any claimant whose claim to
any benefit hereunder has been denied in whole or in part shall receive a
notice from the Plan Administrator within 90 days of such filing setting
forth the specific reasons for such denial, specific references to this
Plan provisions on which the denial was based and an explanation of the
procedure for review of the denial. Such claimant, or his duly authorized
representative, may appeal to the Plan Administrator by written request for
review to be made within 60 days after receiving notice of the denial. The
request for review shall set forth all grounds on which it is based,
together with supporting facts and evidence which the claimant deems
pertinent, and the Plan Administrator shall give the claimant the
opportunity to review pertinent documents in preparing the request. The
Plan Administrator may require the claimant to submit such additional
facts, documents or other material as it
6
<PAGE>
deems necessary or advisable in making its review. Within 60 days after the
receipt of the request for review, the Plan Administrator shall communicate
to the claimant in writing its decision, and if the Plan Administrator
confirms the denial, in whole or in part, the communication shall set forth
the reasons for the decision and specific references to this Plan
provisions on which the decision is based.
V. ERISA RIGHTS
As an eligible Officer under the AGL Resources Inc. 1998 Severance
Plan for Officers, you are entitled to certain rights and protections under
the Employee Retirement Income Security Act of 1974 (ERISA), which provides
that all Plan participants shall be entitled to:
-- Examine without charge, at the Plan Administrator's office and at
other specified locations such as work-sites, all Plan documents and
copies of all documents filed by this Plan with the U.S. Department of
Labor, such as detailed annual reports and Plan descriptions.
-- Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
In addition to creating rights for Plan participants, ERISA imposes
obligations upon the people who are responsible for the operation of
employee benefit plans. The people who operate your Plan, called
"fiduciaries" of this Plan, have a duty to do so prudently and in the
interest of you and other Plan participants and beneficiaries. No one,
including your employer, may fire you or otherwise discriminate against you
in any way to prevent you from obtaining benefits or exercising your rights
under ERISA.
If your claim for a benefit is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the
right to have your claim reviewed and reconsidered.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan Administrator and do
not receive them within 30 days, you may file suit in a federal court. In
such a case, the court may require the Plan Administrator to provide the
materials and pay you up to $100 a day until you receive the materials,
unless the materials were not sent because of reasons beyond the control of
the Plan Administrator. If you have a claim for benefits which is denied or
ignored, in whole or in part, you may file suit in a state or federal
court. If you are discriminated against for asserting your rights, you may
seek assistance from the U.S. Department of Labor, or you may file suit in
a federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued
to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees (for example, if it finds that your claim is
frivolous).
If you have any questions about this Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
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<PAGE>
VI. GENERAL INFORMATION
Plan Sponsor: This Plan is sponsored by:
AGL Resources Inc.
303 Peachtree Street
Suite 400
Atlanta, GA 30308
(404) 584-4000
Employer I.D. Number: The Plan Sponsor's employer identification
number is 58-2210952.
Plan Year: This Plan is administered on a calendar year basis.
Type of Plan: This Plan is a severance benefit plan that is a
welfare benefit plan under ERISA.
Plan Number: This Plan's identification number is 521.
Plan Administrator: The Plan Administrator's name, address and telephone
number are as follows:
Vice President of Human Resources
AGL Resources Service Company
P.O. Box 4569
Atlanta, GA 30302
(404) 584-4706
Funding: Benefits are provided from the general assets of the
Company.
Agent for
Service of
Legal Process: Legal process may be served upon the Company at the
Plan Sponsor's address specified above.
VII. MISCELLANEOUS
7.1 Amendment or Termination. This Plan may be amended or terminated
in writing by the Board of Directors of the Company at any time; provided,
however, that no amendment or termination of this Plan shall reduce the
Separation Benefits of an Officer who had notice of a Termination of
Employment before such amendment or termination.
7.2 Miscellaneous. The validity, interpretation, construction and
performance of the obligations created under this Plan shall be governed by
ERISA, and to the extent not preempted by federal law, the laws of the
State of Georgia without regard to its conflicts of law principles. Any
payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law.
8
<PAGE>
7.3 Validity. The invalidity or unenforceability of any provision of
this Plan shall not affect the validity or enforceability of any other
provision of this Plan, which shall remain in full force and effect.
7.4 Plan Exclusive Source of Rights. This Plan contains all of the
terms and conditions with respect to the Separation Benefits provided
thereunder, and no Officer or former Officer may rely on any other
communication or representation of the Company or any officer, director,
employee or affiliate thereof, as creating any right or obligation
thereunder not expressly provided by this Plan.
IN WITNESS WHEREOF, the Company has caused this document to be
executed by a duly authorized officer as of the day and year first set
forth above.
AGL RESOURCES INC.
By:
James W. Connally
Vice President Human Resources
AGL Resources Service Company -
As agent for AGL Resources Inc.
[CORPORATE SEAL]
9
<PAGE>
EXHIBIT "A"
SEPARATION AGREEMENT
This Separation Agreement is hereby entered into between AGL Resources
Inc. (the "Company") and Robert L. Goocher (the "Employee"), to set forth
the provisions of the termination of the Officer's employment with the
Company under the terms and conditions of the Company's 1998 Severance Plan
for Officers:
Voluntary Agreement and Other Acknowledgments
The Officer acknowledges that:
As a condition of his receiving benefits under the 1998 Severance Plan
for Officers, he hereby agrees and acknowledges that (1) all documents,
records and information in any form which he has acquired or possessed
during his employment have been returned to the Company, and he has
retained no copies or given copies to any third party; and (2) he agrees
that he will not discuss the Company or his employment by the Company with
any third party in any manner which could constitute disparagement of the
Company, its officers, employees or agents.
The Officer has read this Separation Agreement, understands its legal and
binding effect, and knowingly and voluntarily executes this Separation
Agreement of his own free will.
No other promises or agreements of any kind have been made to or with the
Officer by any person or entity to cause him to sign this Separation
Agreement.
The Officer has had the opportunity to consult with, and the Company
has expressly advised him to seek, legal counsel prior to signing this
Separation Agreement.
The Officer has been given at least 45 days to consider the severance
benefits being offered under the terms of this Separation Agreement.
The Officer understands that payment of the separation benefits is
contingent upon his execution of this Separation Agreement and the
expiration of the seven-day revocation period following my execution of
this Separation Agreement without any revocation.
The Officer hereby agrees that for the period during which he is
receiving salary continuation under the Plan and the three-year period
thereafter, he will not, without the prior written consent of the Company,
either directly or indirectly, on his own behalf or in the service or on
behalf of others, solicit, divert or appropriate, or attempt to solicit,
divert or appropriate, to any business that competes with the Company any
person or entity who was employed by, was a customer of or otherwise
transacted business with the Company during the year preceding the
Officer's termination of employment.
The Officer hereby agrees that for the period during which he is
receiving salary continuation under the Plan and the one-year period
thereafter, he will not, without the prior written consent of the Company,
either directly or indirectly, on his own behalf or in the service or on
behalf of others, own, operate, manage, or provide services to any business
that competes with the Company or any of its Affiliates.
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<PAGE>
Information on 1998 Severance Plan for Officers
The Officer hereby certifies that on the date that he received a copy
of this Separation Agreement, he also received a copy of the 1998 Severance
Plan for Officers and the following information:
The class, unit, or group of individuals whose employment is being or has
been terminated as part of the 1998 Severance Plan for Officers, the
eligibility factors for this program, any time limits applicable to the
program; and
The job titles and ages of all individuals covered under the 1998
Severance Plan for Officers and the ages of all individuals in the same job
classification or organizational unit who are not covered.
Revocation of Separation Agreement
The Officer understands that, if he signs this Separation Agreement,
he may change my mind and revoke my acceptance within seven days after
signing it. I understand that, unless revoked by me during this seven-day
period, the release and waiver in the first section above will become
effective seven days after I sign the Separation Agreement.
In witness whereof, the undersigned has executed this agreement on the ____
day of ____________________, 1998.
Employee: Date:
Robert L. Goocher
Witness or
Company Representative: Date:
AGL RESOURCES INC.
By:
James W. Connally
Vice President Human Resources
AGL Resources Service Company -
As agent for AGL Resources Inc.
[CORPORATE SEAL]
11
AGL RESOURCES INC.
1998 SEVERANCE PLAN FOR OFFICERS
SEPARATION AGREEMENT
Acknowledgment
I hereby acknowledge that I have received a copy of the Plan/Summary
Plan Description of the AGL Resources Inc.1998 Severance Plan for Officers.
I acknowledge that I have read this Severance Agreement, and I
understand its legal and binding effect. I also acknowledge that I have
been given a 45-day period to consider my agreement to the terms and
conditions of the Plan, and that I have been informed that after
acceptance, I may revoke my acceptance within the following seven (7) days.
- --------------------------------------------------------------------------------
Effective Date
The effective date of my termination of employment with AGL Resources
Inc. (the Company) is _________________________________, 1998.
- --------------------------------------------------------------------------------
[THIS PART MAY BE ADDED IF NEGOTIATED]
Additional Benefits
In addition to the payments and benefits described in the Plan (or in
lieu thereof, if applicable), the Company shall provide the following
benefits to me:
[INSERT DESCRIPTION OF ANY ADDITIONAL BENEFITS]
[Retiree Medical Coverage. Upon my election to commence payment of
benefits under the AGL Resources Inc. Retirement Plan, the Company shall
provide me and my covered dependents coverage under the AGL Resources Inc.
Retiree Medical Insurance Plan (as it may exist at that time) for my
lifetime. This coverage shall be provided to me and my dependents under the
same terms and conditions (including premium arrangements) as are
applicable to any AGL Resources Inc. employee who retires at that time;
provided, however, that if, at that time, I have become eligible to
participate in any other employer's retiree medical insurance plan
(regardless of the actual benefits provided by such plan), then the AGL
Resources Inc. plan shall not be available to me or my dependents.]
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<PAGE>
[Stock Options and Restricted Stock. All outstanding stock options
that have been granted to me prior to my termination of employment shall
continue to vest and become exercisable according to any vesting schedule
contained therein. Once vested, all outstanding options may be exercised
through and until the full term of the option has elapsed. Any outstanding
incentive stock options shall convert to nonqualified stock options on the
date three months following my termination of employment, and shall
continue for their full terms as nonqualified stock options. Any restricted
stock awards which are unvested as of the effective date of my termination
of employment shall expire.]
[Life Insurance. Premiums for my basic term life insurance coverage
($50,000) under the Company's Group Life Insurance Plan will continue to be
paid by the Company for my lifetime. My coverage under the Compan's GRIP
Life Insurance Plan will remain in effect at its current level and premiums
for that coverage will continue to be paid by the Company until the policy
is paid in full in the year in which I reach age 65. I understand that the
Company-paid premiums on the GRIP Life Insurance Plan coverage will be
treated as taxable income to me.]
[Nonqualified Retirement Benefit. Attached is an Exhibit A indicating
the amount of my nonqualified retirement benefit provided under the Plan
attributable to the calculation as if I had reached age 55 as of the
effective date of my termination of employment. The Company agrees to pay
this nonqualified retirement benefit to me in the same form as I may choose
at the same time that I select the form of my benefits and commence
payments under the AGL Resources Inc. Retirement Plan.]
- --------------------------------------------------------------------------------
Restrictive Covenants
As a condition to my acceptance to participate in the Plan and the
receipt of the additional benefits granted hereunder, I agree to the
following restrictive covenants.
Covenant Not to Compete. I hereby covenant and agree that, during a
period beginning on my date of termination of employment and ending three
(3) years thereafter, I will not directly or indirectly, on my own behalf
or on behalf of any person or entity, compete with the Company or any of
its Affiliates by performing activities or duties substantially similar or
related to the functions, activities or duties performed by me for the
Company or any of its Affiliates for any business entity engaged in direct
competition with the Company or any of its Affiliates. A business entity
shall be considered to be "in direct competition" with the Company or any
of its Affiliates if it is engaged in producing, manufacturing,
distributing, marketing, selling, servicing or repairing products similar
to products produced, manufactured, distributed, marketed, sold, serviced
or repaired by the Company and/or any of its Affiliates, including (but not
limited to) any type of production and distribution of any energy source,
whether by cultivation of natural resources or by technology. This
restriction shall apply only to a restricted territory within a 100-mile
radius of any locations, sites or facilities in which the Company and/or
its Affiliates maintains offices, operations or service contracts or has
provided services during the 12-month period immediately preceding my
termination of employment.
Nondisclosure and Confidentiality. I hereby acknowledge and agree that
during the term of my employment, I have had access to trade secrets and
other confidential information unique to the business of the Company and
its Affiliates and that the disclosure or unauthorized use of such trade
secrets or
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<PAGE>
confidential information by me would injure the Company's business.
Therefore, I hereby agree that I will not, at any time during which I am
receiving any benefits under the Plan, use, reveal or divulge any trade
secrets or any other confidential information which, while not trade
secrets or information unique to the Company's business, is highly
confidential and constitutes a valuable asset of the Company by reason of
the material investment of the Company's time and money in the production
of such information. I hereby agree that I will not use, reveal or divulge
any general confidential or customer-related information.
Nonsolicitation. Due to the my extensive knowledge of the specifics of
the Company's business, and its customers and clients, I hereby agree that
during the period I am receiving payments hereunder and for a period of one
(1) year thereafter, I will not, without the prior written consent of the
Company, either directly or indirectly, on my own behalf or in the service
or on behalf of others, solicit, divert or appropriate, or attempt to
solicit, divert or appropriate, to any business that competes with the
Company's Business any person or entity who transacted business with the
Company during the year preceding the date of my termination of employment
from the Company. This provision shall be specific to any and all persons
or entities with whom I have (i) had direct contact, (ii) been a party to
marketing or sales strategies with regard to, or (iii) been privy to
marketing or sales strategies with regard to such persons or entities. For
purposes of this provision, the Company's Business shall include any and
all aspects of producing, manufacturing, distributing, marketing, selling,
servicing or repairing products similar to products produced, manufactured,
distributed, marketed, sold, serviced or repaired by the Company and/or any
of its Affiliates, including (but not limited to) any type of production
and distribution of any energy source, whether by cultivation of natural
resources or by technology.
I hereby agree that during the period I am receiving payments and
benefits under the Plan and for a period of one (1) year thereafter, I will
not, either directly or indirectly, on my own behalf or in the service or
on behalf of others solicit, divert or hire away, or attempt to solicit,
divert or hire away to any business that competes with Company's Business
any person employed by the Company, or any person employed by the Company
at any time and for any period after the date which is one (1) year prior
to the date of my termination of employment from the Company.
Penalty. I understand that if I violate any provision of these
Restrictive Covenants, the Company may immediately cease any and all
payments and benefits to me under the Plan.
- --------------------------------------------------------------------------------
General Release and Waiver
In consideration for the payments and benefits that I will receive
under the terms of the 1998 Severance Plan for Officers, I hereby agree,
for myself, my Joint Annuitant (if any), my Spouse, heirs, executor or
administrator, assigns, insurers, attorneys and other persons or entities
acting or purporting to act on my behalf, to irrevocably and
unconditionally release, acquit and forever discharge the Company, its
Affiliates, subsidiaries, directors, officers, employees, shareholders,
partners, agents, representatives, predecessors, successors, assigns,
insurers, attorneys, benefit plans sponsored by the Company or its
Affiliates and said plans' fiduciaries, agents and trustees, from any and
all actions, cause of action, suits, claims, obligations, liabilities,
debts, demands, contentions, damages, judgments, levies and executions of
any kind, whether in law or in equity, known or unknown, which I have, have
had, or may in the future claim to have against the Company or its
Affiliates by reason of, arising out of, related to, or resulting
Page 3
<PAGE>
from my employment with the Company or its Affiliates, my decision to
accept the terms of this Severance Plan, and/or the termination of my
employment. This release specifically includes without limitation any
claims arising in tort or contract, any claim based on wrongful discharge,
any claim based on breach of contract, any claim arising under federal,
state or local law prohibiting race, sex, age, religion, national origin,
handicap, disability or other forms of discrimination, any claim arising
under federal, state or local law concerning employment practices, and any
claim relating to compensation or benefits. This specifically includes,
without limitation, any claim which I have or have had under Title VII of
the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended, the Americans with Disabilities Act, as
amended, and the Employee Retirement Income Security Act of 1974, as
amended. This release and waiver does not relinquish any rights I may have
under any tax-qualified retirement plan sponsored or maintained by the
Company or any of its Affiliates.
- --------------------------------------------------------------------------------
Acceptance
Name: ___________________________ SS No. _____________________________
I hereby accept participation in the AGL Resources Inc. 1998 Severance
Plan for Officers and agree to be bound by its terms and conditions. I
hereby agree to the terms of the Restrictive Covenants and General Release
and Waiver contained in this Separation Agreement.
____________________________ _____________________________________________
Date Signature
- --------------------------------------------------------------------------------
Received by Company [for Company use only]
____________________________ _______________________________________
Date Vice President, Human Resources
Page 4
(Letterhead of Etowah LNG Company)
Etowah LNG Company, L.L.C.
Post Office Box 2563
Birmingham, Al 35202 2563
205 325 7114
Fax 205 327 2253
ETOWAH LNG COMPANY, LLC
April 20, 1998
Mr. Thomas H. Benson
Atlanta Gas Light Company
Post Office Box 4569
Atlanta, Georgia 30302-4569
Re: Etowah LNG Company, L.L.C.
Precedent Agreement
Dear Mr. Benson:
Enclosed for your records is one fully executed copy of the Precedent
Agreement dated April 16, 1998 between Etowah LNG Company, L.L.C. and Atlanta
Gas Light Company.
Very truly your,
s/s James D. Johnston
James D. Johnston
Attorney for Southern Natural
Gas Company, as Administrator of
Etowah LNG Company, L.L.C.
JDJ:bkl
Enclosures
cc: Jim Yardley
Devy Traylor
<PAGE>
PRECEDENT AGREEMENT
This Precedent Agreement is made and entered into as of the _____day
of April, 1998 by and between ETOWAH LNG COMPANY, L.L.C., a Delaware
limited liability company, herein called "Company," and Atlanta Gas Light
Company, a Georgia corporation, herein called "Customer," pursuant to the
following terms, conditions, and representations:
RECITALS:
A. Company is a Delaware limited liability company formed by Southern
Natural Gas Company, a Delaware corporation ("Southern"), and AGL Peaking
Services, Inc., a Georgia corporation ("AGL"). This Precedent Agreement may
refer to Southern and AGL individually as a "Member" and jointly as the
"Members."
B. Company will file an application with the Federal Energy Regulatory
Commission ("FERC") on or about April 15, 1998 for Certificates of Public
Convenience and Necessity authorizing Company to construct and operate
natural gas liquefaction, storage, and vaporization facilities, herein
called "Company's Facility," located in Polk County, Georgia and
interconnected with the pipeline systems of Southern and Atlanta Gas Light
Company; and
C. As provided below, this Precedent Agreement binds Company and
Customer to enter into an LNG-1 Service Agreement, substantially in the
form attached as Exhibit A hereto (as approved by the FERC), to effect firm
service through Company's Facility
1 of 14
<PAGE>
pursuant to the terms of this Precedent Agreement.
AGREEMENTS:
In consideration of the mutual covenants set forth in this agreement,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and Customer agree as follows:
1. Company shall seek the contractual and property rights, financing
arrangements, and regulatory approvals, including from the FERC all
necessary authorizations under the FERC's Regulations under the Natural Gas
Act (FERC Authorization), as may be necessary to construct Company's
Facility and to render service under Rate Schedule LNG-1. Company reserves
the right to file and prosecute applications for any required
authorizations, any supplement or amendment to an application, and any
court review as Company deems in its best interests. Customer agrees to use
its good faith efforts to cooperate with and support Company in obtaining
the necessary regulatory approvals. Customer's cooperation and support
includes, without limitation, (i) filing with the FERC in support of
Company's application for certificate authorization, and (ii) providing to
Company any information that the FERC requires relating to Customer's gas
supply arrangements or markets in a timely manner to enable Company to
respond within the time imposed by the FERC; provided, however, that
Company shall at Customer's request seek confidential treatment of such
information. Customer agrees that Company may provide copies of this
Precedent Agreement to Company's Members that have agreed not to disclose
this Precedent Agreement to others. Under no circumstances, however, may
2 of 14
<PAGE>
Company provide copies of this Precedent Agreement to any marketing
affiliate of the Members.
2. Upon receipt by Company of the FERC Authorization described in
Paragraph 1, Company shall transmit to Customer a copy of such
authorization. Within 20 days of receipt by Company of its FERC
Authorization, Company shall notify Customer of Company's decision to
accept or reject such authorization.
3. If Company accepts its FERC Authorization, then within 30 days
Company and Customer shall execute and deliver an LNG-1 Service Agreement
that provides for (i) a Maximum Daily Vaporization Quantity (MDVQ) of
200,000 Mcf per day, (ii) a Primary Delivery Point (subject to change by
mutual agreement and according to Company's FERC approved tariff) at the
interconnect between Company's Facility and Customer's Facility, and (iii)
a primary term of 20 years from the in-service date, subject to Paragraph
8(a); provided, however, that Company's obligation to provide service
pursuant to the executed Service Agreement remains subject to Company's
receipt and acceptance of any remaining necessary contractual and property
rights, financing arrangements, and regulatory approvals, in form and
substance satisfactory to Company. Any other provision of this Paragraph 3
to the contrary notwithstanding, Customer and Company agree that the
obligations, agreements, and representations in this Precedent Agreement
remain subject to the following (PSC-Out): if Customer (i) files a bona
fide Gas Supply Plan, which includes among other things the service for
which Customer has subscribed from Company (Storage Service), with the
Georgia Public Service Commission (PSC) on or
3 of 14
<PAGE>
before August 1, 1998: (ii) pursues, on a best-efforts basis, approval of
the Gas Supply Plan; and (iii) has received from the PSC, by September 15,
1998, order(s) rejecting, disapproving, or excluding those portions of the
Gas Supply Plan that specifically relate to the Storage Service, then
Customer may terminate this Precedent Agreement if Company receives a
written notice of termination, enclosing a copy of the applicable order(s)
from the PSC, by September 30, 1998; provided, however, that if Customer
does not file the Gas Supply Plan with the PSC on or before August 1, 1998
(or if Company has not received the specified notice of termination by
September 30, 1998),then this PSC-Out shall become null and void and have
no effect, and the other provisions of this Precedent Agreement shall
continue with full force and effect. If Customer terminates this Precedent
Agreement pursuant to this PSC-Out, then such termination relieves Customer
and Company of further liability; provided, however, that Customer agrees
to reimburse Company for all actual costs, including without limitation (i)
expenses incurred in the design and engineering of the Facility, (ii)
expenses incurred in preparing for regulatory approvals, (iii) the cost of
all land and materials, and (iv) an after-tax carrying charge of 7% on all
such actual costs. Upon reimbursement, Company agrees to convey its
interest in any land acquired for the Facility to Customer or to another
entity that Customer designates.
4. Company will file for a maximum monthly Reservation Charge not to
exceed $5 per Dth of MDVQ under Rate Schedule LNG-1. Customer's obligation
to pay the maximum monthly Reservation Charge and other charges, and
Company's obligation to
4 of 14
<PAGE>
perform according to its tariff, as approved by the FERC, shall commence as
soon as the Company's Facility has been constructed and is ready for
liquefaction and storage, as determined by Company in its sole opinion.
Company agrees that except for adjustments to its fuel retention percentage
and any industry-wide surcharges imposed by the FERC, Company shall not
file a general rate increase pursuant to Section 4 of the Natural Gas Act
(NGA) before the end of the three-year period beginning on Company's
in-service date, as described in Paragraph 8(a); provided, however, that
Company may, upon written notice to Customer, terminate this rate
moratorium and file a general rate change pursuant to Section 4 of the NGA
if, a result of legislation or action of the FERC (or other government
agency having jurisdiction), Company is required to change the cost
allocation, rate design, services, or billing determinants in a manner that
materially and adversely affects Company's ability to recover its cost of
service.
5. Nothing in this Precedent Agreement shall be deemed or construed to
limit either (i) Company's ability to file with FERC to increase its
maximum lawful rates by the full amount of the actual initial capital costs
of the Company's Facility, or (ii) Customer's right to oppose such filing.
6. No modification of the terms and provisions of this Precedent
Agreement shall be made except by the execution of written agreements by
Company and Customer.
5 of 14
<PAGE>
7. Notices under this Precedent Agreement shall be sent to:
Company: Etowah LNG Company, L.L.C.
Post Office Box 2563
Birmingham, Alabama 35202-2563
Attention: James C. Yardley
Phone: 205/325-3834
Fax: 205/325-3787
Customer: Atlanta Gas Light Company
Post Office Box 4569
Atlanta, GA 30302-4569
Attention: Thomas H. Benson
Phone: 404/584-3808
Fax: 404/584-3932
Either party may change its address by written notice to that effect to the
other party. Notices given hereunder shall be deemed to have been
effectively given upon the third day following the day when the notice
properly addressed and postpaid has been placed in the United States mail,
or upon confirmation of receipt if delivered by facsimile or other similar
means, or in accordance with the dates and time provided for overnight
delivery service.
8. Customer and Company acknowledge and agree to the following:
(a) After Company and Customer execute and deliver the LNG-1
Service Agreement, and after Company receives and accepts
all necessary contractual and property rights, financing
arrangements, and regulatory approvals, in form and
substance satisfactory to Company, Company shall proceed
with the construction of Company's Facility so as to begin
liquefaction and storage for Customer by a proposed
in-service
6 of 14
<PAGE>
date of March 1, 2001. If Company is unable to complete the
construction and place the Company's Facility into operation
by the proposed in-service date despite its exercise of due
diligence, then Company shall continue to proceed with due
diligence to complete such construction and place Company's
Facility in-service at the earliest practicable date.
Company shall not be liable in any manner to Customer, nor
shall this Precedent Agreement or the LNG-1 Service
Agreement be subject to termination, if, despite Company's
exercise of due diligence, construction is not completed or
service is not commenced by the proposed in-service date.
(b) Company is a Delaware limited liability company.
(c) Customer shall have no recourse against any Member of
Company with respect to Company's obligations under this
Precedent Agreement or with respect to any agreements
executed pursuant to the terms hereof, and its sole recourse
shall be against the assets of Company, irrespective of any
failure to comply with applicable law or any provision of
this Precedent Agreement.
(d) No claim shall be made against any Member of Company under
or in connection with this Precedent Agreement or any
agreements executed pursuant to the terms hereof.
(e) Customer shall have no right of subrogation to any claim of
Company
7 of 14
<PAGE>
for any Capital Contributions from any Member of Company.
(f) The representations in (b) through (e) above are made
expressly for the benefit of the Members of Company.
9. If Company has not received and accepted the FERC Authorization on
or before January 31, 2000, then either Company or Customer may, at any
time thereafter until Company receives and accepts the FERC Authorization,
terminate this Precedent Agreement by giving 30 days' advance written
notice to the other; provided, however, that the termination has no effect
if Company receives and accepts the FERC Authorization within the 30-day
notice period. Termination shall be without liability for damages, costs,
or expenses of either Company or Customer to each other or others, or to
shareholders, directors, officers, employees, agents, or consultants of
Company or Customer.
10. THIS PRECEDENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT REFERENCE TO
RULES FOR CONFLICTS OF LAW.
11.(a) Any company which shall succeed by purchase, merger, or
consolidation to the properties substantially as an entirety,
of either Company or Customer, as the case may be, shall be
entitled to the rights and shall be subject to the obligations
of its predecessor in title under this Precedent Agreement.
(b) Either party may, without the consent of the other party,
assign any of its rights hereunder to an entity with which it
is affiliated, but the
8 of 14
<PAGE>
assignor shall not be relieved of its obligations under this
Precedent Agreement. In the event of such assignment, the
assignor shall provide written notice of such assignment to
the other party to this Precedent Agreement as soon as
practicable after such assignment.
(c) In addition to the rights provided in Paragraph 11(b), if
Customer assigns any of its rights hereunder to an entity with
which it is affiliated and, prior to such assignment, obtains
the written consent thereto of Company, such consent not to be
unreasonably withheld, then Customer shall be relieved of its
obligations hereunder to the extent so assigned prospectively
from the effective date of the assignment (except for the
obligations to pay monies related to periods prior to the
assignment which become due before or after such date).
(d) Except as provided in Paragraph 11(b) hereof, no assignment of
this Precedent Agreement or any of the rights or obligations
hereunder shall be made unless there first shall have been
obtained the written consent thereto of Customer in the event
of an assignment by Company, or the written consent thereto of
Company in the event of an assignment by Customer, such
consent not to be unreasonably withheld.
(e) It is agreed, however, that the restrictions on assignment
contained in Paragraphs 11(a) through (d) above shall not in
any way present either party to this Precedent Agreement from
pledging or mortgaging its
9 of 14
<PAGE>
rights hereunder as security for its indebtedness.
(f) For purposes of this Precedent Agreement, "Affiliate" means,
with respect to any relevant entity, any other entity that
directly or indirectly controls, is controlled by, or is under
common control with, such relevant entity in question. As used
herein, the term "control" (including its derivatives and
similar terms) means owning or holding, directly or
indirectly, the power (i) to vote 10% or more of the Voting
Stock of any such relevant entity, or (ii) to direct or cause
the direction of the management and policies of any such
relevant entity. "Voting Stock" means capital stock issued by
a corporation, or equivalent interests in any other entity,
the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors
(or entity with management authority performing similar
functions) of such entity.
IN WITNESS WHEREOF, the parties hereto have caused this Precedent
Agreement to be duly executed by their proper officers thereunto duly
authorized as of the date first hereinabove written.
_____________________________ ETOWAH LNG COMPANY, L.L.C.
By: s/s Thomas H. Benson By: s/s Jim C. Yardley
Title: President Title:
10 of 14
<PAGE>
Date: 4/16/98 Date: 4/16/98
11 of 14
<PAGE>
EXHIBIT A
Precedent Agreement - LNG-1
(------------------)
FORM OF SERVICE AGREEMENT
(For Use Under Rate Schedule LNG-1)
THIS AGREEMENT entered into this ______day of ____________by and between
Etowah LNG Company, L.L.C (Etowah) and
_______________________________(Customer).
W I TNE S S E T H:
WHEREAS, Etowah has undertaken to provide services of liquefaction,
storage, and vaporization of natural gas under Part 284 of the Federal Energy
Regulatory Commission's (Commission) Regulations; and
WHEREAS, Customer has requested service pursuant to Rate Schedule LNG-1
and has submitted to Etowah a request for such service in compliance with
Section 2 of Rate Schedule LNG-1; and
WHEREAS, Etowah agrees to render service to Customer pursuant to the
provisions of Rate Schedule LNG- 1, this Agreement, and Commission's
Regulations.
NOW, THEREFORE, Etowah and Customer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of both this agreement and Etowah's
Rate Schedule LNG-1, as amended from time to time, Etowah agrees to liquefy
natural gas, delivered to Etowah by Customer pursuant to Article II; store such
gas in liquefied form; and vaporize and deliver such gas to Customer or for
Customer's account, as follows:
To withdraw from storage and vaporize the gas stored in liquefied form
by Etowah for Customer's account up to a maximum quantity of _____Mcf, which
quantity shall be Customer's Maximum Daily Vaporization Quantity (MDVQ).
To liquefy natural gas for Customer up to a maximum quantity on any day
of 5% of MDVQ, which equals Customer's Maximum Daily Liquefaction Quantity
(MDLQ).
To store in liquefied form for Customer's account up to a total
quantity of 833% of MDVQ, which equals Customer's Maximum Storage Capacity
(MSC).
ARTICLE II
POINT OF RECEIPT AND DELIVERY
1. Point of Receipt
Subject to the terms and provisions of both this Agreement
and Etowah's Rate Schedule LNG-1 and the General Terms and Conditions
thereto, Etowah agrees to accept at the Receipt Point on any day a
quantity of gas up to Customer's MDLQ.
<PAGE>
2. Point of Delivery
Subject to the terms and provision of both this Agreement
and Etowah's Rate Schedule LNG-1 and the General Terms and Conditions
thereto, Etowah agrees to deliver to Customer at the Delivery Points
described in Exhibit A and Exhibit A-1 to this Agreement. Etowah's
obligation to deliver on a firm basis is limited to the Delivery Point
specified on Exhibit A and the MDVQ stated for that delivery point.
All quantities delivered in excess of MDVQ equal Authorized Excess
Vaporization, as defined in Section 6.1 (d) of Rate Schedule LNG-1.
ARTICLE III
TERM OF AGREEMENT
This agreement shall be effective as of _________________and shall
remain in force and effect until __________, and the year to year thereafter,
subject to termination by either party upon two (2) years prior written notice
to the other.
ARTICLE IV
RATE SCHEDULE AND PRICE
1. Customer shall pay Etowah for service rendered hereunder in
accordance with Etowah's Rate Schedule LNG-1 and the applicable provisions of
the General Terms and Conditions of Etowah's FERC Gas Tariff as filed with the
Commission, and as the same may be amended or superseded from time to time. Such
rate schedule and General Terms and Conditions are by this reference made a part
hereof.
2. Etowah shall have the unilateral right to propose, file , and make
effective with the Commission, or other regulatory authority having
jurisdiction, changes and revision to the rates and rate design proposed
pursuant to Section 4 of the Natural Gas Act, or to propose, file, and make
effective superseding rates or rate schedules, for the purposes of changing the
rates, charges, rate design, terms and conditions of service and other
provisions thereof effective as to Customer; provided, however, that the (i)
firm character of service, (ii) term of agreement (as set forth in Article III
above), (iii) quantities, and (iv) points of receipt and delivery shall not be
subject to unilateral change under this paragraph. Customer shall have the right
to file with the Commission or other regulatory authority in opposition to any
such filings or proposals by Etowah. This agreement does not alter pre-existing
rights under Section 5 if the Natural Gas Act.
ARTTICLE V
MISCELLANEOUS
1. The subject headings of the Articles of this agreement are inserted
for the purpose of convenient reference and are not intended to be a part of
this agreement nor to be considered in the interpretation of the same.
2. This agreement supersedes and cancels as of the effective date
hereof the following contracts between the parties hereto;
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. No waiver by either party of any one or more defaults by the other
in the performance of any provisions of this agreement shall operate or be
construed as a waiver of any future default or defaults, whether of a like or
different character.
13 of 14
<PAGE>
4. This agreement shall be interpreted, performed, and enforced in
accordance with the laws of the State of Georgia, without reference to rules for
conflicts of law.
5. This agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns.
6. Notices to either party shall be in writing and shall be considered
as duly delivered when mailed to the other party at the following address:
(a) If to Etowah:
Etowah LNG Company, L.L.C.
Post Office Box 2563
Birmingham, Alabama. 35203
(b) If to Customer:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Such addresses may be changed from time to time by mailing appropriate notice
thereof to the other party.
7. Customer acknowledges and agrees that (a) Company is a Delaware
limited liability company; (b) Customer shall have no recourse against any
member of Company with respect to Company's obligations under this agreement and
its sole recourse shall be against the assets of Company, irrespective of any
failure to comply with applicable law or any provision of this Agreement; (c) no
claim shall be made against any member of Company under or in connection with
this Agreement; (d) Customer shall have no right of subrogation to any claim of
Company for any Capital Contribution from any member of Company; and (e) this
representation is made expressly for the benefit of the members in Company.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be signed and sealed by their respective officers or representatives thereunto
duly authorized on any day and year above written.
ETOWAH LNG COMPANY, L.L.C.
By______________________________
[L.S]
CUSTOMER
By______________________________
[L.S]
14 of 14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0001004155
<NAME> AGL RESOURCES INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,446
<OTHER-PROPERTY-AND-INVEST> 85
<TOTAL-CURRENT-ASSETS> 264
<TOTAL-DEFERRED-CHARGES> 140
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,935
<COMMON> 286
<CAPITAL-SURPLUS-PAID-IN> 191
<RETAINED-EARNINGS> 179
<TOTAL-COMMON-STOCKHOLDERS-EQ> 656
74
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<LONG-TERM-DEBT-NET> 660
<SHORT-TERM-NOTES> 10
<LONG-TERM-NOTES-PAYABLE> 0
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0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 535
<TOT-CAPITALIZATION-AND-LIAB> 1,935
<GROSS-OPERATING-REVENUE> 1,133
<INCOME-TAX-EXPENSE> 37
<OTHER-OPERATING-EXPENSES> 184
<TOTAL-OPERATING-EXPENSES> 988
<OPERATING-INCOME-LOSS> 145
<OTHER-INCOME-NET> 8
<INCOME-BEFORE-INTEREST-EXPEN> 153
<TOTAL-INTEREST-EXPENSE> 41
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<EARNINGS-AVAILABLE-FOR-COMM> 70
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