Exhibit 10.1

 
 

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GOLDMAN SACHS BANK USA
200 West Street
New York, New York  10282-2198

 
PERSONAL AND CONFIDENTIAL
 
December 6, 2010
 
AGL Capital Corporation
Ten Peachtree Place NE
Atlanta Georgia  30309
 
Attention:  Andrew W. Evans
 
Commitment Letter
 
Ladies and Gentlemen:
 
Goldman Sachs Bank USA (“GS Bank”) is pleased to confirm the arrangements under
which (i) GS Bank is exclusively authorized by AGL Capital Corporation, a
Nevada corporation (the “Company” or “you”) to act as sole lead arranger and
sole bookrunner in connection with, (ii) GS Bank is exclusively authorized by
the Company to act as administrative agent in connection with, and (iii) GS Bank
commits to provide financing for, certain transactions described herein, in each
case on the terms and subject to the conditions set forth in this letter and the
attached Annexes A, B and C hereto (collectively, the “Commitment Letter”).
 
You have informed us that AGL Resources Inc., a Georgia corporation (“HoldCo”),
of which the Company is a direct wholly-owned financing subsidiary, intends to
acquire through a newly formed, direct wholly-owned domestic subsidiary (the
“Acquisition”) all of the outstanding common stock of Nicor Inc. (“Nicor”,
together with its subsidiaries, the “Acquired Business”). You have also informed
us that the Acquisition will be financed from the following sources:
 
·  
the issuance by the Borrower (as defined in Annex B) of $1,050.0 million of debt
securities to fund, in part, the Acquisition Cash Consideration (the “Notes”)
pursuant to a registered public offering or Rule 144A or other private placement
(the “Notes Offering”) or, in the event some or all of the Notes are unable to
be issued at the time the Acquisition is consummated, borrowings by the Borrower
of unsecured senior increasing rate bridge loans (the “Bridge Loans”) under a
364-day senior bridge term loan facility in an aggregate principal amount of
$1,050.0 million (the “Bridge Facility”) having the terms set forth on Annex B;
and

 
·  
the Acquisition Equity Consideration (as defined in Annex B);

 
provided that the amount of our commitments available to the Company under the
Bridge Facility shall automatically be reduced on a dollar-for-dollar basis by,
and on the date of receipt of, the net proceeds to HoldCo or any of its
subsidiaries (but, in the case of proceeds received by a regulated subsidiary of
HoldCo, solely to the extent such proceeds are distributed to HoldCo, the
Company or another unregulated subsidiary of HoldCo (and, in the case of joint
ventures with unaffiliated third parties, to the extent of HoldCo’s direct or
indirect equity interest therein)) from:
 
 
 

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(1)  
(A) any direct or indirect public offering or private placement of any equity
securities or (B) any direct or indirect public offering or private placement of
debt securities or other incurrence of debt (whether funded or unfunded) or bank
borrowings, including, in the case of each of clause (A) and (B), any Permanent
Financing (as defined in the Fee Letter) but excluding (i) indebtedness set
forth in the “Debt Schedule” delivered to GS Bank prior to the date hereof and
indicated as “Exclusions to Commitment Reductions and Mandatory Prepayment”,
(ii) the refinancing of certain commercial paper or Permitted Letters of Credit
(as defined below) of HoldCo and its subsidiaries with new commercial paper or
Permitted Letters of Credit or, with the prior written consent of GS Bank, other
indebtedness satisfactory to GS Bank, (iii) any Permitted Borrower Debt (as
defined in Annex B), (iv) any permitted intercompany investments and (v) (1) any
issuances of equity pursuant to employee stock plans and (2) the Acquisition
Equity Consideration; and

 
(2)  
any non-ordinary course asset sale or other non-ordinary course disposition
(including proceeds from the receipt of insurance or condemnation proceeds) of
properties or assets of HoldCo or its subsidiaries (in each case, subject to
certain customary exceptions to be agreed including a reinvestment right within
six (6) months after the receipt by HoldCo or its applicable subsidiary in
long-term capital assets used or useful in the business of HoldCo or such
subsidiary) that, individually or in the aggregate following the date hereof,
generate net proceeds in excess of $25.0 million (such threshold amount, the
“Asset Sale Proceeds Threshold”);;

 
provided, further that HoldCo and its subsidiaries shall use commercially
reasonable efforts to cause any such proceeds described in the foregoing clauses
(1) and (2) (but, in the case of clause (2), only such proceeds (without giving
effect to the Asset Sale Proceeds Threshold) that are in excess of an aggregate
principal amount of $100.0 million following the date hereof) to be distributed
as soon as practicable to HoldCo, the Company or another wholly-owned
unregulated subsidiary of HoldCo; provided further that in the event that one or
more of the regulatory approvals described in paragraph 5 of Annex C to this
Commitment Letter requires any asset sale or other disposition as a condition to
such approval, the use of “commercially reasonable efforts” required pursuant to
the foregoing proviso shall include HoldCo and its subsidiaries requesting the
approval of such regulator to distribute the proceeds of such asset sale or
other disposition practicable to HoldCo, the Company or another wholly-owned
unregulated subsidiary of HoldCo as soon as practicable.
 
“Permitted Letters of Credit” means letters of credit or letter of credit
facilities of any of HoldCo and its subsidiaries not exceeding $25,000,000 in
the aggregate.
 
1.  
Commitments; Titles and Roles.

 
GS Bank is pleased to confirm its agreement to act, and you hereby appoint GS
Bank to act, as sole lead arranger and sole bookrunner in connection with the
Bridge Facility. GS Bank is pleased to confirm its agreement to act, and you
hereby appoint GS Bank to act, as administrative agent for the Bridge Facility.
GS Bank is pleased to commit to provide the full $1,050.0 million of the Bridge
Facility on the terms and subject to the conditions contained in this Commitment
Letter and the Fee Letter (referred to below). You further agree that no other
titles will be awarded and no compensation (other than that expressly
contemplated by this Commitment Letter and the Fee Letter referred to below)
will be paid in connection with the Bridge Facility unless you and we shall so
agree; provided that GS Bank may appoint up to four financial institutions
identified by us and reasonably acceptable to you to act as syndication agent or
documentation agent (or co-agents as applicable) in connection with the Bridge
Facility.
 
 
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Our fees for our commitments and for services related to the Bridge Facility are
set forth in a separate fee letter (the “Fee Letter”) entered into by the
Company and GS Bank on the date hereof.  For purposes of this Commitment Letter,
“Goldman Sachs” means GS Bank and any of its affiliates that may provide
services or perform obligations under this Commitment Letter or the Fee Letter.
 
2.  
Conditions Precedent.

 
Goldman Sachs’ commitments and agreements hereunder are subject solely to (i)
except (A) as disclosed in the Acquired Business SEC Documents (as defined
below) filed with the SEC since January 1, 2008 but prior to the date hereof
(excluding any risk factor disclosures contained under the heading “Risk
Factors”, any disclosure of risk included in any “forward-looking statements”
disclaimer or any other statements that are similarly predictive or
forward-looking in nature) and (B) as disclosed in the Company Disclosure Letter
(as defined in the Acquisition Agreement as in effect on the date hereof), there
not having occurred, since December 31, 2009 (the date of the most recent annual
audited financial statements for the Acquired Business furnished by the Company
to Goldman Sachs), any change, event or development which has had, or would
reasonably be expected to have, an Acquired Business Material Adverse Effect (as
defined below), (ii) except (A) as disclosed in the Company SEC Documents (as
defined below) filed with the SEC since January 1, 2008 but prior to the date
hereof (excluding any risk factor disclosures contained under the heading “Risk
Factors”, any disclosure of risk included in any “forward-looking statements”
disclaimer or any other statements that are similarly predictive or
forward-looking in nature) and (B) as disclosed in the Parent Disclosure Letter
(as defined in the Acquisition Agreement as in effect on the date hereof), there
not having occurred, since December 31, 2009 (the date of the most recent annual
audited financial statements for HoldCo furnished by the Company to Goldman
Sachs), any change, event or development which has had, or would reasonably be
expected to have, a Company Material Adverse Effect, (iii) execution and
delivery of definitive loan documents relating to the Bridge Facility including,
without limitation, a bridge loan agreement and a guarantee from
HoldCo (collectively, the “Loan Documents”), which Loan Documents shall be on
terms consistent with the terms set forth on Annex B of this Commitment Letter
and otherwise mutually acceptable to the parties hereto, (iv) the accuracy of
the Acquisition Agreement Representations and the Specified Representations and
(v) as set forth on Annex C.
 
“Company SEC Documents” means all annual, quarterly and current reports on Form
10-K, Form 10-Q and Form 8-K, respectively, required to be filed with or
furnished by HoldCo to the SEC pursuant to the Securities Act of 1933 or the
Exchange Act of 1934, as the case may be, together with all certifications
required pursuant to the Sarbanes-Oxley Act of 2002 (together with any
supplements, modifications and amendments thereto since the time of filing
through the date hereof).
 
 “Acquired Business SEC Documents” means all annual, quarterly and current
reports on Form 10-K, Form 10-Q and Form 8-K, respectively, required to be filed
with or furnished by the Acquired Business to the SEC pursuant to the Securities
Act of 1933 or the Exchange Act of 1934, as the case may be, together with all
certifications required pursuant to the Sarbanes-Oxley Act of 2002 (together
with any supplements, modifications and amendments thereto since the time of
filing through the date hereof).
 
“Company Material Adverse Effect” means any change, event or development that is
materially adverse to the business, financial condition or results of operations
of HoldCo and its subsidiaries, taken as a whole, except to the extent that such
change, event or development results from (and for the avoidance of doubt, any
such change, event or development, to the extent resulting from the following,
shall not be taken into account in determining whether there has been a Company
Material Adverse Effect): (a) general economic or political, regulatory,
financial, credit or capital market conditions, including interest rates or
exchange rates, or any changes therein; (b) any change affecting any of the
industries in which HoldCo and its subsidiaries operate; (c) any change
attributable to the execution of the Acquisition Agreement or the announcement
or pendency of the transactions contemplated hereby, including any litigation
resulting therefrom; (d) actions taken pursuant to the Acquisition Agreement or
at the request of the Acquired Business, in each case, with the consent of the
Arranger; (e) acts of war (whether or not declared), the commencement,
continuation or escalation of a war, acts of armed hostility, sabotage or
terrorism or other international or national calamity; (f) any change in the
market price for commodities; (g) any hurricane, earthquake, flood or other
natural disasters or acts of God; (h) any change resulting from weather
conditions or customer use patterns; (i) any adoptions, proposals,
interpretations or changes in laws after the date hereof or any interpretation
thereof by any governmental entity; (j) changes in GAAP after the date hereof or
any interpretations thereof by any governmental entity; (k) any failure by
HoldCo to meet any estimates of revenues, earnings, projections or other
economic performance, whether published, internally prepared or provided to the
Acquired Business and its subsidiaries and each of their respective advisors,
employees, officers, agents and other representatives; or (l) any change in the
price or trading volume of the common stock of HoldCo on the NYSE or any other
market in which such securities are quoted for purchase and sale or any
suspension of trading in securities generally on any securities exchange on
which any securities of HoldCo trade; provided, that with respect to clauses
(a), (b), (e), (f), (g), (h) and (i), such changes and matters do not have a
material and disproportionate adverse impact on HoldCo and its subsidiaries,
taken as a whole, as compared to the adverse impact such changes have generally
on other persons operating in comparable industries (in the case of clauses (a),
(b), (e), (f), (g), (h) and (i)) and/or in the comparable geographic region (in
the case of clauses (e), (f),(g) and (h)) or in the comparable regulatory
jurisdiction (in the case of clause (i)) as HoldCo or its relevant subsidiaries,
and for the avoidance of doubt, for purposes of determining whether a Company
Material Adverse Effect has occurred, only the disproportionate adverse impact
on HoldCo and its subsidiaries, taken as a whole shall be considered; provided,
further, that with respect to clauses (k) and (l), it is understood that the
facts and circumstances giving rise to such failure or change shall not be
excluded from the determination of whether there has been a Company Material
Adverse Effect if such facts and circumstances are not otherwise described in
clauses (a)-(j) of this definition.
 
 
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“Acquired Business Material Adverse Effect” means any change, event or
development that is materially adverse to the business, financial condition or
results of operations of the Acquired Business and its subsidiaries, taken as a
whole, except to the extent that such change, event or development results from
(and for the avoidance of doubt, any such change, event or development, to the
extent resulting from the following, shall not be taken into account in
determining whether there has been an Acquired Business Material Adverse
Effect): (a) general economic or political, regulatory, financial, credit or
capital market conditions, including interest rates or exchange rates, or any
changes therein; (b) any change affecting any of the industries in which the
Acquired Business and its subsidiaries operate, including the international,
national, regional or local wholesale or retail markets for natural gas or
containerized shipping; (c) any change attributable to the execution of the
Acquisition Agreement or the announcement or pendency of the transactions
contemplated hereby, including any litigation resulting therefrom; (d) actions
taken pursuant to the Acquisition Agreement or at the request of HoldCo, in each
case, with the consent of the Arranger; (e) acts of war (whether or not
declared), the commencement, continuation or escalation of a war, acts of armed
hostility, sabotage or terrorism or other international or national calamity;
(f) any change in the market price for commodities; (g) any hurricane,
earthquake, flood or other natural disasters or acts of God; (h) any change
resulting from weather conditions or customer use patterns; (i) any adoptions,
proposals, interpretations or changes in laws after the date hereof or any
interpretation thereof by any governmental entity; (j) changes in GAAP after the
date hereof or any interpretations thereof by any governmental entity; (k) any
failure by the Acquired Business to meet any estimates of revenues, earnings,
projections or other economic performance, whether published, internally
prepared or provided to the Acquired Business and its subsidiaries and each of
their respective advisors, employees, officers, agents and other
representatives; or (l) any change in the price or trading volume of the common
stock of the Acquired Business on the NYSE or any other market in which such
securities are quoted for purchase and sale or any suspension of trading in
securities generally on any securities exchange on which any securities of the
Acquired Business trade; provided, that with respect to clauses (a), (b), (e),
(f), (g), (h) and (i), such changes and matters do not have a material and
disproportionate adverse impact on the Acquired Business and its subsidiaries,
taken as a whole, as compared to the adverse impact such changes have generally
on other persons operating in comparable industries (in the case of clauses (a),
(b), (e), (f), (g), (h) and (i)) and/or in the comparable geographic region (in
the case of clauses (e), (f),(g) and (h)) or in the comparable regulatory
jurisdiction (in the case of clause (i)) as HoldCo or its relevant subsidiaries,
and for the avoidance of doubt, for purposes of determining whether an Acquired
Business Material Adverse Effect has occurred, only the disproportionate adverse
impact on the Acquired Business and its subsidiaries, taken as a whole shall be
considered; provided, further, that with respect to clauses (k) and (l), it is
understood that the facts and circumstances giving rise to such failure or
change shall not be excluded from the determination of whether there has been an
Acquired Business Material Adverse Effect if such facts and circumstances are
not otherwise described in clauses (a)-(j) of this definition.
 
 
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Notwithstanding anything in this Commitment Letter to the contrary, (a) the only
representations relating to HoldCo, the Acquired Business and their respective
subsidiaries, the accuracy of which will be a condition to the availability of
the Bridge Facility on the Closing Date, will be (i) those representations and
warranties regarding (x) the Acquired Business and its subsidiaries set forth in
Article 3 of the Acquisition Agreement  as are material to the interests of the
Lenders, but only to the extent that you or one of your affiliates has the right
(determined without regard to any notice requirement) to terminate your or its
obligations or decline to consummate the Acquisition as a result of a breach of
such representations in the Acquisition Agreement and (y) HoldCo and its
subsidiaries set forth in Article 4 of the Acquisition Agreement as are material
to the interests of the Lenders, but only to the extent that the Acquired
Business has the right (determined without regard to any notice requirement) to
terminate its obligations or decline to consummate the Acquisition as a result
of a breach of such representations in the Acquisition Agreement (such
representations in clause (i), collectively, the “Acquisition Agreement
Representations”) and (ii) the Specified Representations (as defined below), and
(b) the terms of the documentation for the Bridge Facility will be such that
they do not impair the availability of the Bridge Facility on the Closing Date
if the conditions set forth in this Section 2 (including by way of express
references herein) and in Annex C hereto are satisfied; provided that nothing in
the preceding clause (a) will be construed to limit the applicability of the
individual conditions set forth herein or in Annex C). As used herein,
“Specified Representations” means representations relating to corporate
existence; organizational power and authority to enter into the documentation
relating to the Bridge Facility; due execution, delivery and enforceability of
such documentation; solvency (of HoldCo and its subsidiaries on a consolidated
basis after giving effect to the Transactions); no conflicts with laws,
regulations or charter documents; Federal Reserve margin regulations; the
Investment Company Act; and Patriot Act.  The parties hereto acknowledge and
agree that the agreements and commitments of GS Bank hereunder are, except as
expressly referenced in this Section 2 and Annex C, not subject to any
additional conditions precedent under the terms and conditions of this
Commitment Letter, the Fee Letter or any other document entered into between the
parties hereto.  This paragraph, and the provisions herein, shall be referred to
as the “Certain Funds Provision”.
 
Each of the parties hereto agrees that this Commitment Letter is a binding and
enforceable agreement with respect to the subject matter contained herein,
including an agreement to negotiate in good faith the Loan Documents by the
parties hereto in a manner consistent with this Commitment Letter, it being
acknowledged and agreed that the commitments provided hereunder are subject to
conditions precedent as provided herein.
 
 
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3.  
Syndication.

 
GS Bank intends and reserves the right to syndicate the Bridge Facility to the
Lenders (as defined in Annex B), and you acknowledge and agree that the
commencement of syndication shall occur in the discretion of GS Bank.  GS
Bank  will select the Lenders after consultation with you.  GS Bank will lead
the syndication, including determining the timing of all offers to potential
Lenders, any title of agent or similar designations or roles awarded to any
Lender and the acceptance of commitments, the amounts offered and the
compensation provided to each Lender from the amounts to be paid to GS Bank
pursuant to the terms of this Commitment Letter and the Fee Letter.  GS Bank
will determine the final commitment allocations and will notify the Company of
such determinations.  To assist with the general syndication of the Bridge
Facility, the parties hereto agree to use commercially reasonable efforts to
execute and deliver the Loan Documents as soon as reasonably practicable
following the date hereof and to cooperate in good faith in the preparation and
negotiation of the Loan Documents pursuant to such timing as is consistent with
the syndication requirements of the Bridge Facility as determined by GS Bank in
its reasonable judgment.  You further agree that the commitments and agreements
of GS Bank hereunder are conditioned upon GS Bank having a period of at least
thirty (30) consecutive days following the Company’s delivery of the Initial
Marketing Package (as defined below) to syndicate the Bridge Facility prior to
the Closing Date (such period, the “Bridge Syndication Period”); provided, that
such Bridge Syndication Period will not include any day from and including
December 17, 2010 through and including January 3, 2011.  The Company agrees to
use commercially reasonable efforts to ensure that GS Bank’s syndication efforts
benefit from the existing lending relationships of HoldCo, the Company, the
Acquired Business and their respective subsidiaries.  To facilitate an orderly
and successful syndication of the Bridge Facility, you agree that, until the
earlier of Successful Syndication (as defined in the Fee Letter) and 90 days
following the Closing Date, the Company will not, and will ensure that HoldCo
and any subsidiary thereof will not, will use commercially reasonable efforts to
obtain contractual undertakings from the Acquired Business that it will not,
syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or engage in discussions
concerning the syndication or issuance of, any debt facility or any debt or
equity security of HoldCo, the Company, the Acquired Business or any of their
respective subsidiaries (other than (a)(i) the Bridge Facility, (ii) the Notes
and/or any other Permanent Financing, (iii) the refinancing of certain
commercial paper of HoldCo and its subsidiaries with new commercial paper or,
with the prior written consent of GS Bank, other indebtedness satisfactory to GS
Bank, (iv) any Permitted Borrower Debt (as defined in Annex B) and (v)
indebtedness set forth in the “Debt Schedule” delivered to GS Bank prior to the
date hereof and indicated as “Exclusions to Clear Market”, and (b)(i) the
issuance of equity pursuant to employee stock plans and other similar
arrangements to be agreed and (ii) the Acquisition Equity Consideration),
including any renewals, refinancings, amendments, consents or other
modifications of any existing debt facility or debt security, without the prior
written consent of GS Bank.
 
 
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You agree to actively assist, and to use commercially reasonable efforts to
obtain contractual undertakings from the Acquired Business to actively assist,
GS Bank in connection with the syndication of the Bridge Facility, which
assistance shall include, without limitation (i) upon the request of GS Bank, in
its discretion, cooperating with GS Bank in connection with the preparation of
one or more information packages for the Bridge Facility regarding the business,
operations, financial projections and prospects of HoldCo, the Company and the
Acquired Business (collectively, the “Confidential Information Memorandum”)
including, without limitation, all information relating to the Transactions (as
defined in Annex B) contemplated hereunder prepared by or on behalf of HoldCo or
the Company deemed reasonably necessary by GS Bank to complete the syndication
of the Bridge Facility, (ii) using commercially reasonable efforts to obtain
promptly after the date hereof (a) an updated public corporate family rating
from Moody’s Investor Services, Inc. (“Moody’s”), and (b) an updated public
corporate credit rating from Standard & Poor’s Ratings Group, a division of The
McGraw Hill Corporation (“S&P”), in the case of each of clause (a) and (b),
which rating is pro forma for the Transactions, (iii) the presentation of one or
more information packages reasonably acceptable in format to GS Bank
(collectively, the “Lender Presentation” and, together with such marketing
materials of the type referred to below in clauses (iv) and (v) requested by GS
Bank prior to the date hereof, the “Initial Marketing Package”) in meetings and
other communications with prospective Lenders or agents in connection with the
syndication of the Bridge Facility (including, without limitation, direct
contact between senior management and representatives, with appropriate
seniority and expertise, of HoldCo, the Company and the Acquired Business with
prospective Lenders and participation of such persons in meetings), (iv) the
historical financial statements referenced in clauses (i), (ii) and (iii) of
paragraph 2 on Annex C hereto, (v) pro forma financial statements and
information (including, without limitation, a pro forma balance sheet and pro
forma financial projections) for HoldCo and its subsidiaries (including without
limitation the Company, and the Acquired Business) and (vi) such other marketing
materials in form reasonably satisfactory to GS Bank as GS Bank determines are
consistent with the syndication requirements of the Bridge Facility.  You will
be solely responsible for the contents of any such Confidential Information
Memorandum and the Initial Marketing Package and all other information,
documentation or materials delivered to GS Bank in connection therewith
(collectively, the “Information”) and acknowledge that Goldman Sachs will be
using and relying upon the Information without independent verification
thereof.  You agree that Information regarding the Transactions and Information
provided by HoldCo, the Company or your representatives to Goldman Sachs in
connection with the Bridge Facility (including, without limitation, draft and
execution versions of the Loan Documents, the Confidential Information
Memorandum (including any Public-Side CIMs (as defined below)), the Initial
Marketing Package, financial statements, projections and draft or final offering
materials relating to contemporaneous or prior securities issuances by HoldCo,
the Company or the Acquired Business) may be disseminated to potential Lenders
and other persons through one or more internet sites (including an IntraLinks,
SyndTrak or other electronic workspace (the “Platform”)) created for purposes of
syndicating the Bridge Facility or otherwise, in accordance with GS Bank’s
standard syndication practices, and you acknowledge that neither Goldman Sachs
nor any of its affiliates will be responsible or liable to you or any other
person or entity for damages arising from the use by others of any Information
or other materials obtained on the Platform.
 
You acknowledge that certain of the Lenders may be “public side” Lenders (i.e.
Lenders that do not wish to receive material non-public information with respect
to HoldCo, the Company, the Acquired Business or their respective affiliates or
securities) (each, a “Public Lender”).  At the request of GS Bank, you agree to
prepare additional versions of the Confidential Information Memorandum and the
Initial Marketing Package for the Bridge Facility to be used by Public Lenders
that do not contain material non-public information concerning HoldCo, the
Company, the Acquired Business or their respective affiliates or securities (the
“Public-Side CIMs”).  The information to be included in the Public-Side CIMs
will be substantially consistent with the information included in any offering
memorandum or private placement memorandum for the offering for the Notes and/or
any other Permanent Financing except to the extent GS Bank may otherwise
agree.  It is understood that in connection with your assistance described
above, you will provide, and use commercially reasonable efforts to cause all
other applicable persons to provide, authorization letters to GS Bank
authorizing the distribution of the Information to prospective Lenders,
containing a representation to GS Bank that no Public-Side CIM includes material
non-public information about HoldCo, the Company, the Acquired Business or their
respective affiliates or its or their respective securities.  In addition, you
will clearly designate as such all Information provided to Goldman Sachs by or
on behalf of HoldCo or the Company or the Acquired Business which is suitable to
make available to Public Lenders.  You acknowledge and agree that the following
documents may be distributed to Public Lenders: (a) drafts and final versions of
the Loan Documents; (b) customary administrative materials prepared by GS Bank
for prospective Lenders (such as a lender meeting invitation, allocations and
funding and closing memoranda); and (c) term sheets and notification of changes
in the terms of the Bridge Facility.
 
 
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4.  
Information.

 
You  represent and covenant (in the case of Information relating to the Acquired
Business, to the best of your knowledge) that (i) all Information (other than
financial projections) provided directly or indirectly by or on behalf of HoldCo
or the Company to Goldman Sachs or the Lenders in connection with the
Transactions contemplated hereunder, when taken as a whole, is and will be
complete and correct in all material respects and does not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading and (ii) the
financial projections that have been or will be made available to Goldman Sachs
or the Lenders by or on behalf of HoldCo or the Company in connection with the
Transactions contemplated hereunder have been and will be prepared in good faith
based upon assumptions that are or will be believed by the preparer thereof to
be reasonable at the time such financial projections were or will be furnished
to Goldman Sachs or the Lenders, it being understood and agreed that financial
projections are not a guarantee of financial performance and actual results may
differ from financial projections and such differences may be material.  You
agree that if at any time prior to the later of (i) the Closing Date and (ii)
Successful Syndication, any of the representations in the preceding sentence
would be incorrect in any respect if the Information and financial projections
were being furnished, and such representations were being made, at such time,
then you will promptly supplement, or cause to be supplemented, the Information
and financial projections so that such representations will be correct in all
respects under those circumstances.
 
5.  
Indemnification and Related Matters.

 
In connection with arrangements such as this, it is our firm’s policy to receive
indemnification.  You agree to the provisions with respect to our indemnity and
other matters set forth in Annex A, which is incorporated by reference into this
Commitment Letter.
 
6.  
Assignments.

 
This Commitment Letter may not be assigned by you without the prior written
consent of GS Bank (and any purported assignment without such consent will be
null and void), is intended to be solely for the benefit of Goldman Sachs and
the other parties hereto and, except as set forth in Annex A hereto, is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto.  Goldman Sachs may assign its commitments
and other agreements hereunder, in whole or in part, to any of its affiliates
and, as provided under Section 3 above, to any Lender prior to the Closing
Date.  In addition, until the earlier of Successful Syndication and the Closing
Date, Goldman Sachs may, in consultation with the Company, assign its
commitments and other agreements hereunder, in whole or in part, to other
Lenders. Notwithstanding the foregoing, no such assignment shall relieve Goldman
Sachs of its obligations set forth herein to fund that portion of the
commitments under the Bridge Facility so assigned, except to the extent (x) that
you have identified such Lender on the “Permitted Assignee Schedule” set forth
on Schedule 1 to the Fee Letter including, for the avoidance of doubt, the
lenders under the Existing AGL Credit Agreement as of the date hereof (each, a
“Permitted Assignee”) or (y) you have consented to such assignment (such consent
not to be unreasonably withheld or delayed and provided that such consent shall
be deemed to have been given if you have not responded within ten (10) business
days of a request for such consent) and such assignment is evidenced by (1) an
amendment or joinder, among such Lender, Goldman Sachs and you have, with
respect to this Commitment Letter pursuant to which such Lender shall commit to
provide a portion of the Bridge Facility or (2) the Loan Documents, whereupon,
in the case of each of clause (x) and (y), Goldman Sachs’ commitments hereunder
with respect to the Bridge Facility shall be reduced at such time by an amount
equal to the commitment assumed by such Lender. Neither this Commitment Letter
nor the Fee Letter may be amended or any term or provision hereof or thereof
waived or otherwise modified except by an instrument in writing signed by each
of the parties hereto or thereto, as applicable, and any term or provision
hereof or thereof may be amended or waived only by a written agreement executed
and delivered by all parties hereto or thereto.
 
 
8

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7.  
Confidentiality.

 
Please note that this Commitment Letter, the Fee Letter and any written
communications provided by, or oral discussions with, Goldman Sachs in
connection with this arrangement are exclusively for the information of the
Company and may not be disclosed to any third party or circulated or referred to
publicly without our prior written consent except, after providing written
notice to Goldman Sachs (to the extent not expressly prohibited by law from
doing so), pursuant to a subpoena or order issued by a court of competent
jurisdiction or by a judicial, administrative or legislative body or committee;
provided that we hereby consent to your disclosure of (i) this Commitment
Letter, the Fee Letter and such communications and discussions to the Company’s
officers, directors, agents and advisors who are directly involved in the
consideration of the Bridge Facility and who have been informed by you of the
confidential nature of such advice and the Commitment Letter and Fee Letter and
who have agreed to treat such information confidentially, (ii) this Commitment
Letter or the information contained herein (and, to the extent portions thereof
have been redacted in a manner satisfactory to GS Bank after review by GS Bank
thereof, the Fee Letter and the information contained therein) to the Acquired
Business to the extent you notify such person of its obligations to keep such
material confidential and such person agrees to hold the same in confidence, and
to the Acquired Business’ officers, directors, agents and advisors who are
directly involved in the consideration of the Bridge Facility to the extent such
persons agree to hold the same in confidence, (iii) this Commitment Letter and
the Fee Letter as required by applicable law or compulsory legal process (in
which case you agree to inform us promptly thereof), (iv) the information
contained in Annex B, in any prospectus, offering memorandum or private
placement memorandum relating to the Notes and/or any other Permanent Financing
in a form customary for offerings of such type, (v) the information contained in
Annex B to Moody’s and S&P; provided that such information is supplied to
Moody’s and S&P only on a confidential basis after consultation with Goldman
Sachs and (vi) the aggregate of the fee amounts contained in the Fee Letter as
part of the Projections, pro forma information or a generic disclosure of
aggregate sources and uses related to fee amounts related to the Transactions to
the extent customary or required in the offering and marketing materials for the
Bridge Facility and/or the Permanent Financing or in any public filing relating
to the Transactions.
 
8.  
Absence of Fiduciary Relationship; Affiliates; Etc.

 
As you know, Goldman Sachs, together with its affiliates (collectively, “GS”),
is a full service financial services firm engaged, either directly or through
affiliates, in various activities, including securities trading, investment
banking and financial advisory, investment management, principal investment,
hedging, financing and brokerage activities and financial planning and benefits
counseling for both companies and individuals.  In the ordinary course of these
activities, GS may make or hold a broad array of investments and actively trade
debt and equity securities (or related derivative securities) and/or financial
instruments (including bank loans) for their own account and for the accounts of
their customers and may at any time hold long and short positions in such
securities and/or instruments.  Such investment and other activities may involve
securities and instruments of HoldCo and its subsidiaries, as well as of other
entities and persons and their affiliates which may (i) be involved in
transactions arising from or relating to the engagement contemplated by this
Commitment Letter, (ii) be customers or competitors of HoldCo and its
subsidiaries, or (iii) have other relationships with HoldCo and its
subsidiaries.  In addition, GS may provide investment banking, underwriting and
financial advisory services to such other entities and persons.  GS may also
co-invest with, make direct investments in, and invest or co-invest client
monies in or with funds or other investment vehicles managed by other parties,
and such funds or other investment vehicles may trade or make investments in
securities of HoldCo and its subsidiaries or such other entities.  The
transactions contemplated by this Commitment Letter may have a direct or
indirect impact on the investments, securities or instruments referred to in
this paragraph.  Although GS Bank in the course of such other activities and
relationships may acquire information about the transaction contemplated by this
Commitment Letter or other entities and persons which may be the subject of the
transactions contemplated by this Commitment Letter, GS shall have no obligation
to disclose such information, or the fact that GS is in possession of such
information, to the Company or to use such information on the Company’s behalf.
 
 
9

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Consistent with GS’s policy to hold in confidence the affairs of its customers,
GS will not furnish confidential information obtained from you by virtue of the
transactions contemplated by this Commitment Letter to any of its other
customers.  Furthermore, you acknowledge that GS has no obligation to use in
connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, confidential information obtained or that may be obtained by
them from any other person.
 
GS may have economic interests that conflict with those of the Company, its
equity holders and/or its affiliates.  You agree that GS will act under this
Commitment Letter as an independent contractor and that nothing in this
Commitment Letter or the Fee Letter or otherwise will be deemed to create an
advisory, fiduciary or agency relationship or fiduciary or other implied duty
between GS and the Company, its equity holders or its affiliates.  You
acknowledge and agree that the transactions contemplated by this Commitment
Letter and the Fee Letter (including the exercise of rights and remedies
hereunder and thereunder) are arm’s-length commercial transactions between GS,
on the one hand, and the Company, on the other, and in connection therewith and
with the process leading thereto, (i) GS has not assumed an advisory or
fiduciary responsibility in favor of the Company, its equity holders or its
affiliates with respect to the transactions contemplated hereby (or the exercise
of rights or remedies with respect thereto) or the process leading thereto
(irrespective of whether GS has advised, is currently advising or will advise
the Company, its equity holders or its affiliates on other matters) or any other
obligation to the Company except the obligations expressly set forth in this
Commitment Letter and the Fee Letter and (ii) GS is acting solely as a principal
and not as the agent or fiduciary of the Company, its management, equity
holders, affiliates, creditors or any other person. You acknowledge and agree
that the Company has consulted its own legal and financial advisors to the
extent it deemed appropriate and that it is responsible for making its own
independent judgment with respect to such transactions and the process leading
thereto.  You agree that the Company will not claim that GS has rendered
advisory services of any nature or respect,  including without limitation with
respect to the financing transactions contemplated hereby, or owes a fiduciary
or similar duty to the Company, in connection with such transactions or the
process leading thereto. In addition, GS Bank may employ the services of its
affiliates in providing services and/or performing their obligations hereunder
and may exchange with such affiliates information concerning HoldCo, the
Company, the Acquired Business and other companies that may be the subject of
this arrangement, and such affiliates will be entitled to the benefits afforded
to GS Bank hereunder.
 
In addition, please note that GS does not provide accounting, tax or legal
advice.  Notwithstanding anything herein to the contrary, the Company (and each
employee, representative or other agent of the Company) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the Bridge Facility and all materials of any kind (including opinions or
other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure.  However, any information relating to the tax
treatment or tax structure will remain subject to the confidentiality provisions
hereof (and the foregoing sentence will not apply) to the extent reasonably
necessary to enable the parties hereto, their respective affiliates, and their
and their respective affiliates’ directors and employees to comply with
applicable securities laws.  For this purpose, “tax treatment” means U.S.
federal or state income tax treatment, and “tax structure” is limited to any
facts relevant to the U.S. federal income tax treatment of the transactions
contemplated by this Commitment Letter but does not include information relating
to the identity of the parties hereto or any of their respective affiliates.
 
 
10

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9.  
Miscellaneous.

 
Goldman Sachs’ commitments and agreements hereunder will terminate upon the
earliest to occur of (i) the consummation of the Acquisition, (ii) the
termination of the definitive Agreement and Plan of Merger, dated as of December
6, 2010, among HoldCo, Apollo Acquisition Corp., Ottawa Acquisition LLC and
Nicor (the “Acquisition Agreement”) in accordance with its terms and
(iii) December 30, 2011 or if the Marketing Period (as defined in the
Acquisition Agreement as in effect on the date hereof) has not been completed on
or before December 17, 2011, February 2, 2012 (but only to the extent the
Initial Outside Date (as defined in the Acquisition Agreement as in effect on
the date hereof) has been so extended); provided that if the Initial Outside
Date has been extended to the Extended Outside Date (as defined in the
Acquisition Agreement as in effect on the date hereof) pursuant to Section
7.1(b) of the Acquisition Agreement as in effect on the date hereof, to a date
not beyond July 2, 2012, then the date applicable under this clause (iii) shall
be extended to such Extended Outside Date, unless the closing of the Bridge
Loans on the terms and subject to the conditions contained herein, has been
consummated on or before such date.  In addition, upon the reduction of all
commitments under the Bridge Facility as set forth in Annex B under the heading
“Mandatory Prepayments” or the proviso in the second paragraph of this
Commitment Letter (including in connection with the issuance of the Notes or any
other Permanent Financing (in escrow or otherwise)), Goldman Sachs’ commitment
hereunder to provide and arrange Bridge Loans will terminate.
 
The provisions set forth under Sections 3,4, 5 (including Annex A) and 7 hereof
and this Section 9 hereof will remain in full force and effect regardless of
whether definitive Loan Documents are executed and delivered.  The provisions
set forth under Sections 5 (including Annex A) and 7 hereof and this Section 9
will remain in full force and effect notwithstanding the expiration or
termination of this Commitment Letter or Goldman Sachs’ commitments and
agreements hereunder.
 
The Company for itself and its affiliates agrees that any suit or proceeding
arising in respect to this Commitment Letter or Goldman Sachs’ commitments or
agreements hereunder or the Fee Letter will be tried exclusively in any Federal
court of the United States of America sitting in the Borough of Manhattan or, if
that court does not have subject matter jurisdiction, in any state court located
in the City and County of New York, and the Company for itself and its
affiliates agrees to submit to the exclusive jurisdiction of, and to venue in,
such court.  Any right to trial by jury with respect to any action or proceeding
arising in connection with or as a result of Goldman Sachs’ commitments or
agreements or any matter referred to in this Commitment Letter or the Fee Letter
is hereby waived by the parties hereto.  The Company for itself and its
affiliates agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.  Service of any process, summons, notice
or document by registered mail or overnight courier addressed to any of the
parties hereto at the addresses above shall be effective service of process
against such party for any suit, action or proceeding brought in any such
court.  This Commitment Letter and the Fee Letter will be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws; provided, however, that the interpretation of
the definition of Acquired Business Material Adverse Effect and Company Material
Adverse Effect, in each case, as set forth herein, shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
 
 
11

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Goldman Sachs hereby notifies the Company and the Acquired Business that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Patriot Act”), GS Bank and each Lender
may be required to obtain, verify and record information that identifies the
Borrower and the Guarantor (as defined in Annex B), which information includes
the name and address of, the Borrower and the Guarantor and other information
that will allow GS Bank and each Lender to identify the Borrower and the
Guarantor in accordance with the Patriot Act.  This notice is given in
accordance with the requirements of the Patriot Act and is effective for Goldman
Sachs and each Lender.
 
This Commitment Letter may be executed in any number of counterparts, each of
which when executed will be an original, and all of which, when taken together,
will constitute one agreement.  Delivery of an executed counterpart of a
signature page of this Commitment Letter by facsimile transmission or electronic
transmission (in pdf format) will be effective as delivery of a manually
executed counterpart hereof.  This Commitment Letter and the Fee Letter are the
only agreements that have been entered into among the parties hereto with
respect to the Bridge Facility and set forth the entire understanding of the
parties with respect thereto and supersede any prior written or oral agreements
among the parties hereto with respect to the Bridge Facility.
 

[Remainder of page intentionally left blank]
 
 
 
12 

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Please confirm that the foregoing is in accordance with your understanding by
signing and returning to GS Bank the enclosed copy of this Commitment Letter,
together, if not previously executed and delivered, with the Fee Letter, on
December 6, 2010 whereupon this Commitment Letter and the Fee Letter will become
binding agreements between us.  If the Commitment Letter and Fee Letter have not
been signed and returned as described in the preceding sentence by such date,
this offer will terminate on such date.  We look forward to working with you on
this transaction.
 
 

Very truly yours,
 
 
GOLDMAN SACHS BANK USA

 
 
By:
/s/ Anna Ostrovsky  

 
 
Authorized Signatory

 

 
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ACCEPTED AND AGREED AS OF DECEMBER 6, 2010:
 
 
AGL CAPITAL CORPORATION
 
 
 
By:          /s/ Paul R.
Shlanta                                                      
 
Name:     Paul R. Shlanta
 
Title:       Executive Vice President, General Counsel and Chief Ethics and
Compliance Officer
 

 
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ANNEX A
 
In the event that Goldman Sachs becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person, including
shareholders, partners, members or other equity holders of HoldCo, the Company
or the Acquired Business in connection with or as a result of either this
arrangement or any matter referred to in this Commitment Letter or the Fee
Letter (together, the “Letters”), the Company agrees to periodically reimburse
on demand Goldman Sachs for its reasonable legal and other expenses (including,
without limitation, the cost of any investigation and preparation) incurred in
connection therewith.  The Company also agrees to indemnify and hold Goldman
Sachs harmless against any and all losses, claims, damages or liabilities to any
such person in connection with or as a result of either this arrangement or any
matter referred to in the Letters (whether or not such investigation,
litigation, claim or proceeding is brought by you, your equity holders or
creditors or an indemnified person and whether or not any such indemnified
person is otherwise a party thereto), except to the extent that such loss,
claim, damage or liability has been found by a final, non-appealable judgment of
a court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of Goldman Sachs in performing the services that are the
subject of the Letters.  If for any reason the foregoing indemnification is
unavailable to Goldman Sachs or insufficient to hold it harmless, then the
Company will contribute to the amount paid or payable by Goldman Sachs as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative economic interests of (i) HoldCo, the
Company and the Acquired Business and their respective affiliates, shareholders,
partners, members or other equity holders on the one hand and (ii) Goldman Sachs
on the other hand in the matters contemplated by the Letters as well as the
relative fault of (i) HoldCo, the Company and the Acquired Business and their
respective affiliates, shareholders, partners, members or other equity holders
on the one hand and (ii) Goldman Sachs on the other hand with respect to such
loss, claim, damage or liability and any other relevant equitable
considerations.  The reimbursement, indemnity and contribution obligations of
the Company under this paragraph will be in addition to any liability which the
Company may otherwise have, will extend upon the same terms and conditions to
any affiliate of Goldman Sachs and the partners, members, directors, agents,
employees and controlling persons (if any), as the case may be, of Goldman Sachs
and any such affiliate, and will be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, Goldman
Sachs, any such affiliate and any such person. The Company also agrees that
neither any indemnified party nor any of such affiliates, partners, members,
directors, agents, employees or controlling persons will have any liability to
the Company or any person asserting claims on behalf of or in right of the
Company or any other person in connection with or as a result of either this
arrangement or any matter referred to in the Letters, except in the case of the
Company to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company or its affiliates, shareholders, partners or other
equity holders have been found by a final, non-appealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such indemnified party in performing the services that are the
subject of the Letters; provided, however, that in no event will such
indemnified party or such other parties have any liability for any indirect,
consequential, special or punitive damages in connection with or as a result of
such indemnified party’s or such other parties’ activities related to the
Letters. The provisions of this Annex A will survive any termination or
completion of the arrangement provided by the Letters.
 
 
Annex A-1 

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ANNEX B
 
AGL Capital Corporation
 
Summary of the Bridge Loans
 
Reference is made to the Commitment Letter, of which this Annex B is a
part.  Certain capitalized terms used herein are defined in the Commitment
Letter.
 
 
Borrower:
AGL Capital Corporation, a Nevada corporation (the “Borrower”).

 
 
Guarantor:
AGL Resources Inc., a Georgia corporation (“HoldCo” or the “Guarantor”) will
guarantee (the “Guarantee”) all obligations under the Bridge Loans.  The Bridge
Loans and the Guarantee will rank pari passu in right of payment with all other
senior indebtedness and guarantees of such indebtedness of the Borrower and
HoldCo.

 
 
Transactions:
The Borrower intends to acquire the Acquired Business on the terms and
conditions set forth in the Acquisition Agreement, including all exhibits and
schedules attached thereto, the Company Disclosure Letter (as defined in the
Acquisition Agreement as in effect on the date hereof) and the Parent Disclosure
Letter (as defined in the Acquisition Agreement as in effect on the date hereof)
(collectively, the “Acquisition Documents”), pursuant to which the equity
holders of the Acquired Business will receive an aggregate amount of $976.0
million in cash (the “Acquisition Cash Consideration”) and $1,435 million of
common stock of the Borrower (the “Acquisition Equity Consideration” and,
together with the Acquisition Cash Consideration, the “Acquisition
Consideration”). In connection with the Acquisition, the Borrower intends to (i)
obtain the Bridge Facility (provided that it is anticipated that some or all of
the Bridge Facility will be replaced or repaid by the issuance of Permanent
Financing (as defined in the Fee Letter)), (ii) terminate and repay or refinance
certain existing indebtedness of the Acquired Business and (iii) pay the fees
and expenses incurred in connection with the foregoing (the “Transaction
Costs”). The transactions described in this paragraph are collectively referred
to as the “Transactions”.

 
 
Purpose/Use of Proceeds:
The proceeds of the Bridge Facility will be used on the Closing Date to fund, in
part, the Acquisition Cash Consideration and to pay the Transaction Costs.

 
 
Sole Lead Arranger and Sole

 
Bookrunner:
Goldman Sachs Bank USA (“GS Bank” and, in its capacities as Sole Lead Arranger
and Sole Bookrunner, the “Arranger”).

 
 
Co-Syndication Agents:
Up to two financial institutions selected by the Arranger and reasonably
acceptable to the Borrower.

 
 
Co-Documentation Agents:
Up to two financial institutions selected by the Arranger and reasonably
acceptable to the Borrower.

 
 
Annex B-1

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Administrative Agent:
GS Bank (in its capacity as Administrative Agent, the “Administrative Agent”).

 
 
Lenders:
GS Bank and/or other financial institutions selected by the Arranger (each, a
“Lender” and, collectively, the “Lenders”).

 
 
Amount of Bridge Loans:
$1,050.0 million in aggregate principal amount of senior unsecured increasing
rate loans, less the amount of any reduction to the commitments under the Bridge
Facility on or prior to the Closing Date as set forth under the heading
“Mandatory Prepayments” below, including, without limitation, in connection with
the issuance of any Notes or Permanent Financing (the “Bridge Loans”).

 
 
Closing Date:
The date on or before December 30, 2011 (or if the Marketing Period (as defined
in the Acquisition Agreement as in effect on the date hereof) has not been
completed on or before December 17, 2011, February 2, 2012 (but only to the
extent the Initial Outside Date (as defined in the Acquisition Agreement as in
effect on the date hereof) has been so extended); provided that if the Initial
Outside Date has been extended to the Extended Outside Date (as defined in the
Acquisition Agreement as in effect on the date hereof) pursuant to Section
7.1(b) of the Acquisition Agreement as in effect on the date hereof, to a date
not beyond July 2, 2012, then the date applicable under this paragraph shall be
extended to such Extended Outside Date) on which the borrowings under the Bridge
Facility are made and the Acquisition is consummated (the “Closing Date”).

 
 
Maturity:
The Bridge Loans will mature on the date that is 364 days after the Closing
Date.

 
 
Amortization:
No amortization will be required with respect to the Bridge Facility.

 
 
Interest Rate:
All amounts outstanding under the Bridge Facility will bear interest, at the
Borrower’s option, at a floating per annum rate equal to (i) the reserve
adjusted Eurodollar Rate plus the Applicable Margin (as defined below) or (ii)
at the Base Rate plus the Applicable Margin minus 1.00%.

 
As used herein, “Applicable Margin” means a percentage determined in accordance
with the pricing grid (the “Pricing Grid”) below, subject to an increase of
0.25% as of the last day of each 90-day period after the Closing Date; provided
that at any time HoldCo or any of its subsidiaries (including, without
limitation, the Company and the Acquired Business) has any obligations
outstanding (whether funded or unfunded) under the Existing AGL Credit Facility
(as may be amended from time to time after the date hereof) or any other bank,
bridge or similar debt facility, the interest rates applicable to the Bridge
Facility shall be increased to be at least equal to the highest corresponding
interest rates then in effect for the Existing AGL Credit Facility, Existing
Nicor Credit Facilities and such other bank, bridge or similar debt facility.
 
 
Annex B-2

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CFR/CCR Rating
(Moody’s/S&P)
Applicable Margin
A2/A or higher
1.50%
A3/A-
1.75%
Baa1/BBB+
2.00%
Baa2/BBB
2.25%
Baa3/BBB- or lower
2.50%

 
 
For purposes of the foregoing, “CFR/CCR Rating” means, as of any date of
determination, and taking into account the Transactions, the Borrower’s public
corporate family rating or public corporate credit rating, as determined by
Moody’s or S&P, respectively; provided that

 
 
if a CFR/CCR Rating is issued by each of Moody’s and S&P, then the higher of
such CFR/CCR Ratings shall apply unless there is a split in the CFR/CCR Ratings
of more than one level, in which case the level which is the midpoint shall
apply, and if there is no midpoint, then the level that is one level below the
higher CFR/CCR Rating shall apply. The CFR/CCR Ratings shall be determined from
the most recent public announcement or publication of any changes in the CFR/CCR
Ratings. If neither Moody’s nor S&P shall publish such a rating for the
Borrower, the ratings of such ratings agencies shall be deemed to be the lowest
rating level under the Pricing Grid.

 
 
As used herein, the terms “reserve adjusted Eurodollar Rate” and “Base Rate”
will have the meaning customary and appropriate for bridge financings of this
type, and the basis for calculating accrued interest and the interest periods
for loans bearing interest at the reserve adjusted Eurodollar Rate will be
customary and appropriate for bridge financings of this type.  After the
occurrence and during the continuance of a payment or bankruptcy default,
interest on all overdue amounts will accrue at a rate equal to the applicable
rate set forth above, plus an additional two percentage points (2.00%) per annum
and will be payable on demand.

 
 
Duration Fees:
The Borrower shall pay a duration fee for the ratable benefit of each Lender
under the Bridge Facility, on the dates set forth below, equal to a percentage
determined in accordance with the grid below (the “Duration Fee Percentage”)
times the aggregate principal amount of Bridge Loans outstanding as of such
date.

 
Baa1 and BBB+ or better
(the “Ratings Threshold”)
In the event the Ratings Threshold
is not achieved
90 days after the Closing Date
0.50%
90 days after the Closing Date
0.75%
180 days after the Closing Date
1.00%
180 days after the Closing Date
1.25%
270 days after the Closing Date
1.50%
270 days after the Closing Date
1.75%

 
 
Annex B-3

--------------------------------------------------------------------------------

 
 
Funding Protection:
Customary for transactions of this type, including breakage costs, gross-up for
withholding, compensation for increased costs and compliance with capital
adequacy and other regulatory restrictions.

 
 
Mandatory Prepayments/

 
Commitment Reductions:
On and after the Closing Date, the Bridge Loans shall be prepaid at 100% of the
principal amount of the Bridge Loans being prepaid plus accrued interest to the
date of prepayment (and, after December 6, 2010, but prior to the Closing Date,
the aggregate commitments in respect of the Bridge Facility under the Commitment
Letter shall be permanently reduced on a dollar-for-dollar basis) by the amount
of net proceeds to HoldCo or any of its subsidiaries (including, without
limitation, the Company and, on and after the Closing Date, the Acquired
Business), but, in the case of proceeds received by a regulated subsidiary of
HoldCo, solely to the extent such proceeds are distributed to HoldCo, the
Company or another unregulated subsidiary of HoldCo (and, in the case of joint
ventures with unaffiliated third parties, to the extent of HoldCo’s direct or
indirect equity interest therein) from:

(1)  
(A) any direct or indirect public offering or private placement of any equity
securities or (B) any direct or indirect public offering or private placement of
any debt securities or any other incurrence of debt (whether funded or unfunded)
or bank borrowings, including, without limitation, in the case of each of clause
(A) and (B), any Permanent Financing, but excluding (i) any funded or unfunded
debt incurred in the ordinary course under the Existing AGL Credit Agreement as
in effect on the date of the Commitment Letter (as may be amended in accordance
with the terms set forth in Annex C), (ii) any Permitted Borrower Debt (as
defined below), (iii) indebtedness set forth in the “Debt Schedule” delivered to
the Arranger prior to the date hereof and indicated as “Exclusions to Commitment
Reductions and Mandatory Prepayment”, (iv) permitted intercompany investments,
(v) the refinancing of certain commercial paper or Permitted Letters of Credit
(as defined below) of HoldCo and its subsidiaries with new commercial paper or
Permitted Letters of Credit or, with the prior written consent of the Arranger,
other indebtedness satisfactory to the Arranger, and (iv) (1) any issuances of
equity pursuant to employee stock plans and (2) the Acquisition Equity
Consideration; and

(2)  
 any non-ordinary course asset sale or other non-ordinary course disposition
(including the receipt of insurance or condemnation proceeds) of properties or
assets of HoldCo or its subsidiaries (including the Company and, on and after
the Closing Date, the Acquired Business and in each case, subject to certain
customary exceptions to be agreed including a reinvestment right within six (6)
months after the receipt by HoldCo or its applicable subsidiary in long-term
capital assets used or useful in the business of HoldCo or such subsidiary)
that, individually or in the aggregate following the date hereof, generate net
proceeds in excess of $25.0 million (such threshold amount, the “Asset Sale
Proceeds Threshold”);

 
Annex B-4

--------------------------------------------------------------------------------

 
provided, that HoldCo and its subsidiaries shall use commercially reasonable
efforts to cause any such proceeds described in the foregoing clauses (1) and
(2) above (but, in the case of clause (2), only such proceeds (without giving
effect to the Asset Sale Proceeds Threshold) that are in excess of an aggregate
principal amount of $100.0 million following the date of the Commitment Letter)
to be distributed as soon as practicable to HoldCo, the Company or another
unregulated wholly-owned subsidiary of HoldCo; provided further that in the
event that one or more of the regulatory approvals described in paragraph 5 of
Annex C to the Commitment Letter requires any asset sale or other disposition as
a condition to such approval, (i) no later than 2 business days following the
Closing Date, the Bridge Loans shall be prepaid plus accrued interest to the
date of prepayment in an amount equal to the amount of net proceeds resulting
from any required asset sale or other disposition with respect to the Acquired
Business prior to the Closing Date, which are held by Holdco, the Company or
another wholly-owned unregulated subsidiary of Holdco (including the Acquired
Business) on the Closing Date and (ii) the use of “commercially reasonable
efforts” required pursuant to the foregoing proviso shall include HoldCo and its
subsidiaries requesting the approval of such regulator to distribute the
proceeds of such asset sale or other disposition to HoldCo, the Company or
another wholly-owned unregulated subsidiary of HoldCo as soon as practicable.
 
 
Any proceeds from the sale of Permanent Financing (as defined in the Fee Letter)
funded or purchased by a Lender or one or more of its affiliates will be
applied, first, to refinance the Bridge Loans held at that time by such Lender,
and second, in accordance with the pro rata provisions otherwise applicable to
prepayments.

“Permitted Letters of Credit” means letters of credit or letter of credit
facilities of any of HoldCo and its subsidiaries not exceeding $25,00,000 in the
aggregate.
 

 
Permitted Borrower

 
Debt:
Certain senior unsecured debt securities and credit facilities (collectively,
the “Permitted Borrower Debt”) of the Borrower consisting solely of:

 
Annex B-5

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(i)  
Any debt securities (and expressly not loans) of the Borrower issued either (x)
on or prior to January 14, 2011 or (y) on or after February 4, 2011 but prior to
May 31, 2011, in exchange for, or the net proceeds of which are directly and
immediately used solely (except to the extent otherwise expressly agreed in
advance in writing by the Arranger in its sole discretion) to refinance, either
(A) the 7.125% Notes due 2011 of the Borrower or (B) the Permitted Delayed Draw
Facility referred to below, as applicable, which refinancing debt shall have
terms and conditions customary for such debt; provided, that the Borrower shall
have engaged one or more investment and/or commercial banks satisfactory to GS
Bank on terms and conditions satisfactory to GS Bank to act as a sole or joint
bookrunner in connection with the public sale or private placement of such
refinancing debt securities; provided, further, that neither HoldCo nor any of
its subsidiaries shall syndicate or issue, attempt to syndicate or issue,
announce or authorize the announcement of the syndication or issuance of, or
engage in discussions concerning the syndication or issuance of such refinancing
debt prior to the date that is two (2) weeks following the date of the
Commitment Letter (such debt securities, as used herein and in the Commitment
Letter, the “Permitted 2011 Notes Refinancing”);

 
(ii)  
solely in the event that the Company determines in good faith that the debt
securities under the Permitted 2011 Notes Refinancing cannot be offered or sold
prior to January 14, 2011 for any reason, a short-term credit facility of the
Borrower consummated on or prior to January 14, 2011, the net proceeds of which
are directly and immediately used to solely refinance the 7.125% Notes due 2011
of the Borrower, which credit facility shall have customary terms and conditions
to be agreed; provided, that the Borrower shall have engaged GS Bank on terms
and conditions to be agreed to act as a sole or joint lead arranger and
bookrunner in connection with the syndication of such credit facility (such
short-term facility, as used herein and in the Commitment Letter, “Permitted
Delayed Draw Facility”);

 
(iii)  
an incremental revolving facility under the Existing AGL Credit Agreement (as
may be amended in accordance with the terms set forth in Annex C) in an amount
not to exceed, together with any Permitted Nicor Revolver Refinancing pursuant
to clause (iv) below, $750.0 million, to be entered into in accordance with the
terms and conditions of the Existing AGL Credit Agreement (as may be amended in
accordance with the terms set forth in Annex C); provided, that the Borrower
shall have engaged one or more financial institutions satisfactory to GS Bank to
act as lead arranger of such incremental facility; provided, further, that
neither HoldCo nor any of its subsidiaries shall syndicate or issue, attempt to
syndicate or issue, announce or authorize the announcement of the syndication or
issuance of, or engage in discussions concerning the syndication or issuance of
such incremental facility prior to the earlier of (x) Successful Syndication of
the Bridge Facility and (y) 90 days after the announcement of the Transactions
and the commencement of the Bridge Syndication Period (as defined in the
Commitment Letter) (provided that if Successful Syndication shall not have
occurred, such actions shall only be taken to the extent reasonable prior notice
thereof shall have been given to the Arranger and, to the extent requested by
the Arranger, taken in co-ordination with the Arranger) (such incremental
facility, as used herein and in the Commitment Letter, “Permitted Incremental
Facility”);

 
 
Annex B-6

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(iv)  
any revolving credit facility of the Borrower in an amount not to exceed,
together with any Permitted Incremental Facility pursuant to clause (iii) above,
$750.0 million, on terms and conditions customary for debt financings of this
kind and the net proceeds of which are directly and immediately used solely to
refinance or replace the Existing Nicor Credit Facilities (including to repay
loans, and terminate commitments, under the Existing Nicor Credit Facilities),
and pursuant to a syndication process satisfactory to GS Bank; provided that
neither HoldCo nor any of its subsidiaries shall syndicate or issue, attempt to
syndicate or issue, announce or authorize the announcement of the syndication or
issuance of, or engage in discussions concerning the syndication or issuance of
such refinancing debt prior to the earlier of (x) Successful Syndication of the
Bridge Facility and (y) 90 days after the announcement of the Transactions and
the commencement of the Bridge Syndication Period (provided that if Successful
Syndication shall not have occurred, such actions shall only be taken to the
extent done so in co-ordination with the Arranger); provided, further, that any
such refinancing debt pursuant to this sub-clause (iv) shall only become
effective following the Closing Date (such revolving credit facility, as used
herein and in the Commitment Letter, “Permitted Nicor Revolver Refinancing”);
and

 
(v)  
in lieu of the Permitted Incremental Facility and the Permitted Nicor Revolver
Refinancing, any revolving credit facility of the Borrower in an amount not to
exceed $1,750.0 million, on terms and conditions customary for debt financings
of this kind and the net proceeds of which are directly and immediately used
solely to refinance or replace the Existing Nicor Credit Facilities and the
Existing AGL Credit Agreement (including to repay loans, and terminate
commitments, under the Existing Nicor Credit Facilities and the Existing AGL
Credit Agreement), and pursuant to a syndication process satisfactory to GS
Bank; provided that neither HoldCo nor any of its subsidiaries shall syndicate
or issue, attempt to syndicate or issue, announce or authorize the announcement
of the syndication or issuance of, or engage in discussions concerning the
syndication or issuance of such refinancing debt prior to the earlier of (x)
Successful Syndication of the Bridge Facility and (y) 90 days after the Closing
Date (provided that if Successful Syndication shall not have occurred, such
actions shall only be taken to the extent done so in co-ordination with the
Arranger); provided, further, that any such refinancing debt pursuant to this
sub-clause (v) shall only become effective following the Closing Date (such
revolving credit facility, as used herein and in the Commitment Letter,
“Permitted Combined Revolver Refinancing”).

 
 
Annex B-7

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As used herein, “Existing Nicor Credit Facilities” means, collectively, the
credit facilities established pursuant to (i) that certain 3-Year Credit
Agreement, dated as of April 23, 2010, among Nicor Gas Company and Nicor Inc.,
as Borrowers, JPMorgan Cash Bank, N.A., as Administrative Agent, and the other
parties thereto from time to time, as amended, amended and restated,
supplemented or otherwise modified from time to time through the date hereof,
and (ii) that certain 364-Day Credit Agreement, dated as of April 23, 2010,
among Nicor Gas Company, as Borrower, JPMorgan Chase Bank, N.A., as
Administrative Agent and the other parties thereto from time to time, as
amended, amended and restated, supplemented or otherwise modified from time to
time through the date hereof (the “364-Day Nicor Credit Agreement”).
 
 
Voluntary Prepayment:
Bridge Loans may be prepaid, in whole or in part, at the option of the Borrower,
at any time without premium or penalty, upon five (5) business days’ written
notice, such prepayment to be made at par plus accrued interest.

 
 Loan Documentation:
The definitive Loan Documents for the Bridge Facility will contain only those
representations, warranties, covenants and events of default as are expressly
set forth below in this Annex B, together with other customary loan document
provisions to be negotiated in good faith and based upon and consistent with the
terms set forth in the Commitment Letter, in each case, applicable to HoldCo and
its subsidiaries (including, without limitation, the Company and the Acquired
Business), with exceptions, baskets, materiality thresholds and grace periods to
be mutually agreed, but giving due regard to (i) that certain Credit Agreement,
dated as of September 15, 2010, among the Borrower, HoldCo, Inc., as Guarantor,
Wells Fargo Bank, National Association, as Administrative Agent, and the other
parties thereto from time to time (as amended, amended and restated,
supplemented or otherwise modified from time to time through the date hereof,
the “Existing AGL Credit Agreement”), (ii) the operational requirements of
HoldCo and its subsidiaries, and (iii) the syndication requirements of, current
market conditions for, and the differences in nature of, the Bridge Facility,
which representations, warranties, covenants and events of default shall be
limited to:

 
- representations and

 
warranties:
organizational status and good standing; requisite power and authority;
qualification; equity interests and ownership; due authorization, execution,
delivery and enforceability of the Loan Documents; no conflicts; governmental
and third-party consents; historical and projected financial condition; no
material adverse change; absence of material litigation; payment of taxes; title
to properties; intellectual property; environmental matters; no defaults under
material agreements; Investment Company Act and margin stock matters; ERISA and
other employee matters; absence of brokers or finders fees; consolidated Closing
Date solvency of the HoldCo and its subsidiaries taken as a whole; compliance
with laws; full disclosure; and Patriot Act and other related matters;

 
Annex B-8

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 - financial covenant:
maximum consolidated total debt to consolidated total capitalization (the “Total
Debt to Capitalization Ratio”) of HoldCo and its subsidiaries not to exceed
0.70:1.00 at any time;

 
 
- affirmative covenants:
delivery of financial statements and other reports (including the identification
of information as suitable for distribution to Public Lenders or Non-Public
Lenders); maintenance of existence; payment of taxes and claims; maintenance of
properties; maintenance of insurance; books and records; inspections; compliance
with laws; environmental matters; maintenance of CFR/CCR Ratings; ranking as
senior debt; use of proceeds; compliance with the Commitment Letter, the Fee
Letter and the engagement letter of even date herewith (the “Engagement
Letter”) between the Borrower and the Financial Institutions (as defined in the
Fee Letter) and to use all commercially reasonable efforts to refinance the
Bridge Loans as promptly as practicable following the Closing Date;

 
 
- negative covenants:
limitations with respect to debt (including guarantees of indebtedness); liens
(other than, among other exceptions to be mutually agreed, liens granted
pursuant to the terms  of that certain Indenture, dated as of January 1, 1954,
between Commonwealth Edison Company and Continental Illinois National Bank and
Trust Company of Chicago, as amended, supplemented or otherwise modified from
time to time through the date hereof); sale and leasebacks; restrictions on
subsidiary distributions; restricted payments (other than ordinary cash
dividends economically equivalent (on a per share basis after giving effect to
the Acquisition) to the ordinary cash dividends historically paid by the
Borrower plus any increase to such dividends that is consistent with historical
practice); share repurchases; mergers and consolidations; change in operations
and hedging; sale of assets (including subsidiary interests); investments;
transactions with affiliates; and

 
 
- events of default:
failure to make payments when due, default under other material indebtedness
(including, without limitation, the Existing AGL Credit Agreement),
noncompliance with covenants, breaches of representations and warranties,
bankruptcy, judgments in excess of specified amounts, ERISA, invalidity
of guarantees, failure to comply with the Commitment Letter, the Fee Letter and
the Engagement Letter, or to comply with mandatory prepayment provisions; and
“change of control” (to be defined in a mutually agreed upon manner).

 
 
Annex B-9

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Conditions Precedent to

 
Borrowing:
The several obligations of the Lenders to make, or cause one of their respective
affiliates to make, the Bridge Loans will be subject only to the conditions
precedent referred to in Section 2 of the Commitment Letter and in Annex C (in
each case including by way of express references provided for therein).  In
addition, all representations and warranties in the Loan Documents shall be made
and be accurate on the Closing Date, but shall be subject to the Certain Funds
Provision as defined in the Commitment Letter.

 
Assignments and
Participations:
 
Prior to the Closing Date, each of the Lenders may assign all or (subject to
minimum assignment amount requirements) any part of its commitments under the
Bridge Facility, in whole or in part, to other Lenders provided that no such
assignment shall relieve such Lender of its obligations to fund that portion of
the commitments under the Bridge Facility so assigned, except to the extent each
of the Borrower and the Administrative Agent has consented to such assignment
(such consent not to be unreasonably withheld or delayed) and provided that such
consent shall be deemed to have been given if the Borrower has not responded
within ten (10) business days of a request for such consent, and such assignee
is evidenced by such assignee Lender becoming a party to the Loan Documents,
whereupon, in the case of each of clause (x) and (y), such assigning Lender’s
commitments hereunder with respect to the Bridge Facility shall be reduced at
such time by an amount equal to the commitment assumed by such Lender. From the
Closing Date, each of the Lenders may assign all or (subject to minimum
assignment amount requirements) any part of its Bridge Loans to its affiliates
(other than natural persons) or one or more banks, financial institutions or
other entities that are “Eligible Assignees,” as defined in the Bridge Loan
Agreement.  Upon such assignment, such Eligible Assignee will become a Lender
for all purposes under the Loan Documents; provided that assignments made to
Lender affiliates and other Lenders will not be subject to the above described
minimum assignment amount requirements.  A $3,500 processing fee will be
required in connection with any such assignment (except in the case of
assignments made by or to Goldman Sachs).  The Lenders will also have the right
to sell participations, subject to customary limitations on voting rights, in
their respective Bridge Loans.

 
Requisite Lenders:
Amendments and waivers will require the approval of Lenders holding more than
50% of the Bridge Loans then outstanding, except that no amendment may (i)
extend the maturity of any Bridge Loan or change the time of payment of interest
on any Bridge Loan, (ii) reduce the rate of interest or the principal amount of
any Bridge Loan, (iii) alter the prepayment provisions of any Bridge Loan, or
(iv) reduce the percentage of holders necessary to modify or change the Bridge
Loans, in each case without the consent of each Lender affected thereby.

 
 
Annex B-10

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Taxes:
The Bridge Facility will provide that all payments are to be made free and clear
of any taxes (other than franchise taxes and taxes on overall net income),
imposts, assessments, withholdings or other deductions whatsoever.  Lenders will
furnish to the Administrative Agent appropriate certificates or other evidence
of exemption from U.S. federal tax withholding.

 
 
Indemnity:
The Bridge Facility will provide customary and appropriate provisions relating
to indemnity and related matters in a form reasonably satisfactory to the
Arranger, the Administrative Agent and the Lenders.

 
 
Governing Law and

 
Jurisdiction:
The Bridge Loan Agreement will provide that the Borrower will submit to the
exclusive jurisdiction and venue of the federal and state courts of the State of
New York. The parties to the Loan Documents will waive any right to trial by
jury.  New York law will govern the Loan Documents.

 
 
Counsel to the Arranger and

 
 Administrative Agent:
Milbank Tweed Hadley & McCloy LLP.

 

 
  Annex B-11

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. ANNEX C
 
AGL Capital Corporation
 
Summary of Conditions Precedent to the Bridge Facility
 
Reference is made to the Commitment Letter, of which this Annex C is a
part.  Certain capitalized terms used herein are defined in the Commitment
Letter.
 
A.
CONDITIONS PRECEDENT TO THE BRIDGE FACILITY

 
1.  
Concurrent Transactions:  The Acquisition Equity Consideration, together with
(x) the proceeds from borrowings made on the Closing Date pursuant to the Notes
and/or any other Permanent Financing (or in lieu thereof, the Bridge Loans) and
(y) cash on the balance sheets of the Company and the Acquired Business on the
Closing Date, will be the sole and sufficient sources of funds to consummate the
Acquisition, refinance certain existing indebtedness of the Acquired Business
and pay all related fees, commissions and expenses.  The terms, conditions and
other provisions of the Acquisition Documents (including, without limitation,
the form and structure of the Acquisition) will be reasonably satisfactory to
the Arranger (it being agreed that the terms, conditions and other provisions of
the Acquisition Documents (as in effect on the date hereof), including the form
and structure of the Acquisition, are reasonably satisfactory to the Arranger)
and the Acquisition shall have been consummated substantially concurrently with
the closing of the Bridge Facility and in accordance with all applicable laws
and the terms of the Acquisition Documents without giving effect to any
amendments, supplements, extensions, waivers or other modifications by any party
(other than waivers or modifications solely by the Acquired Business with
respect to breaches of representations and warranties made by HoldCo or one of
its subsidiaries) thereto which are material and adverse to the Lenders or the
Arranger (including, without limitation, with respect to the conditions
precedent referred to therein), or consents thereunder, without the consent of
the Arranger (it being understood that (x) any increase or reduction in the
purchase price in excess of $150.0 million in the aggregate since the date
hereof, or any change in the percentage of the Acquisition Consideration
constituting the Acquisition Cash Consideration, shall be deemed to be material
and adverse and (y) any increase or reduction in the purchase price equal to or
less than $150.0 million in the aggregate since the date hereof shall not be
deemed to be material and adverse).  There shall not have occurred and be
continuing (pro forma for the Acquisition and the financing thereof) (x) a
financial covenant default under any of the Loan Documents with respect to the
Total Debt to Capitalization Ratio or (y) any default or event of default under
any other indebtedness of HoldCo or any of its subsidiaries (including the
Company and the Acquired Business) having an aggregate principal amount
outstanding in excess of $100,000,000 except, in the case of this clause (y), to
the extent resulting solely from the consummation of the Transactions and to the
extent such indebtedness is not outstanding after the Closing Date; provided
that the Company shall not be permitted to repay (for the avoidance of doubt,
prior to, on or after the Closing Date) more than $25,000,000 in aggregate
principal amount of any such defaulted indebtedness in order to cure the default
or defaults thereunder.  Without limiting the generality of the foregoing, an
amendment to each of the Existing AGL Credit Agreement and the Existing LC
Reimbursement Agreements (as defined below) (such amendments, the “Permitted
Existing Debt Amendments”) on terms previously disclosed in writing to the
Arranger, shall have become effective in accordance with its
terms.  Substantially concurrently with the consummation of the Acquisition, all
pre-existing indebtedness of the Acquired Business and its subsidiaries shall
have been repaid or repurchased in full, all commitments relating thereto shall
have been terminated, and all liens or security interests related thereto shall
have been terminated or released, such that after giving effect to the
Transactions, HoldCo and its subsidiaries (including the Company and the
Acquired Business) shall have no outstanding indebtedness or preferred stock
other than (a) loans under the Bridge Facility, (b) any Notes or any other
Permanent Financing, (c) indebtedness set forth in the “Debt Schedule” delivered
to GS Bank prior to the date hereof and indicated as “Surviving Indebtedness”,
(d) certain commercial paper or Permitted Letters of Credit of HoldCo and its
subsidiaries (but expressly not the Acquired Business) with new commercial paper
or Permitted Letters of Credit or, with the prior written consent of GS Bank,
other indebtedness satisfactory to GS Bank and (e) any Permitted Borrower
Debt.  Notwithstanding any provision to the contrary in this Commitment Letter,
the commitments in respect of the Bridge Facility shall be automatically reduced
on a dollar-for-dollar basis by the amount of any reduction to the Acquisition
Consideration.

 
 
 

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“Existing LC Reimbursement Agreements” means, collectively, (i) Reimbursement
Agreement, dated as of October 14, 2010, among Pivotal Utility Holdings, Inc.,
as Applicant, AGL Resources Inc., as Guarantor, JPMorgan Chase Bank, N.A., as
Administrative Agent, the other banks party thereto, with respect to the
$54,600,000 New Jersey Economic Development Authority Gas Facilities Refunding
Revenue Bonds (Pivotal Utility Holdings, Inc. Project) Series 2007 (AMT), (ii)
Reimbursement Agreement, dated as of October 14, 2010, among Pivotal Utility
Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, the other
banks party thereto, with respect to the $46,500,000 Gas Facilities Refunding
Revenue Bonds (Pivotal Utility Holdings, Inc. Project) Series 2005, (iii)
Reimbursement Agreement, dated as of October 14, 2010, among Pivotal Utility
Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, JPMorgan Chase
Bank, N.A., as Administrative Agent, the other banks party thereto, with respect
to the $39,000,000 New Jersey Economic Development Authority Gas Facilities
Refunding Revenue Bonds (NUI Corporation Project) Series 1996 A and (iv)
Reimbursement Agreement, dated as of October 14, 2010, among Pivotal Utility
Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, the other
banks party thereto, with respect to the $20,000,000 Industrial Development
Refunding Revenue Bonds (Pivotal Utility Holdings, Inc. Project) Series 2005.
 
2.  
Financial Statements.  The Arranger shall have received (i) at least 30 days
prior to the Closing Date, audited consolidated financial statements of each of
HoldCo and the Acquired Business for each of the three fiscal years ending at
least ninety-five (95) days prior to the Closing Date and meeting the
requirements of Regulation S-X; (ii) as soon as available, and in any event at
least 30 days prior to the Closing Date, unaudited consolidated financial
statements for any interim period or periods of each of HoldCo and the Acquired
Business ended after the date of the most recent audited financial statements
and more than 45 days prior to the Closing Date; (iii) additional audited (if
available) and unaudited financial statements for all recent, probable or
pending acquisitions (other than the Acquired Business) meeting the requirements
of Regulation S-X occurring at least 30 days prior to the Closing Date; and (iv)
pro forma financial statements giving effect to the Transactions and, to the
extent applicable, any probable or pending acquisitions or divestitures, meeting
the requirements of Regulation S-X.

 
3.  
Performance of Obligations.  All costs, fees, expenses (including, without
limitation, legal fees and expenses) and other compensation contemplated by the
Commitment Letter and the Fee Letter payable to GS Bank, the Arranger, the
Administrative Agent or the Lenders shall have been paid to the extent due and
invoiced in reasonable detail and the Company shall have complied in all
material respects with all of its other obligations under the Commitment Letter
and the Fee Letter.

 
 
 

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4.  
Minimum Liquidity. After giving effect to the Transactions, including the
funding of the Bridge Facility, the Company shall have (A) (x) unfunded
commitments available for borrowing under the Existing AGL Credit Facility, any
Permitted Incremental Facility, any Permitted Nicor Revolver Refinancing and any
Permitted Combined Revolver Refinancing less (y) the aggregate amount of any
outstanding commercial paper of HoldCo and its subsidiaries, plus (B)
unrestricted cash and cash equivalents at HoldCo or the Company in an aggregate
amount, in the case of (A) plus (B), equal to not less than $200.0 million.

 
5.  
Customary Closing Documents.  The Arranger shall have received: (i) customary
(A) notice of borrowing, (B) legal opinions, (C) corporate records and (D)
documents from public officials and officer’s certificates; (ii) customary
evidence of authority; (iii) evidence of (A) clearance from the Securities
Exchange Commission of the joint proxy statement and requisite approvals from
the shareholders of HoldCo and Nicor, (B) state regulatory approvals from each
of the Illinois Commerce Commission and the California Public Utilities
Commission), (C) requisite approval of the Federal Communications Commission and
compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (as amended), and the rules and regulations promulgated
thereunder, and other applicable foreign or supranational antitrust and
competition laws; (iv) absence of injunction with respect to the Transactions
and absence of injunction or litigation (including any pending or existing
action, suit or proceeding by any governmental or regulatory authority or any
other person in any jurisdiction) affecting the Bridge Facility; (v) customary
evidence of insurance; and (vi)  a solvency certificate from the chief financial
officer of HoldCo with respect to HoldCo and its subsidiaries taken as a whole
in the form set forth in Exhibit 1 to this Annex C.  The Arranger will have
received at least 10 days prior to the Closing Date all documentation and other
information required by bank regulatory authorities and requested at least 15
days prior to the Closing Date under applicable “know-your-customer” and
anti-money laundering rules and regulations, including the Patriot Act.

 
6.  
Prior Marketing of Notes.  The Company shall have used commercially reasonable
efforts to cause the Notes to be issued or placed on or prior to the Closing
Date, which efforts will include, without limitation, (A) the completion and
delivery to the Financial Institutions (as defined in the Fee Letter) at least
twenty (20) consecutive business days prior to the Closing Date (the period
between such delivery and the Closing Date, the “Notes Marketing Period”), of a
preliminary prospectus, preliminary offering memorandum or preliminary private
placement memorandum (each, an “Offering Memorandum”) for the offer and sale of
the Notes pursuant to a registration statement, Rule 144A or other private
placement, in each case, under the Securities Act of 1933, as amended (the
“Securities Act”), containing such disclosures as may be required by applicable
laws, as are customary for such a document (including, to the extent applicable,
all audited, unaudited, pro forma and other financial statements and schedules
of HoldCo and the Company as would be required in a registered public offering
of Notes by the Company), which Offering Memorandum will be in a form that will
enable the independent registered public accountants of the Company to render a
customary “comfort letter” (including customary “negative assurances”), and (B)
delivery by such independent registered public accountants of draft customary
“comfort letters” in the form that such accountants are prepared to issue upon
completion of customary procedures at pricing and closing of such Notes (such
drafts shall be delivered for review and comment by the Financial Institutions
within a reasonable time prior to their issuance); provided, that such Notes
Marketing Period shall not include (i) any period during which the Notes cannot
be offered or sold because of a black-out period imposed by the Company for any
reason or by applicable securities law or (ii) any day from and including (A)
December 17, 2010 through and including January 3, 2011, (B) August 19, 2011
through and including September 5, 2011, (C) November 18, 2011 through and
including November 28, 2011 or (D) December 16, 2011 through and including
January 2, 2012.

 
 
 

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7.  
Minimum Rating.  On or prior to the Closing Date, the Company shall have been
assigned an updated public corporate family rating of at least Baa3 by Moody’s
and an updated public corporate credit rating of no less than BBB- by S&P, in
each case pro forma for the Transactions and with stable or better outlook. All
such ratings shall be determined from the most recent public announcement or
publication of any changes in such ratings and shall have continued through the
Closing Date.

 

 
 

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Exhibit 1 to
Annex C

Form of Solvency Certificate

SOLVENCY CERTIFICATE
OF
AGL RESOURCES INC. AND ITS SUBSIDIARIES

I, the chief financial officer of AGL Resources Inc., a Georgia corporation
(“Holdings”), in that capacity only and not in my individual capacity (and
without personal liability) DO HEREBY CERTIFY AS FOLLOWS:

1.           Reference is made to that certain Bridge Loan Credit Agreement,
dated as of December [__], 2010 (as it may be amended, supplemented or otherwise
modified, the “Credit Agreement”; the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among AGL Capital
Corporation, a Nevada corporation, AGL Resources Inc., as Guarantor, the Lenders
party thereto from time to time, Goldman Sachs Bank USA, as Administrative
Agent, [______], as Syndication Agent, and   [], as Documentation Agent.

2.           I  have reviewed the terms of the Credit Agreement and the
definitions and provisions contained in the Credit Agreement relating thereto,
together with each of the Related Agreements, and, in my opinion, have made, or
have caused to be made under my supervision, such examination or investigation
as is necessary to enable me to express an informed opinion as to the matters
referred to herein.

3.           Based upon my review and examination described in paragraph 3
above, I certify that as of the date hereof, after giving effect to the
consummation of the Transactions:

(a)           the present fair saleable value of all present assets of Holdings
and its subsidiaries, taken as a whole, is greater than the debt (including
contingent liabilities) of Holdings and its subsidiaries, taken as a whole;

(b)           the capital of Holdings and its subsidiaries, taken as a whole, is
not unreasonably small in relation to their business as contemplated on the
Closing Date and reflected in the Projections or with respect to any transaction
contemplated to be undertaken after the Closing Date;

(c)           Holdings and its subsidiaries, taken as a whole, have not incurred
and do not intend to incur, or believe (nor should they reasonably believe) that
they will incur, debts beyond their ability to pay such debts as they mature in
the ordinary course of business; and

(d)           the sum of the debts of Holdings and its subsidiaries, taken as a
whole, is less than all of the property, at fair valuation, of Holdings and its
subsidiaries, taken as a whole, exclusive of property transferred, concealed or
removed with intent to hinder, delay or defraud the creditors of Holdings and
its subsidiaries and (ii) property that may be exempted from the bankruptcy
estate of Holdings and its subsidiaries.

provided, that, for purposes of the foregoing clauses (a) through (d), the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No.5).

The foregoing certifications are made and delivered as of
[                                                                                                           ].

________________________
Name:
Title: Chief Financial Officer

 
 

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Project Ottawa Debt Schedule

Debt Instrument
Exclusions to Clear Market
Exclusions to Commitment Reductions and Mandatory Prepayment
Survives Closing Date
AGL Resources Inc. and its Subsidiaries
1. Credit Agreement, dated as of September 15, 2010, among AGL Resources Inc.,
AGL Capital Corporation, the Lenders party thereto, Wells Fargo Bank, National
Association as Administrative Agent, and the other agents party thereto
Yes, to the extent constituting Permitted Existing Debt Amendments, Permitted
Incremental Facility and/or Permitted Combined Revolver Refinancing
Yes, to the extent constituting Permitted Existing Debt Amendments, Permitted
Incremental Facility and/or Permitted Combined Revolver Refinancing
Yes
2. AGL Letter of Credit Facilities
     
(i) Reimbursement Agreement, dated as of October 14, 2010, among Pivotal Utility
Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, JPMorgan Chase
Bank, N.A., as Administrative Agent, the other banks party thereto, with respect
to the $54,600,000 New Jersey Economic Development Authority Gas Facilities
Refunding Revenue Bonds (Pivotal Utility Holdings, Inc. Project) Series 2007
(AMT)
Yes, to the extent constituting Permitted Existing Debt Amendments
No
Yes
(ii) Reimbursement Agreement, dated as of October 14, 2010, among Pivotal
Utility Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, The Bank
of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, the
other banks party thereto, with respect to the $46,500,000 Gas Facilities
Refunding Revenue Bonds (Pivotal Utility Holdings, Inc. Project) Series 2005
Yes, to the extent constituting Permitted Existing Debt Amendments
No
Yes
(iii) Reimbursement Agreement, dated as of October 14, 2010, among Pivotal
Utility Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, JPMorgan
Chase Bank, N.A., as Administrative Agent, the other banks party thereto, with
respect to the $39,000,000 New Jersey Economic Development Authority Gas
Facilities Refunding Revenue Bonds (NUI Corporation Project) Series 1996 A
Yes, to the extent constituting Permitted Existing Debt Amendments
No
Yes
(iv) Reimbursement Agreement, dated as of October 14, 2010, among Pivotal
Utility Holdings, Inc., as Applicant, AGL Resources Inc., as Guarantor, The Bank
of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, the
other banks party thereto, with respect to the $20,000,000 Industrial
Development Refunding Revenue Bonds (Pivotal Utility Holdings, Inc. Project)
Series 2005
Yes, to the extent constituting Permitted Existing Debt Amendments
No
Yes
3. AGL Loan Agreements (Revenue Bonds)
     
(i) Loan Agreement, dated June 1, 1996, between NUI Utilities, Inc. (f/k/a NUI
Corporation) and New Jersey Economic Development Authority pursuant to which
Pivotal Utility Holdings Inc. (f/k/a NUI Utilities, Inc.) issued $39.0 million
bonds, due June 1, 2026, as amended by that certain First Amendment to Loan
Agreement, dated September 1, 2010
No
No
Yes
(ii) Loan Agreement, dated December 1, 1998, between NUI Utilities, Inc. (f/k/a
NUI Corporation) and New Jersey Economic Development Authority, pursuant to
which NUI Utilities issued $40.0 million 5.25% bonds due November 1, 2033
No
No
Yes
(iii) Loan Agreement, dated April 1, 2005, between Pivotal Utility Holdings,
Inc. and Brevard County, FL, as amended by that certain First Amendment to Loan
Agreement, dated June 1, 2008, as further amended by that certain Second
Amendment to Loan Agreement, dated September 1, 2010, pursuant to which Pivotal
Utility Holdings, Inc. issued $20 million bonds due October 1, 2024
 
No
No
Yes
(iv) Loan Agreement, dated May 1, 2005, between Pivotal Utility Holdings, Inc.
and New Jersey Economic Development Authority, as amended by that certain First
Amendment to Loan Agreement, dated June 1, 2008, as further amended by that
certain Second Amendment to Loan Agreement, dated September 1, 2010, pursuant to
which Pivotal Utility Holdings, Inc. issued $46.5 million bonds due October 1,
2022
No
No
Yes
(v) Loan Agreement, dated May 1, 2007, between Pivotal Utility Holdings,
Inc.  (f/k/a NUI Utilities, Inc. and NUI Corporation) and New Jersey Economic
Development Authority, as amended by that certain First Amendment to Loan
Agreement, dated June 1, 2008, as further amended by that certain Second
Amendment to Loan Agreement, dated September 1, 2010, pursuant to which NUI
Utilities issued $54.6 million bonds due June 1, 2032.
No
No
Yes
4. AGL Medium Term Notes issued pursuant to that certain Indenture, dated as of
December 1, 1989,  between Atlanta Gas Light Company and Bankers Trust Company,
as the Trustee.
     
(i) $5 million aggregate principal amount of 8.4% medium term notes issued by
Atlanta Gas Light Company maturing June 5, 2012
 
No
No
Yes
(ii) $5 million aggregate principal amount of 8.3% medium term notes issued by
Atlanta Gas Light Company maturing June 19, 2012
 
No
No
Yes
(iii) $5 million aggregate principal amount of 8.3% medium term notes issued by
Atlanta Gas Light Company maturing July 1, 2012
 
No
No
Yes
(iv) $22 million aggregate principal amount of 7.2% medium term notes issued by
Atlanta Gas Light Company due 2017
 
No
No
Yes
(v) $30 million aggregate principal amount of 9.1% medium term notes issued by
Atlanta Gas Light Company due 2021
 
No
No
Yes
(vi) $5 million aggregate principal amount of 8.55% medium term notes issued by
Atlanta Gas Light Company due 2022
 
No
No
Yes
 
(vii) $25 million aggregate principal amount of 8.7% medium term notes issued by
Atlanta Gas Light Company due 2022
 
No
No
Yes
(viii) $6 million aggregate principal amount of 8.55% medium term notes issued
by Atlanta Gas Light Company due 2022
 
No
No
Yes
(ix) $10 million aggregate principal amount of 8.55% medium term notes issued by
Atlanta Gas Light Company due 2022
 
No
No
Yes
(x) $30 million aggregate principal amount of 6.55% medium term notes issued by
Atlanta Gas Light Company due 2026
 
No
No
Yes
 
(xi) $53.5 million aggregate principal amount of 7.3% medium term notes issued
by Atlanta Gas Light Company due 2027.
 
No
No
Yes
5. AGL Senior Notes (issued pursuant to that certain Indenture, dated as of
February 20, 2001, among AGL Capital Corporation, as Issuer, AGL Resources Inc.,
as Guarantor, and The Bank of New York, as Trustee)
     
(i) $300 million aggregate principal amount of 7.125% Senior Notes issued by AGL
Capital Corporation due 2011
 
Yes, to the extent constituting Permitted Delayed Draw Facility or Permitted
2011 Notes Refinancing
Yes, to the extent constituting Permitted Delayed Draw Facility or Permitted
2011 Notes Refinancing
Yes
(ii) $225 million aggregate principal amount of 4.45% Senior Notes issued by AGL
Capital Corporation due 2013
 
No
No
Yes
(iii) $200 million aggregate principal amount of 4.95% Senior Notes issued by
AGL Capital Corporation due 2015
 
No
No
Yes
(iv) $300 million aggregate principal amount of 6.375% Senior Notes issued by
AGL Capital Corporation due 2016
 
No
No
Yes
(v) $300 million aggregate principal amount of 5.25% Senior Notes issued by AGL
Capital Corporation due 2019
 
No
No
Yes
(vi) $250 million aggregate principal amount of 6.00% Senior Notes issued by AGL
Capital Corporation due 2034
No
No
Yes
6. Credit Agreement, dated as of November 2, 2006, among Southstar Energy
Services LLC, as Borrower, Bank of America, N.A., as Administrative Agent, Swing
Line Lender and L/C Issuer and the other Lenders party thereto from time to
time, as amended, restated, modified, renewed, refunded, replaced or refinanced
Yes, provided such refinancing will not commence prior to July 1, 2011
Yes, provided such refinancing will not commence prior to July 1, 2011
Yes
7. Florida Capital Leases to the extent existing as of December 06, 2010
No
No
Yes
Nicor Inc.  and its Subsidiaries
1. 364-Day Credit Agreement, dated as of April 23, 2010, among Northern Illinois
Gas Company, as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and
the other parties thereto from time to time, as amended, amended and restated,
supplemented or otherwise modified from time to time through the date hereof.
Yes
 
Yes
No
2. Three Year Credit Agreement, dated as of April 23, 2010, among Northern
Illinois Gas Company and Nicor Inc., as Borrowers, JPMorgan Cash Bank, N.A., as
Administrative Agent, and the other parties thereto from time to time, as
amended, amended and restated, supplemented or otherwise modified from time to
time through the date hereof.
Yes, to the extent constituting Permitted Nicor Revolver Refinancing or
Permitted Combined Revolver Refinancing
Yes, to the extent constituting Permitted Nicor Revolver Refinancing or
Permitted Combined Revolver Refinancing
No
3. Nicor First Mortgage Bonds (issued pursuant to that certain Indenture, dated
as of January 1, 1954, between Commonwealth Edison Company and Continential
Illinois National Bank and Trust Company of Chicago)
     
(i) 6.625% first mortgage bonds issued by Northern Illinois Gas Company maturing
February 1, 2011
 
Yes, provided that such financing (x) does not exceed an amount equal to $75.0
million, and (y) will commence on or after the date that is six months prior to
the stated maturity thereof (as in effect on the date hereof) or at a lower cost
of funds (calculating such cost on an aggregate after-tax basis)
Yes, provided that such financing (x) does not exceed an amount equal to $75.0
million, and (y) will commence on or after the date that is six months prior to
the stated maturity thereof (as in effect on the date hereof) or at a lower cost
of funds (calculating such cost on an aggregate after-tax basis)
Yes
(ii) $50 million of 7.20% first mortgage bonds issued by Northern Illinois Gas
Company due 2016
 
No
No
Yes
(iii) $50 million of 4.70% first mortgage bonds issued by Northern Illinois Gas
Company due 2019
 
No
No
Yes
(iv) $50 million of 5.80% first mortgage bonds issued by Northern Illinois Gas
Company due 2023
 
No
No
Yes
(v) $50 million of 6.58% first mortgage bonds issued by Northern Illinois Gas
Company due 2028
 
No
No
Yes
(vi) $50 million of 5.90% first mortgage bonds issued by Northern Illinois Gas
Company due 2032
No
No
Yes
(vii) $50 million of 5.90% first mortgage bonds issued by Northern Illinois Gas
Company due 2033
 
No
No
Yes
(viii) $50 million of 5.85% first mortgage bonds issued by Northern Illinois Gas
Company due 2036
 
No
No
Yes
(ix) $75 million of 6.25% first mortgage bonds issued by Northern Illinois Gas
Company due 2038
 
No
No
Yes
4. Refinancing of 6.79% Senior Secured Notes issued pursuant to that certain
Trust Indenture and Security Agreement, dated as of May 15, 2001, between
Horizon Pipeline Company, L.L.C, as the Company, and BNY Midwest Trust Company,
as the Trustee, amended, restated, modified, renewed, refunded, replaced or
refinanced
Yes, provided that such refinancing will (x) not exceed $49.8 million and (y)
commence on or after the date that is six months prior to the stated maturity
thereof (as in effect on the date hereof) or at a lower cost of funds
(calculating such cost on an aggregate after-tax basis)
Yes, provided that such refinancing will (x) not exceed $49.8 million and (y)
commence on or after the date that is six months prior to the stated maturity
thereof (as in effect on the date hereof) or at a lower cost of funds
(calculating such cost on an aggregate after-tax basis)
Yes
5. $120 MM Central Valley debt financing - March 2012
 
Yes, provided that such financing will not commence prior to September 30, 2011
and such financing will be done in consultation with AGL Resources Inc. as to
structure, terms and conditions thereof
Yes, provided that such financing will not commence prior to September 30, 2011
and such financing will be done in consultation with AGL Resources Inc.as to
structure, terms and conditions thereof
Yes

 
 
 

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