GUARANTEE

GUARANTEE, dated as of June 16, 2003, made by AGL RESOURCES INC., a Georgia
corporation (the “Guarantor”), in favor of SUNTRUST BANK, as administrative
agent (in such capacity, the “Administrative Agent”) for the lenders (the
“Lenders”) parties to the 364-Day Credit Agreement, dated as of June 16, 2003
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Guarantor, AGL CAPITAL CORPORATION (the “Borrower”),
the Lenders, SUNTRUST BANK, as Administrative Agent, Wachovia Bank, National
Association and Bank One, NA, as Co-Documentation Agents, and The Bank of
Tokyo-Mitsubishi, Ltd. and Credit Lyonnais, New York Branch, as Co-Syndication
Agents.

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to
make Loans to the Borrower upon the terms and subject to the conditions set
forth therein;

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective Loans to the Borrower under the Credit Agreement, to the
obligation of the Issuing Lender to issue Letters of Credit for the account of
the Borrower thereunder, and to the obligation of the Lenders to participate in
the Letters of Credit, that the Guarantor shall have executed and delivered this
Guarantee to the Administrative Agent for the ratable benefit of the Lenders;
and

WHEREAS, the Guarantor is the parent of the Borrower, and it is to the advantage
of Guarantor that the Lenders make the Loans to the Borrower, the Issuing Lender
issue the Letters of Credit for the account of the Borrower, and the Lenders
participate in the Letters of Credit.

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Loans to the Borrower under the
Credit Agreement, the Issuing Lender to issue Letters of Credit for the account
of the Borrower thereunder, and the Lenders to participate in the Letters of
Credit thereunder, the Guarantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:

1.

Defined Terms.  (a)  Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

(b)

The following terms shall have the meanings set forth below:

“Lender Hedge Agreement”:  all Hedge Agreements entered into by the Borrower
with any Lender (or any Affiliate of any Lender) in connection with the Loans.

“Obligations”:  the collective reference to the unpaid principal of and interest
on the Loans and all other obligations and liabilities of the Borrower to the
Administrative Agent and the Lenders (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and Reimbursement Obligations and interest accruing at the
then applicable rate provided in the Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceedings, relating to the Borrower whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to the
Administrative Agent or any Lender (or in the case of any Lender Hedge
Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise pursuant to the Credit Agreement, any Letter of Credit, the Loans, any
Lender Hedge Agreement or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrower or the Guarantor pursuant to the terms of the Credit Agreement or this
Guarantee or any other Loan Document).

(c)

The words “hereof,” “herein” and “hereunder” and words of similar import when
used in this Guarantee shall refer to this Guarantee as a whole and not to any
particular provision of this Guarantee, and section and paragraph references are
to this Guarantee unless otherwise specified.

(d)

The meanings given to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms.

2.

Guarantee. (a) The Guarantor hereby unconditionally and irrevocably guarantees
to the Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.

(b)

The Guarantor further agrees to pay any and all expenses (including, without
limitation, all fees and disbursements of counsel actually incurred) which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guarantee.  This
Guarantee shall remain in full force and effect until the Obligations are paid
in full, no Letter of Credit shall be outstanding and the Revolving Commitments
are terminated, notwithstanding that from time to time prior thereto the
Borrower may be free from any Obligations.

(c)

No payment or payments made by the Borrower or any other Person or received or
collected by the Administrative Agent or any Lender from the Borrower or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application, at any time or from time to time, in reduction of
or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment or payments (other than payments made by the
Guarantor in respect of the Obligations or payments received or collected from
the Guarantor in respect of the Obligations), remain liable for the Obligations
until the Obligations are paid in full, no Letter of Credit shall be outstanding
and the Revolving Commitments are terminated.

(d)

The Guarantor agrees that whenever, at any time, or from time to time, it shall
make any payment to the Administrative Agent or any Lender on account of its
liability hereunder, it will notify the Administrative Agent and such Lender in
writing that such payment is made under this Guarantee for such purpose.

3.

Right of Set-off.  Upon the occurrence of any Event of Default, the
Administrative Agent and each Lender is hereby irrevocably authorized at any
time and from time to time (unless the Administrative Agent or such Lender, as
applicable, has agreed to the contrary) without notice to the Guarantor, any
such notice being expressly waived by the Guarantor, to set off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Administrative Agent or
such Lender to or for the credit or the account of the Guarantor, or any part
thereof in such amounts as the Administrative Agent or such Lender may elect,
against or on account of the Obligations and liabilities of the Guarantor to the
Administrative Agent or such Lender hereunder and claims of every nature and
description of the Administrative Agent or such Lender against the Guarantor, in
any currency, whether arising hereunder, under the Credit Agreement, any other
Loan Document or otherwise, as the Administrative Agent or such Lender may
elect, whether or not the Administrative Agent or such Lender has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured.  The Administrative Agent and each Lender shall notify
the Guarantor promptly as of any such set-off and the application made by the
Administrative Agent or such Lender, as the case may be, of the proceeds
thereof; provided that the failure to give such notice shall not affect the
validity of such set-off and application.  The rights of the Administrative
Agent and each Lender under this paragraph are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.

4.

No Subrogation.  Notwithstanding any payment or payments made by the Guarantor
hereunder, or any set-off or application of funds of the Guarantor by the
Administrative Agent or any Lender, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or against any collateral security or guarantee or right of
offset held by the Administrative Agent or any Lender for the payment of the
Obligations, nor shall the Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower in respect of payments made by
the Guarantor hereunder, until all amounts owing to the Administrative Agent and
the Lenders by the Borrower on account of the Obligations are paid in full, no
Letter of Credit shall be outstanding and the Revolving Commitments terminated.
 If any amount shall be paid to the Guarantor on account of such subrogation
rights at any time when all of the Obligations shall not have been paid in full,
such amount shall be held by the Guarantor in trust for the Administrative Agent
and the Lenders, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Administrative
Agent in the exact form received by the Guarantor (duly indorsed by the
Guarantor to the Administrative Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.

5.

Amendments, etc. with respect to the Obligations; Waiver of Rights.  The
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor, and without notice to or further
assent by the Guarantor, any demand for payment of any of the Obligations made
by the Administrative Agent or any Lender may be rescinded by the Administrative
Agent or such Lender, and any of the Obligations continued, and the Obligations,
or the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender, and the Credit Agreement, any other Loan
Document and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent (or the Required Lenders, as the case may be) may deem
advisable from time to time, and any guarantee or right of offset at any time
held by the Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released.  Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto.  When making
any demand hereunder against the Guarantor, the Administrative Agent or any
Lender may, but shall be under no obligation to, make a similar demand on the
Borrower or any other guarantor, and any failure by the Administrative Agent or
any Lender to make any such demand or to collect any payments from the Borrower
or any such other guarantor or any release of the Borrower or such other
guarantor shall not relieve the Guarantor of its obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Administrative Agent or any Lender
against the Guarantor.  For the purposes hereof “demand” shall include the
commencement and continuance of any legal proceedings.

6.  Guarantee Absolute and Unconditional.  The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Administrative Agent or any Lender
upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Guarantee; and
all dealings between the Borrower or the Guarantor, on the one hand, and the
Administrative Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee.  The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or the
Guarantor with respect to the Obligations.  This Guarantee shall be construed as
a continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of the Credit Agreement or any
other Loan Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower against the Administrative Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance.  When
pursuing its rights and remedies hereunder against the Guarantor, the
Administrative Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any other
Person or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to pursue such other rights or remedies or to collect any
payments from the Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower or any such other Person or of any such collateral
security, guarantee or right of offset, shall not relieve the Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Lender against the Guarantor.  This Guarantee shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon the Guarantor and its successors and assigns thereof, and shall inure
to the benefit of the Administrative Agent and the Lenders, and their respective
successors, indorsees, transferees and assigns, until all the Obligations and
the obligations of the Guarantor under this Guarantee shall have been satisfied
by payment in full and the Revolving Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Obligations.

7.

Reinstatement.  This Guarantee shall continue to be effective, or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any substantial part of its property, or otherwise,
all as though such payments had not been made.

8.

Payments.  The Guarantor hereby agrees that the Obligations will be paid to the
Administrative Agent without set-off or counterclaim in U.S. Dollars at the
office of the Administrative Agent located at 303 Peachtree Street, N.E.,
Atlanta, Georgia  30308.

9.

Authority of Administrative Agent.  The Guarantor acknowledges that the rights
and responsibilities of the Administrative Agent under this Guarantee with
respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this
Guarantee shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Guarantor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and the Guarantor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.

10.

Notices.  All notices, requests and demands to or upon the Administrative Agent,
any Lender or the Guarantor to be effective shall be in writing (or by telex,
fax or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by mail,
when deposited in the mails by certified mail, return receipt requested, or (3)
if by telex, fax or similar electronic transfer, when sent and receipt has been
confirmed, addressed as follows:

(a)

if to the Administrative Agent or any Lender, at its address or transmission
number for notices provided in Section 10.2 of the Credit Agreement; and

(b)

if to the Guarantor, at its address or transmission number for notices set forth
under its signature below.

The Administrative Agent, each Lender and the Guarantor may change its address
and transmission numbers for notices by notice in the manner provided in this
Section.

11.

Severability.  Any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

12.

Integration.  This Guarantee represents the agreement of the Guarantor with
respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein.

13.  Amendments in Writing; No Waiver; Cumulative Remedies.  (a)  None of the
terms or provisions of this Guarantee may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Guarantor and
the Administrative Agent, provided that any provision of this Guarantee may be
waived by the Administrative Agent and the Lenders in a letter or agreement
executed by the Administrative Agent or by telex or facsimile transmission from
the Administrative Agent.

(b)

Neither the Administrative Agent nor any Lender shall by any act (except by a
written instrument pursuant to paragraph 13(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof.  No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof.  No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion.

(c)

The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.

14.

Section Headings.  The section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

15.

Successors and Assigns.  This Guarantee shall be binding upon the successors and
assigns of the Guarantor and shall inure to the benefit of the Administrative
Agent and the Lenders and their successors and assigns.

16.

GOVERNING LAW.  THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

17.

Submission to Jurisdiction; Waivers.  The Guarantor hereby irrevocably and
unconditionally:

(a)

Submits for itself and its property in any legal action or proceeding relating
to this Guarantee and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

(b)

consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same;

(c)

agrees that service of process in any such action or proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Guarantor at its address referred
to in Section 10(b) hereof or at such other address of which the Administrative
Agent shall have been notified pursuant thereto;

(d)

agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law or shall limit the right to sue in any
other jurisdiction; and

(e)

waives, to the maximum extent not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding referred to in this Section
17 any special, exemplary, punitive or consequential damages.

18.

WAIVER OF JURY TRIAL.  THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.

AGL RESOURCES INC.

By:

/s/ Andrew Evans

Andrew Evans

Vice President and Treasurer

Address for Notices:

817 West Peachtree Street, N.W.

Suite 1000

Atlanta, Georgia  30308

Attention:  Treasurer

Telephone:  (404) 584-3589

Fax:  (404) 584-3580

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