Document:

Guaranty Agreement by and between Atlanta Gas Light Company and AGL Resources
      Inc.

    
      
        

      

    

    Exhibit
      10.2

     

     

    GUARANTY
      AGREEMENT

    

    

    THIS
      GUARANTY AGREEMENT (“Guaranty”)
      by
      (hereinafter referred to as “Guarantor”)
      and
      ATLANTA GAS LIGHT COMPANY (hereinafter referred to as the “Company”)
      is
      effective December 13, 2005.

    

    WHEREAS,
      the Company provides natural gas delivery services to customers pursuant to
      the
      terms and conditions of various Rate Schedules, Terms of Service and Rules
      and
      Regulations approved by the Georgia Public Service Commission from time to
      time
      (collectively, the “Tariff”);

    

    WHEREAS,
      Section 3.21 of the Tariff provides that, prior to making or causing deliveries
      of gas into the Company’s system or making nominations or taking any other
      action on behalf of a Retail Customer (as defined in the Tariff), each “Pooler”
shall deposit with the Company, as security for the payment of all of the
      Pooler’s liabilities and obligations to the Company, a cash deposit, a letter of
      credit issued by a financial institution acceptable to the Company, a surety
      bond, or a guaranty issued by a corporation acceptable to the
      Company;

    

    WHEREAS,
      the undersigned Guarantor derives substantial benefit from the Pooler Agreement,
      and the Pooler and the undersigned Guarantor have requested that the Company
      accept the guaranty of the undersigned Guarantor in satisfaction of the Pooler’s
      obligations under Section 3.21 of the Tariff;

    

    WHEREAS,
      this Guaranty expresses the terms and conditions of the aforementioned
      guaranty;

    

    NOW,
      THEREFORE, for and in consideration of the premises and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged
      by
      the parties hereto, the undersigned Guaranty hereby agrees as
      follows:

    

    1.  Guarantor
      hereby irrevocably and unconditionally guarantees to the Company the due and
      punctual payment upon demand, of all liabilities and obligations now or
      hereafter arising or existing from time to time of the Pooler to the Company,
      including, without limitation, the following (collectively, the “Obligations”):
      (a)
      all charges under the Tariff applicable to the Pooler pursuant to Section 3.20
      of the Tariff, including, without limitation, all amounts due for fixed,
      variable, volumetric, special, rider and other charges pursuant to monthly
      bills
      rendered by the Company to the Pooler pursuant to Section 3.22.1 of the Tariff,
      all amounts due to the Company for the purchase by the Pooler of interstate
      storage inventory pursuant to Section 13.8 of the Tariff, all amounts due to
      the
      Company for the purchase by the Pooler of peaking inventory pursuant to Section
      13.11 of the Tariff, and all amounts due to the Company for the purchase by
      the
      Pooler of firm wellhead supplies pursuant to Section 13.14 of the Tariff; (b)
      all costs or charges, in addition to those set forth in the Tariff, that are
      passed by the Company to the Pooler pursuant to Section 3.8 or Section 3.11
      of
      the Tariff; (c) all costs or charges due to the Company pursuant to any of
      the
      rate schedules contained in the Tariff; (d) all costs or charges due to the
      Company pursuant to Sections 11, 13, 15, 17 and 20 of the Tariff, including
      without limitation any failure by the Pooler to pay any interstate pipeline
      company for any of the Company’s Interstate Transportation and Storage Services
      and Parking Capacity that are allocated to and assigned to the Pooler pursuant
      to Section 13 of the Tariff; (e) all returned check charges incurred by the
      Pooler pursuant to Section 3.9 of the Tariff; and (f) all late payment charges
      incurred by the Pooler pursuant to Section 3.10 of the Tariff. Guarantor further
      hereby assumes liability for, hereby guarantees payment to the Company, hereby
      agrees to pay, protect, and save the Company harmless from and against, and
      hereby indemnifies the Company from and against, any and all liabilities,
      obligations, losses, damages, costs and expenses (including, without limitation,
      reasonable attorney’s fees), causes of action, suits, claims, demands and
      judgments of any nature or description whatsoever (collectively, “Costs”),
      which
      may at any time be imposed upon, incurred by or awarded against the Company
      as a
      result of : (i) any failure by the Pooler to comply with any term or condition
      of the Obligation Documents (as defined below) including, without limitation,
      the obligations of the Pooler to indemnify the Company and to hold the Company
      harmless under the circumstances set forth in Section 3.16, Section 3.17 and
      Section 18.8 of the Tariff; (ii) any breach by the Pooler of any representation
      or warranty made by the Pooler to the Company pursuant to the Obligation
      Documents (as defined below) including, without limitation, the warranties
      of
      the Pooler pursuant to Section 3.15 and Section 3.16 of the Tariff; and (iii)
      any failure by the Pooler to pay any interstate pipeline company for any of
      the
      Company’s Interstate Transportation and Storage Services and Parking Capacity
      that are allocated to and assigned to the Pooler pursuant to Section 13 of
      the
      Tariff. The foregoing sentence shall not be deemed to result in Guarantor being
      liable for any payments that do not constitute Obligations. 

    

    This
      is a
      guaranty of payment and performance and not of collection. The liability of
      Guarantor under this Guaranty shall no be absolute, direct and immediate and
      not
      conditional or contingent upon the pursuit of any remedies against the Pooler
      or
      any other person (including, without limitation, other guarantors, if any),
      nor
      against any collateral for the Obligations or the Costs, nor upon any other
      condition or contingency not set forth herein. Guarantor waives any right to
      require that an action be brought against the Pooler or any other person or
      to
      require that resort be had to any collateral for the Obligations or the Costs,
      or to any balance of any credit on the books of the Company in favor of the
      Pooler or any other person. In the event, on account of the Bankruptcy Reform
      Act of 1978, as amended, whatsoever, now or hereafter in effect, which may
      be or
      become applicable (collectively, “Bankruptcy
      Laws”),
      the
      Pooler shall be relieved of or fail to incur any debt, obligation or liability
      as provided in the Obligation Documents (as defined below), Guarantor shall
      nevertheless be fully liable therefore. In the event of a default under the
      Obligation Document which is not cured within any applicable grace or cure
      period, the Company shall have the right to enforce its rights, powers and
      remedies thereunder or hereunder, in any order, and all rights, powers and
      remedies available to the Company in such event shall be non-exclusive and
      cumulative of all other rights, powers and remedies provided thereunder or
      hereunder or by law or in equity. 

    

    Notwithstanding
      anything in this Guaranty to the contrary, the aggregate amount for which
      Guarantor may be liable shall not exceed $63,881,520 million. 

    

    2.  For
      purposes of this Guaranty, all sums owing to the Company by the Pooler shall
      be
      deemed to have become immediately due and payable if (a) the Pooler defaults
      under Section 3.22 of the Tariff in any of its payment obligations to the
      Company; (b) the Pooler defaults in any of its obligations to the Company under
      the Tariff; (c) a petition is filed by the Pooler or any general partner thereof
      under any Bankruptcy Laws, or a petition is filed by the Pooler or any general
      partner thereof for the appointment of a receiver of any part of the property
      of
      the Pooler or any general partner thereof, or any such a petition is filed
      against the Pooler or any general partner thereof and is not dismissed within
      thirty (30) days; or (d) the Pooler or any general partner thereof makes a
      general assignment for the benefit of creditors, suspends business, or commits
      any act amounting to a business failure. 

    

    3.  To
      the
      extent permitted by law, Guarantor hereby waives and agrees not to assert or
      take advantage of any defense, counterclaim, right or remedy now or hereafter
      accorded by applicable law to indemnitors, guarantors or sureties, including,
      without limitation, those arising out of or related in any way to the following,
      irrespective of any lack of notice to or consent by Guarantor: (a) any right
      to
      require the Company to proceed against the Pooler or any other person or to
      proceed against or exhaust any security held by the Company at any time, or
      to
      pursue any other remedy in the Company’s power or under any other agreement
      before proceeding against Guarantor hereunder; (b) any defense that may arise
      by
      reason of the incapacity, lack of authority, death or disability of any other
      person or entity, or the failure of the Company to file or enforce a claim
      against the estate (in administration, bankruptcy or any other proceeding)
      of
      any other person or entity; (c) demand, presentment for payment, notice of
      nonpayment or dishonor, protest, notice of protest, or diligence in collection;
      (d) notice of acceptance of this Guaranty by the Company, notice of default,
      and
      all other notices of any kind, or the lack of any additional Obligations or
      Costs, or of any action or non-action on the part of the Pooler, the Company,
      any endorser or creditor of the Pooler of Guarantor, or on the part of any
      other
      person whomsoever under this Guaranty or any Obligation Documents (as defined
      below), and any and all other formalities which otherwise might be legally
      required to charge Guarantor with liability; (e) any defense based upon an
      election of remedies by the Company; (f) any right or claim of right to cause
      a
      marshaling of the assets of the Pooler or Guarantor; (g) any principle or
      provision of law, statutory or otherwise, which is or might be in conflict
      with
      the terms and provisions of this Guaranty; (h) interruptions in the business
      relations between the Pooler and the Company; (i) any change in the composition
      of the Pooler, including, without limitation, the withdrawal or removal of
      Guarantor from any current or future position of ownership, management or
      control of the Pooler; (j) any duty on the part of the Company to disclose
      to
      Guarantor any facts the Company may now or hereafter know about the Pooler,
      regardless of whether the Company has reason to believe that any such facts
      materially increase the risk beyond that which Guarantor intends to assume,
      or
      has reason to believe that such facts are unknown to Guarantor, it being
      understood and agreed that Guarantor is fully responsible for being and keeping
      informed of the financial condition of the Pooler, and of any and all
      circumstances bearing on the risk that liability may be incurred by Guarantor
      hereunder; (k) any release or substitution in whole or in part of any security
      for the Obligations or the Costs, or any lack of notice of disposition or of
      manner of disposition of any collateral for the Obligations or the Costs, or
      any
      deficiencies in any collateral for the Obligations or the costs, or any
      deficiency in the ability of the Company to collect or to obtain performance
      from any persons or entities now or hereafter liable for the payment or
      performance of any Obligations or costs; (l) any amendments, extensions,
      modifications, renewals or waivers of default as to the Pooler Agreement, the
      tariff or any other existing or future agreement or obligation of the Pooler
      with or to the Company (collectively the “Obligation
      Documents”),
      or
      any release of the Pooler or of any other person or entity from performance
      or
      observance of any of the agreements, covenants, terms or conditions contained
      in
      any of the Obligation Documents, whether by operation of law, voluntary action
      of the Company, or by action of any court, whether pursuant to any Bankruptcy
      Laws, or any other law of any jurisdiction whatsoever, now or hereafter in
      effect or otherwise; (m) any invalidity, irregularity or unenforceability,
      in
      whole or in par, of any one or more of the Obligation Documents; (n) any other
      guaranty now or hereafter executed by any other person in connection with the
      Obligations or the Costs, or any rights, powers or privileges the Company may
      now or hereafter have against any other person, entity or collateral; (o) any
      assignment for the benefit of creditors by the Pooler of any general partner
      thereof; (p) any appointment of a receiver, liquidator or trustee for the Pooler
      or any general partner thereof, or for any of the properties of the Pooler
      or
      any such general partner; (q) any filing of a petition by or against the Pooler
      or any general partner thereof for relief pursuant any Bankruptcy Laws; (r)
      the
      institution of any proceedings for the dissolution or liquidation of the Pooler
      or any general partner thereof; (s) any relief or discharge granted the Pooler
      or any general partner thereof under any Bankruptcy Laws; (t) any assertion
      or
      claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the
      voluntary or involuntary bankruptcy proceeding of the Pooler or any general
      partner thereof) or any other stay provided under any other Bankruptcy Laws,
      shall operate or be interpreted to stay, interdict, condition, reduce or inhibit
      the ability of the Company to enforce any of its rights, whether now or
      hereafter required, which the Company may have against Guarantor or the
      collateral for the Obligations or the Costs; (u) any defense, right of offset
      or
      other claim which Guarantor may have against the Pooler, or which the Pooler
      may
      have against the Company, or which the Guarantor may have against the Company
      in
      connection with any action by the Company to recover amounts due under this
      Guaranty; (v) all rights of redemption, homestead, dower, and other rights
      or
      exemptions of every kind, whether under common law or by statue; (w) any
      avoidance action; or (x) the taking or failure to take any other action of
      any
      type whatsoever. 

    

    4.  Notwithstanding
      the satisfaction by Guarantor of any Obligation or Cost hereunder, Guarantor
      shall not have any right of subrogation, contribution, reimbursement or
      indemnity whatsoever against Pooler for the Obligations or Costs. In connection
      with the foregoing, Guarantor expressly waives any and all rights of subrogation
      to the Company against the Pooler, and Guarantor hereby waives any rights to
      enforce any remedy which the Company may have against the Pooler and any right
      to participate as a subrogee or otherwise in any collateral pledged to the
      Company for the Obligations or the Costs. In addition to and without in any
      way
      limiting the foregoing, Guarantor hereby subordinates any and all indebtedness
      of the Pooler now or hereafter owed to Guarantor to all unpaid Obligations
      of
      the Pooler to the Company, and agrees with the Company that Guarantor shall
      not
      claim any offset or other reduction of Guarantor’s obligations hereunder because
      of any such indebtedness and shall not take any action to obtain any of the
      collateral pledged to the Company for the Obligations or the Costs. Further,
      Guarantor shall not have any right of recourse against the Company by reason
      of
      any action the Company may take or omit to take under the provisions of any
      of
      the Obligation Documents. Notwithstanding the foregoing, this Paragraph 4 shall
      not prevent the Pooler from issuing dividends to Guarantor which are otherwise
      proper and permitted under all applicable law. 

    

    5.  This
      Guaranty shall be deemed to be continuing in nature and shall remain in full
      force and effect and shall survive (a) the exercise of any remedy by the Company
      under the Obligation documents, even if, as a part of such remedy, the
      Obligations or the Costs are paid or satisfied in full; (b) any termination
      or
      suspension of the Pooler’s entitlement to act as a “Pooler” on the Company’s
      system, pursuant to Section 3.21.4 of the Tariff or otherwise; and (c) any
      dispute by the Pooler of the amount of any bill from the Company, pursuant
      to
      Section 3.22.3 of the Tariff, or otherwise. Notwithstanding the foregoing,
      Guarantor may terminate this guaranty at any time upon 150 days’ prior written
      notice to the Company; provided,
      however,
      that
      Guarantor guarantee of all Obligations arising prior to the date of such
      termination shall survive such termination and remain in full force and effect
      unless and until Pooler provides, in form an substance satisfactory to Company,
      security in lieu of this Guaranty for any and all pre-termination Obligations
      and provided further, that such termination shall in now way affect the
      requirement that Pooler deposit adequate security with the Company in accordance
      with Section 3.21 of the Tariff. If the Obligations and Costs are partially
      paid
      or discharged by reason of the exercise of any of the remedies available to
      the
      Company, this Guaranty shall nevertheless remain in full force and effect,
      and
      Guarantor shall remain liable for all remaining Obligations and Costs, even
      though any rights which Guarantor may have against the Pooler may be destroyed
      or diminished by the exercise of any such remedy. A separate right of action
      hereunder shall arise each time the Company acquires knowledge of any matter
      guaranteed by Guarantor under this Guaranty. Separate and successive actions
      may
      be brought hereunder to enforce any of the provisions hereof at any time and
      from time to time. No action hereunder shall preclude any subsequent action,
      and
      Guarantor hereby waives and covenants not to assert any defense in the nature
      of
      splitting of causes of action or merger of judgments. If at any time all or
      any
      part of any payment made by Guarantor or received by the Company from guarantor
      under or with respect to this Guaranty is or must be rescinded or returned
      for
      any reason whatsoever (including, but not limited to, the insolvency, bankruptcy
      or reorganization of Guarantor or the Pooler or any general partner thereof),
      then the obligations of Guarantor hereunder shall, to the extent of the payment
      rescinded or returned, be deemed to have continued in existence, notwithstanding
      such previous payment made by Guarantor, or receipt of payment by the Company,
      and the obligations of Guarantor hereunder shall continue to be effective or
      be
      reinstated, as the case may be, as to such payment, all as though such previous
      payment by Guarantor had never been made. 

    

    6.  In
      the
      event this Guaranty is collected by or through an attorney at law, the
      undersigned Guarantor shall reimburse the Company for all costs of collection,
      including reasonable attorneys’ fees and expenses. Any amounts received by the
      Company hereunder may be applied to the Obligations or the Costs in such order
      and manner as the Company may deem appropriate. 

    

    7.  All
      notices, demands, requests or other communications to be sent by one party
      to
      the other hereunder or required by law shall be in writing and shall be deemed
      to have been validly given or served by delivery of the same in person to the
      intended addressee, or by depositing the same with Federal Express or another
      reputable private courier service for next business day delivery to the intended
      addressee at its address set forth on the signature page of this Guaranty or
      at
      such other address as may be designated by such party as herein provided, or
      by
      depositing the same amount in the United States mail, postage prepaid,
      registered or certified mail, return receipt requested, addressed to the
      intended addressee at its address set forth on the signature page of this
      Guaranty or at such other address as may be designated by such party as herein
      provided. All notices, demands and requests shall be effective upon such
      personal delivery, or one (1) business day after being deposited with the
      private courier service, or two (2) business days after being deposited in
      the
      United States mail as required above. Rejection or other refusal to accept
      or
      the inability to deliver because of changed address of which no notice was
      given
      as herein required shall be deemed to be receipt of the notice, demand or
      request sent. By giving to the other party hereto at least (15) days’ prior
      written notice thereof in accordance with the provisions hereof, the parties
      hereto shall have the right from time to time to change their respective
      addresses and each shall have the right to specify as its address any other
      address within the United States of America. 

    

    8.  This
      Guaranty may not be assigned by Guarantor without the Company’s prior written
      consent, which consent may be withheld by the Company in its sole discretion.
      This Guaranty shall inure to the benefit of any may be enforced by the Company
      and its successors and assigns, and shall be binding upon and enforceable
      against the undersigned Guarantor its successors, and assigns. 

    

    9.  This
      Guaranty shall be interpreted, construed and governed by an in accordance with
      the laws of the State of Georgia. The invalidity of any portion, provision
      or
      paragraph of this Guaranty shall not affect or render invalid any other portion,
      provision or paragraph of this Guaranty. This Guaranty constitutes the entire
      agreement between the undersigned Guarantor and the Company with respect to
      the
      subject matter hereof and supersedes all prior agreements, whether written
      or
      oral, between the parties respecting such matters. No modification of this
      Guaranty, and no waiver of any right or remedy hereunder, shall be binding
      on
      the Company or the Guarantor unless it is in writing and signed by the Company
      and the Guarantor. No delay or failure by the Company to exercise any right
      or
      remedy shall operate as a waiver thereof, and no single or partial exercise
      by
      the company of any right or remedy shall preclude other or future exercise
      thereof or the exercise of any other right or remedy. This Guaranty is subject
      to enforcement at law or in equity, including actions for damages or specific
      performance. Time is of the essence hereof. 

    

    10.  So
      long
      as this Guaranty remains in effect, Guarantor will do all things necessary
      to
      preserve its existence and corporate, limited liability company and partnership
      formalities (as applicable). Guarantor represents, warrants and covenants that:
      (i) Guarantor is duly organized, validly existing and in good standing under
      the
      laws of the jurisdiction of its formation and has full power and authority
      to
      execute, deliver and perform this Guaranty; (ii) the execution, delivery and
      performance of this Guaranty have been and remain duly authorized by all
      necessary legal action and do not contravene the Guarantor’s organizational
      documents or any contractual restriction binding on Guarantor or its assets;
      (iii) Guarantor will execute and deliver to the Company appropriate documents,
      opinions and certificates evidencing Guarantor’s authority to execute and
      deliver the Guaranty; and (iv) the Guaranty constitutes the legal, valid and
      binding obligation of Guarantor enforceable against Guarantor in accordance
      with
      its terms. 

    

    11.  Guarantor
      hereby agrees to furnish to the Company promptly upon demand by the Company
      current and dated financial statements detailing the assets and liabilities
      of
      Guarantor certified by Guarantor, in form and substance acceptable to the
      Company. Guarantor hereby warrants and represents to the Company that any and
      all balance sheets, net worth statements and other financial date which have
      heretofore been given or may hereafter be given to the Company with respect
      to
      Guarantor did or will a the time of delivery fairly and accurately present
      the
      financial condition of Guarantor. Guarantor acknowledges that the Company has
      the right to require different or additional security from the Pooler pursuant
      to Section 3.21 of the Tariff.

    

    12.  To
      the
      extent the Tariff is amended to change any of the existing section numbers
      of
      the Tariff identified in this Guaranty, Guarantor acknowledges and agrees that
      this Guaranty shall be automatically amended so that any of the section numbers
      identified in this Guaranty shall be consistent with the section numbers set
      forth in the Tariff as amended. 

    

    13.  SUBMISSION
      TO JURISDICITON; WAIVER OF JURY TRIAL. 

    

    a.  GUARANTOR,
      TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
      VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMITS TO
      PERSONAL JURISDICTION IN THE STATE OF GEORGIA OVER ANY SUIT, ACTION OR
      PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS GUARANTY, (ii) AGREES
      THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
      COURT OF COMPETENT JURISDICTION SITTING IN FULTON COUNTY, GEORGIA, (iii) SUBMITS
      TO THE JURISDICTION OF SUCH COURTS, AND (iv) AGREES THAT IT WILL NOT BRING
      ANY
      ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
      THE RIGHT OF THE COMPANY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
      FORUM). GUARANTOR, TO THE FULL EXTENT PERMITTED BY LAW, FURTHER CONSENTS AND
      AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH
      SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
      PREPAID, TO GURANTOR AT THE ADDRESS FOR NOTICES SET FORTH ON THE LAST PAGE
      HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUE IN EVERY
      RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDTY
      OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

    

    b.  GUARANTOR,
      TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
      VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINGUISHES
      AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
      BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS GUARANTY OR ANY
      CONDUCT, ACTO OR OMISSION OF THE COMPANY OR THE POOLER, OR ANY OF THEIR
      DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
      ANY
      OTHER PERSONS AFFILIATED WITH THE COMPANY, THE POOLER OR GUARANTOR, IN EACH
      OF
      THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Guaranty to be executed
      by
      their duly authorized officer or representative. 

    

    

    GUARANTOR:

     

    AGL
      RESOURCES, INC., a Georgia Corporation 

    

    

    By:
      /s/
      Andrew W. Evans

    Name:
      Andrew W. Evans

    Title:
      SVP & CFO

    

    

    

    Address
      of the Company:   

    

    Atlanta
      Gas Light Company

    Ten
      Peachtree Place

    Atlanta,
      Georgia 30309

    ATTN:
      Cash Manager

    

    Address
      of the Guarantor:

    

    AGL
      Resources Inc.

    Ten
      Peachtree Place

    Atlanta,
      Georgia 30309

    ATTN:
      VP
& TreasurerExhibit 10.1

    Exhibit
      10.1

     

    THE
      MAJESTIC STAR CASINO, LLC

    

    MANAGEMENT
      INCENTIVE PLAN

    

    

    Purpose
      and Overview:

    The
      Management Incentive Plan is one part of the compensation package offered to
      its
      key executives by The Majestic Star Casino, LLC (the "Company"). As a key member
      of the management team for The Majestic Star Casino, LLC, you play an important
      role in the Company’s ability to achieve its goals, most notably 1) developing
      and maintaining quality and depth at all levels of our management team; 2)
      attaining the top position in the markets we serve; and, 3) maintaining a high
      level of guest service. 

    

    The
      Management Incentive Program is designed to:

    
      	q  	
              Encourage
                and reward the attainment of performance results, which extend beyond
                your
                essential job responsibilities;

            

    

    
      	q  	
              Encourage
                fiscal responsibility and reward achievement of the Company’s realistic
                and attainable fiscal year EBITDA; 

            

    

    
      	q  	
              Maintain
                the Company’s commitment to quality guest
                service;

            

    

    
      	q  	
              Retain
                and recruit talented and forward-thinking key managers who are essential
                to the continued growth and success of the Company;
                and

            

    

    
      	q  	
              Establish
                individual non-financial performance objectives, which are developed
                by
                the plan participants and their managers, with a year-end evaluation
                designed to measure the individual accomplishments.
                

            

    

    

    What
      is the Intent of the Plan: 

    Provide
      executives with a competitive annual incentive that is tied to their position
      and base compensation.

    

    Recognize
      and reward executives on the overall financial success of the
      Company.

    

    Provide
      an incentive to executives to achieve a higher individual performance level
      in critical business areas which are not necessarily measured by financial
      performance, such as succession planning and development of staff.

    

    Incentive
      Plan Highlights:
      

    The
      Management Incentive Plan is built on “success.” The greater the success of the
      Company, the greater the reward. 

    

    At
      the
      beginning of each year, each property will set an aggressive but attainable
      financial target, which will be based on budgeted EBITDA (including
      the estimate for the bonus).

    
      
        
        

      

      
        -
          1
          -

        
          

        

      

      
        
        

      

    

    

    Also,
      at
      the beginning of each year, plan participants will establish, with their
      managers, their non-financial individual performance goals, which will be
      reviewed at the end of each year in order to evaluate the level of success
      as it
      pertains to their individual performance accomplishments.

    

    Bonuses
      for eligible corporate executives will be measured by the
      properties' combined actual EBITDA to combined budgeted
      EBITDA, along with the accomplishments achieved with each
      executive's non-financial performance goals.

    

    Bonuses
      for eligible property executives will be measured by their own
      property’s actual EBITDA to budgeted EBITDA along with each executive's
      non-financial performance goals. 

    

    Target
      Bonus Award

    The
      target bonus awards are a specific percentage of your base salary actually
      earned during the plan year. Target bonus awards are determined by your position
      as outlined below: 

     

    
      	
              Eligible
                Property Positions

            	
              Bonus
                Target

            	
              Property-Wide
                Financial Performance

            	
              Individual
                Goal Accomplishments

            
	
              General
                Managers

            	
              30%

            	
              70%

            	
              30%

            
	
              Vice
                Presidents

            	
              30%

            	
              60%

            	
              40%

            
	
              Directors

            	
              20%

            	
              60%

            	
              40%

            
	
              Managers

            	
              5%

            	
              50%

            	
              50%

            

    

     

    
      	
              Eligible
                Corporate Positions

            	
              Bonus
                Target

            	
              Company-Wide
                Financial Performance

            	
              Individual
                Goal Accomplishments

            
	
              EVP/Chief
                Operating Officer 

            	
              50%

            	
              70%

            	
              30%

            
	
              EVP
                Strategic Initiatives

            	
              30%

            	
              50%

            	
              50%

            
	
              VP
                & Chief Financial Officer

            	
              30%

            	
              60%

            	
              40%

            
	
              VP
                & Legal Counsel

            	
              30%

            	
              50%

            	
              50%

            
	
              VP
                of Project Development

            	
              30%

            	
              50%

            	
              50%

            
	
              VP
                of Human Resources

            	
              30%

            	
              60%

            	
              40%

            
	
              VP
                of Marketing

            	
              30%

            	
              60%

            	
              40%

            
	
              VP
                of Info Technology

            	
              30%

            	
              60%

            	
              40%

            
	
              VP
                of Internal Audit

            	
              30%

            	
              50%

            	
              50%

            
	
              Directors

            	
              20%

            	
              40%

            	
              60%

            
	
              Managers

            	
              5%

            	
              30%

            	
              70%

            

    

    

    The
      President and Chief Executive Officer is not participating in
      the plan.

    

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      Increase
        or Decrease in Bonus Awards

    

    The
      amount of your “financial performance” bonus will increase if actual EBITDA
      is above budgeted EBITDA and decrease if actual EBITDA is below budgeted EBITDA.
      The table below indicates the amount of the  decrease in the “financial
      performance” portion of your bonus award. 

    

    
      	
               
ACTUAL
                EBITDA AS % OF BUDGET

            	
              BONUS
                PAYOUT AS % OF BONUS TARGET

            	 
	
               100

            	
               100

            	 
	
               99

            	
               98

            	 
	
               98

            	
               96

            	 
	
               97

            	
               94

            	 
	
               96

            	
               92

            	 
	
               95

            	
               90

            	 
	
               94

            	
               87

            	 
	
               93

            	
               84

            	 
	
               92

            	
               81

            	 
	
               91

            	
               78

            	 
	
               90

            	
               75

            	 
	
               89

            	
               70

            	 
	
               88

            	
               65

            	 
	
               87

            	
               60

            	 
	
               86

            	
               55

            	 
	
               85

            	
               50

            	 
	
               84

            	
               -0-
                NO BONUS

            	 

    

     

    IF
      A PROPERTY’S ACTUAL EBITDA, OR COMBINED EBITDA FOR CORPORATE BONUS PURPOSES,
      EXCEEDS BUDGETED EBITDA, THEN 25% OF THE AMOUNT OF ACTUAL EBITDA THAT EXCEEDS
      BUDGETED EBITDA WILL BE APPLIED TO THE BONUS POOL FOR THAT PARTICULAR PROPERTY
      OR CORPORATE AND DISTRIBUTED ON A WEIGHTED AVERAGE
      BASIS.

    

    Property
      Example:

    Joe
      Smith
      holds the position of a vice-president, and his base compensation actually
      received for the year is $75,000. Assume the budgeted EBITDA for the year is
      $20,000,000 and at the end of the year, actual EBITDA is $18,000,000. Joe’s
      target bonus award is 30%; the decrease as a percentage to the budgeted
      EBITDA is 10%. Therefore, the bonus payout is 75%. Joe’s bonus is calculated as
      follows assuming he met his individual goals as well:

    

    
      	 	
              30%

            	
              x

            	
              $75,000

            	
              =

            	
              $22,500

            	
              x

            	
              60%
                (Financial Performance) 

            	
               =

            	
               $13,500

            	
              x

            	
               
                75%

            	
               
                =

            	
              $10,125

            	 
	 	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	 	
               

            	
               

            	
               

            	
               

            	
               

            	 
	 	
              30%

            	
              x

            	
              $75,000

            	
              =

            	
              $22,500

            	
              x

            	
              40%
                (Individual Goals)

            	
               =

            	
               $9,000

            	
               x

            	
               100%

            	
               =

            	
               $9,000

            	 
	
            	
               

            	
            	
            	
            	
               

            	 	 	 	 	 	 	 	 	 	 	 

    

    Thus,
      Joe
      receives a bonus of $10,125 + $9,000 = $19,125.

    

    Corporate
      Example:

    Sally
      Jones holds the position of a vice-president, and her base compensation actually
      received for the year is $150,000.  Assume
      the budgeted EBITDA for the year for each of the four properties is $99,000,000
      and at the end of the year, the properties combined EBITDA is $89,000,000.
      Sally’s target bonus award is 30%, but it will be calculated as follows assuming
      she met her individual goals as well: 

      

    
      	
               

            	
              30%

            	
              x

            	
              $150,000

            	
              =

            	
              $45,000

            	
              x

            	
              60%
                (Financial Performance)

            	
              x

            	
              75%

            	
              =

            	
              $20,250

            	 
	 	 

              30%

            	 

              x

            	 

              $150,000

            	 

              =

            	 

              $45,000

            	 

              x

            	 

              40%
                (Individual Goals)

            	
               
                x

              

            	 

              100%

            	
              =

            	 

              $18,000

            	 
	
               

            	 	 	 	 	 

    

    Sally’s
      bonus award is $18,000 + $20,250 = $38,250.

    

    Eligibility:

    To
      be
      eligible to receive a bonus, you must 

    
      	1)  	
              be
                a full-time employee and in a bonus-eligible position
                

            

    

    
      	2)  	
              be
                an employee in an eligible position before October 1st
                of
                the plan year

            

    

    
      	3)  	
              be
                an active employee at the time bonuses are
                distributed.

            

    

    
      
        
        

      

      
        - 3
          -

        
          

        

      

      
        
        

      

    

    If
      the
      Company terminates a bonus-eligible executive other than “for cause,”
the executive shall receive his/her bonus within 30 days of the executive’s
      last day of employment. The appropriate bonus will be calculated by determining
      the applicable EBITDA by aggregating actual EBITDA from January 1 of the current
      year through the employee’s last full month of employment, plus the budgeted
      EBITDA for the remaining months of the plan year and comparing this to budgeted
      EBITDA for the full plan year. No bonus payment will be made under the
      individual goals component of the Management Incentive Plan.

    

    In
      the
      event the executive does not have an employment agreement, which takes
      precedence as it relates to the definition of “for cause,” “for cause” shall
      mean (i) any act or omission of executive constituting fraud, dishonesty,
      negligence or malfeasance; (ii) executive’s failure to meet the reasonable
      expectations of the Company in the performance of the executive’s assigned
      duties or responsibilities; or, (iii) executive’s violation of company policies
      or procedures.

    

    FOR
      THE INDIVIDUAL PROPERTIES:

    THE
      FINANCIAL PERFORMANCE OF THE PROPERTY MUST BE MET PRIOR TO THE DISTRIBUTION
      OF
      ANY PORTION OF THE BONUS AWARD. AS LONG AS 85% OF THE BUDGETED EBITDA IS MET,
      THE NON-FINANCIAL PORTION OF THE BONUS IS ELIGIBLE TO BE PAID OUT UP TO 100%.
      

    

    FOR
      THE CORPORATE OFFICE:

    IF
      THE COMBINED PROPERTY EBITDA (AS DESCRIBED ON PAGE 2) DOES NOT ACHIEVE AT LEAST
      85% OF THE BUDGETED AMOUNTS, THE INDIVIDUAL GOALS COMPONENT OF THE BONUS IS
      NOT
      ELIGIBLE TO BE PAID OUT. THE NON-FINANCIAL PORTION OF THE BONUS AWARD IS NOT
      DEPENDENT ON ACHIEVING AT LEAST 85% OF BUDGETED EBITDA. THEREFORE, IF AT LEAST
      85% OF BUDGETED EBITDA IS NOT ACHIEVED, THE NON FINANCIAL PORTION IS STILL
      ELIGIBLE TO BE PAID OUT UP TO 100%. 

    

    ANY
      EXCEPTIONS MADE TO PAY OUT BONUSES ABOVE AND BEYOND THE PLAN DESIGN WILL BE
      AT
      THE DISCRETION OF THE BOARD OF DIRECTORS. 

    

    Promotions/Transfers:

    Executives who
      are promoted into a bonus-eligible position before October 1 of the plan year
      will receive bonus awards. Awards will be calculated on a pro-rated basis.
      

     

    Executives who
      are promoted from one bonus-eligible position into another bonus-eligible
      position will have their bonus award percentage calculated by using their actual
      earnings during the 12-month plan year, but their bonus target percentage will
      be pro-rated based on the number of months employed in each position.

     

    
      Bonus
        Pay Out Timetable:

      The
        bonus
        will be paid out in one distribution, which will be in March following the
        plan
        year ending on December 31. However, if the properties/corporate reach 90%
        of
        the budgeted EBITDA (using November actuals and budgeted EBITDA for December),
        one half of the bonus target for the “financial performance” portion only will
        be paid in December of the plan year, and the balance based on actual results
        will be distributed in the month of March following the plan
        year.

    

     

     

     

     

    
-
      4
      -

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