Document:

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                                                                    EXHIBIT 10.2

                    SEVERANCE AGREEMENT AND GENERAL RELEASE
                    ---------------------------------------

     This Severance Agreement and General Release ("Agreement") is entered into
by and between John D. Branch ("Employee") and Harry's Farmers Market, Inc. (the
"Company").

     For and in consideration of the payments, covenants and agreements
described below, the parties agree as follows:

     1.  Termination of Employment.  Employee understands and agrees that his
         -------------------------
last day of employment with the Company and its subsidiaries is October 6, 2000
(the "Termination Date") and that he shall sign the form of resignation letter
attached hereto as Exhibit A.  For and in consideration of the covenants and
                   ---------
agreements described in this Agreement, the Company agrees to provide Employee
the severance benefits described in Section 2 of this Agreement.

     2.  Severance Benefits.  Subject to full execution of this Agreement and
         ------------------
Employee's compliance with the terms of this Agreement throughout the Severance
Period, the Company shall provide Employee with the following benefits:

         a.    Payments. The Company shall pay Employee a sum of $20,000,
               --------
     representing previously earned bonus compensation, and all other amounts
     due Employee, up to and including the Termination Date, at Employee's
     current annual salary, less all applicable withholding and taxes, at the
     same time as the Company's normal pay period.

         b.    Options and Restricted Stock. All stock options under the
               ----------------------------
     following agreements (collectively, the "Agreements"), shall vest and be
     exercisable as set forth below:

         (i)   Non-qualified Stock Option Agreement, dated April 16, 1999 (the
               "1999 Option"), for 225,000 shares of the Company's Class A
               Common Stock (the "Common Stock"), with an exercise price of
               $0.9688, shall be vested as to 203,125 shares of Common Stock and
               shall be exercisable through October 6, 2002. Such terms are set
               forth in an amendment to the 1999 Option set forth in Exhibit B
                                                                     ---------
               attached hereto, which shall be signed and agreed to by the
               parties hereto.

         (ii)  Non-qualified Stock Option Agreement, dated June 30, 1997 (the
               "1997 Option"), for 10,000 shares of Common Stock, with an
               exercise price of $3.00, shall be vested as to the full 10,000
               shares and shall be exercisable through October 6, 2002. Such
               terms are set forth in an amendment to the 1997 Option set forth
               in Exhibit C attached hereto, which shall be signed and agreed to
                  ---------
               by the parties hereto.
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          All other stock option agreements previously entered into between
     Employee and the Company are hereby cancelled and of no further force and
     effect.

          c.  Corporate Apartment.  Employee shall be entitled to the continued
              -------------------
     use of the Corporate Apartment (as defined herein) through November 30,
     2000.  For purposes of this provision, the "Corporate Apartment" shall be
     defined as that apartment located at 9105 Madison Drive, Dunwoody, Georgia.

          d.  Expenses.  Employee shall be entitled to the reimbursement of any
              --------
     and all reasonable and proper business costs and expenses incurred by him
     during his employment with the Company, or as a member of the Board of
     Directors of the Company, through the Termination Date.  Employee shall
     provide the Company with appropriate documentation of such expenses prior
     to reimbursement.  Any dispute as to the reimbursement of costs and
     expenses shall be determined by the majority vote of the Company's
     Compensation Committee.

     3.   Release of Claims by Employee.  In consideration of the benefits being
          -----------------------------
delivered to him under the terms of this Agreement and the other promises
contained in this Agreement, Employee for himself, his successors and assigns,
now and forever hereby releases and discharges the Company and all its past and
present officers, directors, stockholders, employees, agents, predecessors,
subsidiaries, affiliates, estates, successors, assigns and attorneys
(hereinafter collectively referred to as "Releasees") from any and all claims,
charges, actions, causes of action, sums of money due, suits, debts, covenants,
contracts, agreements, promises, demands or liabilities (hereinafter
collectively referred to as "Claims") whatsoever, in law or in equity, which
Employee ever had or now has from the beginning of time up to the date this
Agreement is executed.  Employee understands and agrees that he has knowingly
relinquished, waived and forever released any and all remedies arising out of
such Claims, including, without limitation, backpay, front pay, liquidated
damages, compensatory damages, general damages, special damages, punitive
damages, exemplary damages, consequential damages, costs, expenses and
attorneys' fees.

     Without limiting the generality of the foregoing, Employee specifically
acknowledges and agrees that he has knowingly and voluntarily released the
Company and all other Releasees from any and all claims that are in any way
connected with any employment relationship or the termination of any employment
relationship that existed between the Company and Employee, including without
limitation all claims arising under federal, state or local statute, regulation,
ordinance or common-law for (i) employment discrimination; (ii) wrongful
discharge; (iii) breach of contract; (iv) tort claims of any type, including
those for intentional or negligent infliction of emotional harm, intentional or
negligent hiring, retention or supervision and assault or battery; and (v)
unpaid benefits, wages, compensation, commissions, bonuses or incentive payments
of any type.

     4.   Release of Claims by the Company.  In consideration of the promises
          --------------------------------
contained in this Agreement, the Company, its successors and assigns, now and
forever

                                      -2-
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hereby releases and discharges the Employee from any and all Claims
whatsoever, in law or in equity, which the Company ever had or now has from the
beginning of time up to the date this Agreement is executed.  However,
notwithstanding the aforementioned, this waiver by the Company shall not inure
to the benefit of any Claims by the Company based upon the intentional
misconduct of Employee.

     5.   Agreement Not to Disclose Trade Secrets and Confidential Information.
          --------------------------------------------------------------------
Employee understands and agrees that, as set forth in more detail below,
Employee will treat confidentially all information, records, files and
discussions derived as a part of the Employee's services for the Company.
Employee further agrees that such confidential information will not be used by
Employee in connection with any other employment or consulting capacity or
otherwise divulged except as necessary to meet the Company's business needs.
This paragraph does not prevent Employee from obtaining employment in retail
businesses including food stores and restaurants.

          (a)  Trade Secrets Defined. As used in this Agreement, the term "Trade
               ---------------------
Secrets" shall include, but not be limited to, customer lists, billing
information, technical information regarding the Company's intellectual property
and systems and product information which Employee had knowledge of during his
employment at the Company. Trade secrets shall not include information that has
become generally available to the public by the act of one who has the right to
disclose such information without violating any right or privilege of the
Company. This definition shall not limit any definition of trade secrets or any
equivalent term under state or federal law.

          (b)  Nondisclosure of Trade Secrets. Employee shall not directly or
               ------------------------------
indirectly transmit or disclose any Trade Secret of the Company to any person,
concern or entity, and shall not make use of any such Trade Secret, directly or
indirectly, for himself or for others, without the prior written consent of the
Company.

          (c)  Confidential Information Defined.  As used in this Agreement, the
               --------------------------------
term "Confidential Information" shall mean all information regarding the
Company, its activities, business or customers that is not generally known to
persons not employed by the Company but that does not rise to the level of a
Trade Secret and that is not generally disclosed by the Company practice or
authority to persons not employed by the Company. Confidential Information shall
not include information that has become generally available to the public by the
act of one who has the right to disclose such information without violating any
right or privilege of the Company.  This definition shall not limit any
definition of confidential information or any equivalent term under state or
federal law.

          (d)  Nondisclosure of Confidential Information.  Employee shall not
               -----------------------------------------
directly or indirectly transmit or disclose any Confidential Information to any
person, concern or entity, or make any use of any such Confidential Information,
directly or indirectly, for himself or for others, without the prior written
consent of the Company.

                                      -3-
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          (e)  Enforceability. Nothing in this provision or this Agreement shall
               --------------
limit or supersede any rights or remedies otherwise available to the Company
under federal, state or local law but shall be cumulative with any such rights
and/or remedies. These nondisclosure covenants shall survive the expiration or
termination of this Agreement for any reason.

     6.   Non-Disparagement.   Employee acknowledges and agrees that he will
          -----------------
not make any disparaging, libelous, slanderous or defamatory statements about
the Company or its products, services, business and employment practices,
regardless of the truth or falsity of such statements.  Employee further
acknowledges that, for purposes of this Section 6, the term "Company" also
includes the Company's employees, officers, directors, executives, agents,
attorneys and any affiliated or related organizations.

     The Company also acknowledges and agrees that it will not make any
disparaging, libelous, slanderous or defamatory statements about Employee,
regardless of the truth or falsity of such statements.  The Company further
acknowledges that, for purposes of this Section 6, the term "Company" includes
the Company's employees, officers, directors, executives, agents, attorneys and
any affiliated or related organizations.

     7.   Dispute Assistance.  Employee acknowledges and agrees that he will
          ------------------
reasonably assist the Company, at the Company's request and expense, in
defending any Claims made against the Company relating to matters occurring
during his tenure with the Company.  Employee further agrees to not to assist
another person or entity in any manner, directly or indirectly, in bringing any
Claim against the Company, except when legally required, in which case Employee
agrees to notify the Company about such requirement prior to taking any action.

     8.   Employment Reference.  The Company acknowledges and agrees that, if
          --------------------
requested by a prospective employer, the Company shall provide an employment
reference that confirms Employee's dates of employment, his most recent job
title and salary information and the statements contained in Exhibit D.
                                                             ---------

     9.   Press Release. Each of the Company and Employee acknowledge that it is
          -------------
necessary for the Company to issue a press release regarding the resignation of
Employee and both parties agree to the issuance of the form of press release
attached hereto Exhibit E.
                ---------

    10.   Acknowledgments.  This Agreement is executed by Employee voluntarily.
          ---------------
Employee acknowledges that he has had full and reasonable opportunity to
consider this Agreement and that he has not been pressured or in any way coerced
into its execution.  Employee acknowledges and represents that he has not filed
any complaint or charges against the Company relating to his employment with any
other local, state or federal agency or court, that he will not do so at any
time hereafter, and that if any such agency or court assumes jurisdiction of any
such complaint or charge against the Company, Employee will direct that agency
or court to withdraw from the matter.  Employee further represents that he will
not in any manner solicit any former, current or future employees

                                      -4-
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of the Company or any other Releasee to pursue claims against the Company or any
Releasee.

     11.  Governing Law and Severability.  This Agreement and the rights and
          ------------------------------
obligations of the parties hereto shall be governed and construed in accordance
with the laws of the State of Georgia.  If any provision hereof is unenforceable
or is held to be unenforceable, such provision shall be fully severable, and
this document and its terms shall be construed and enforced as if such
unenforceable provision had never comprised a part hereof.

     12.  Arbitration.    All disputes arising under this Agreement (other than
          -----------
claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by the Company and Employee in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.  The arbitration
shall be held in such place in Atlanta, Georgia as may be specified by the
arbitrator (or any place agreed to by the Company, Employee and the arbitrator).
The decision of the arbitrator shall be final and binding as to any matters
submitted; provided, however, if necessary, such decision and satisfaction
procedure may be enforced by either the Company or Employee in any court of
record having jurisdiction over the subject matter or over any of the parties to
this Agreement.  All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be borne by
the party against which the decision is rendered, or, if no decision is
rendered, such costs and expenses shall be borne equally by the Company as one
party and Employee as the other party.  If the arbitrator's decision is a
compromise, the determination of which party or parties bears the costs and
expenses incurred in connection with any such arbitration proceeding shall be
made by the arbitrator on the basis of the arbitrator's assessment of the
relative merits of the parties' positions.

     12.  Entire Agreement.  This Agreement contains all the terms of the
          ----------------
Severance Agreement and General Release by and among the parties.  No
representations, inducements, promises, or agreements, oral or otherwise, which
are not embodied herein have been made and none shall be of any force or effect.

     13.  Non-Revocation.  Employee acknowledges and agrees that this Agreement
          --------------
is valid and enforceable and that he will not institute any suit, action, or
proceeding, whether at law or equity, challenging the enforceability of this
Agreement.

     14.  Modification.  No waiver or modification of this Agreement or of any
          ------------
covenant, condition or limitation contained herein shall be valid unless in
writing signed by both parties.

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     IN WITNESS WHEREFORE, the parties hereto have executed this Agreement on
the dates set forth beside their signatures.

                                     /S/ JOHN D. BRANCH
                              ------------------------------------
                              John D. Branch

                              Date:  October 6, 2000

                              HARRY'S FARMER'S MARKET, INC.

                              By:         /S/ HARRY A. BLAZER
                                   -------------------------------
                                   Harry A. Blazer
                                   President

                              Date:  October 6, 2000

                                      -6-<PAGE>

                                                                   EXHIBIT 10.1x

                             CONTINUITY AGREEMENT

     This Continuity Agreement ("Agreement") is entered into as of this 28th day
of August, 2000, by and between AGL RESOURCES INC. (the "Company") and Paula G.
Rosput (the "Executive").

     WHEREAS, Executive is presently employed by the Company or one of its
subsidiaries in a key management capacity; and

     WHEREAS, the Company's Board of Directors desires to assure, and has
determined that it is appropriate and in the best interests of the Company and
its shareholders to reinforce and assure, the continued attention and dedication
of certain key executives of the Company and its subsidiaries to their duties of
employment without personal distraction or conflict of interest as a result of
the possibility or occurrence of a change in control of the Company; and

     WHEREAS, the Company's Board of Directors has authorized the Company to
enter into continuity agreements with those key executives of the Company and
its subsidiaries designated by the Compensation Committee of the Company's Board
of Directors (the "Committee"); and

     WHEREAS, the Executive is a key employee of the Company or one of its
subsidiaries and has been designated by the Committee as an executive to be
offered such a continuity agreement with the Company.

     NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

                                   SECTION 1

                                  Definitions

     1.1  "Announcement" shall mean a press release issued by the Company
           ------------
announcing the intention to engage in a transaction or event that is expected to
result in a Change in Control of the Company as defined hereunder.

     1.2  "Board" shall mean the Board of Directors of the Company.
           -----

     1.3  "Cause" shall mean:
           -----

          (a) fraud, dishonesty or willful malfeasance by the Executive in
     connection with the Executive's employment with the Company which results
     in material harm to the Company;

          (b) the Executive's continued failure to substantially perform the
     duties and responsibilities of the Executive's position after written
     notice from the Company setting forth the particulars of such failure and a
     reasonable opportunity of not less than thirty (30) business days to cure
     such failure;
<PAGE>

          (c) the Executive's willful and material breach of the provisions of
     Section 6 of this Agreement; or

          (d) the Executive's plea of guilty or nolo contendere to, or
     conviction of, a felony.

     1.4  "Change in Control" shall be deemed to have occurred when:
           -----------------

          (a) any "person" as defined in Section 3(a)(9) of the Securities
     Exchange Act of 1934, as amended (the "Exchange Act"), and as used in
     Section 13(d) and 14(d) thereof, including a "group" as defined in Section
     13(d) of the Exchange Act but excluding the Company and any subsidiary and
     any employee benefit plan sponsored or maintained by the Company or any
     subsidiary (including any trustee of such plan acting as trustee), directly
     or indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
     under the Exchange Act), of securities of the Company representing 10% or
     more of the combined voting power of the Company's then outstanding
     securities (unless the event causing the 10% threshold to be crossed is an
     acquisition of securities directly from the Company); or

          (b) the shareholders of the Company shall approve any merger or other
     business combination of the Company, the sale of 50% or more of the
     Company's assets or any combination of the foregoing transactions (the
     "Transactions"), other than a Transaction immediately following which the
     shareholders of the Company and any trustee or fiduciary of any Company
     employee benefit plan immediately prior to the Transaction own at least 80%
     of the voting power, directly or indirectly, of (A) the surviving
     corporation in any such merger or other business combination; (B) the
     purchaser of the Company's assets; (C) both the surviving corporation and
     the purchaser in the event of any combination of Transactions; or (D) the
     parent company owning 100% of such surviving corporation, purchaser or both
     the surviving corporation and the purchaser, as the case may be; or

          (c) within any twenty-four month period, the persons who were
     directors immediately before the beginning of such period (the "Incumbent
     Directors") shall cease (for any reason other than death) to constitute at
     least a majority of the Board or the board of directors of a successor to
     the Company.  For this purpose, any director who was not a director at the
     beginning of such period shall be deemed to be an Incumbent Director if
     such director was elected to the Board by, or on the recommendation of or
     with the approval of, at least two-thirds of the directors who then
     qualified as Incumbent Directors (so long as such director was not
     nominated by a person who has entered into an agreement to effect a Change
     in Control or expressed an interest to cause such a Change in Control).

     1.5  "Code" shall mean the Internal Revenue Code of 1986, as amended.
           ----

     1.6  "Company" shall mean AGL Resources Inc.
           -------

     1.7  "Consummation of a Change in Control Transaction" shall mean the
           -----------------------------------------------
earlier of the date on which a person first becomes the beneficial owner of the
requisite number of securities of the Company described in Section 1.4(a), the
date on which a transaction described in Section 1.4(b) is actually closed (not
the date on which the shareholders' approval is obtained), or the date on which
the Incumbent Directors cease to constitute a majority of the Board as described
in Section 1.4(c).

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<PAGE>

     1.8  "Disability" shall mean, for purposes of this Agreement, the
           ----------
Executive's absence from the full-time performance of the Executive's duties
pursuant to a determination made in accordance with the procedures established
by the Company in connection with the Company's long-term disability benefits
plan (as in effect as of the date of the Announcement) that the Executive is
disabled as a result of incapacity due to physical or mental illness.

     1.9  "Effective Date" shall mean the date as of which this Agreement is
           --------------
executed, as first written above.

     1.10 "Good Reason" shall mean the occurrence of one or more of the
           -----------
following without the Executive's express written consent:

          (a) any material diminution in the Executive's position, duties or
     responsibilities with the Company or any change which would constitute a
     material adverse alteration in the Executive's duties, responsibilities or
     other conditions of employment, from those in effect as of the earlier of
     the date of the Announcement or the date of a Change in Control;

          (b) any adverse change in the Executive's salary or incentive
     compensation from the salary and incentive compensation in effect as of the
     earlier of the date of the Announcement or the date of a Change in Control;

          (c) any failure by the Company either to continue in effect, or to
     provide in the aggregate reasonably similar retirement, savings, medical,
     dental, accident, disability and life insurance plans or coverages and any
     other similar benefits, policies or programs in which the Executive was a
     participant as of the earlier of the date of the Announcement or the date
     of a Change in Control (unless such failure or discontinuance of benefits
     is applicable to all similarly-situated executives of the Company);

          (d) any relocation of the Executive's employment to a location in
     excess of 35 miles from the location at which the Executive was based as of
     the earlier of the date of the Announcement or the date of a Change in
     Control; or

          (e) any failure of the Company to obtain from any successor to the
     Company an agreement reasonably satisfactory to the Executive to assume and
     perform this Agreement.

     1.11 "Qualifying Termination" shall mean the occurrence of any one or more
           ----------------------
of the following events:

          (a) the involuntary termination of Executive's employment by the
     Company or its subsidiary, as applicable, without Cause; or

          (b) Executive's termination of his or her employment with the Company
     or its subsidiary, as applicable, for Good Reason.

     A Qualifying Termination shall not include a termination of Executive's
employment by reason of the Executive's death, the Executive's Disability, the
Executive's voluntary termination of employment without Good Reason, or the
termination of the Executive's employment for Cause.

                                       3
<PAGE>

                                   SECTION 2

                               Term of Agreement

     2.1  Term.  This Agreement shall commence on the Effective Date and shall
          ----
continue in effect for a period of three (3) years (the "Term").

     2.2  Modification of Term.  In the event that an Announcement or a Change
          --------------------
in Control occurs during the Term, the term of this Agreement shall
automatically and irrevocably become a term ending on the later of the last day
of the Term or the second anniversary of the date of Consummation of a Change in
Control Transaction.  This Agreement shall be assigned to, and shall be assumed
by, any successor to the Company upon Consummation of a Change in Control
Transaction.  During the modified term pursuant to this section, this Agreement
shall not be terminated by the Company or its successor.

     2.3  No Assurances.  Executive acknowledges and agrees that (i) there is no
          -------------
assurance that, upon the expiration of the Term of this Agreement, this
Agreement will be renewed or extended, (ii) the Company has no obligation to
renew or extend this Agreement, and (iii) Executive has no right to any such
renewal or extension.  Executive acknowledges and agrees further that in the
event the Company, in its sole discretion, elects to offer Executive a renewal
or extension of this Agreement or a new agreement following the expiration of
the Term of this Agreement, there can be no assurance as to the terms of any
such renewal, extension or new agreement, the Company has made no
representations to Executive with respect thereto and nothing contained in this
Agreement shall be relevant, or of any precedential value whatsoever, in
determining the terms of any renewal, extension or new agreement.

                                   SECTION 3

                          Change in Control Benefits

     3.1  Entitlement to Benefits.  If, for any reason constituting a Qualifying
          -----------------------
Termination, the Executive's employment terminates during the period beginning
on the earlier of the date of an Announcement or the occurrence of a Change in
Control and ending on the second anniversary of the date of the Consummation of
a Change in Control Transaction, the Company shall provide to the Executive the
benefits described in Section 3.2 below.

     3.2  Description of Change in Control Benefits.  The Company shall pay and
          -----------------------------------------
provide to Executive each of the following benefits, subject to Executive's
entitlement to such benefits pursuant to Section 3.1 hereof:

          (a) Accrued Pay and Benefits.  As soon as practical following a
              ------------------------
     Qualifying Termination, but no later than 10 business days following such
     Qualifying Termination, the Company shall provide the Executive with a lump
     sum cash payment equal to Executive's earned but unpaid base salary, the
     Executive's Earned and Unused Vacation Pay (as hereinafter defined),
     unreimbursed business expenses and all other amounts earned by and owed to
     Executive through and including the date of the Qualifying Termination.  In
     addition, Executive may continue to utilize any funds remaining in his or
     her Executive Allowance Fund for the remainder of the calendar year in
     which the Qualifying Termination occurs, for expenses permitted under the
     Executive Allowance Fund.  If the Executive is leasing an automobile

                                       4
<PAGE>

     through the Executive Allowance Fund on the date of the Qualifying
     Termination, the Executive must continue the lease through the end of the
     calendar year in which the Qualifying Termination occurs and then may
     either assume responsibility for the payments on the lease or return the
     automobile to the Company in which case the Company shall assume
     responsibility for the lease. In the event any annual incentive payments
     are paid to employees for the fiscal year in which the Qualifying
     Termination occurs, at the time such payments are paid, the Company shall
     provide the Executive with a lump sum cash payment equal to a prorata
     portion of the Executive's incentive payment under the Company's annual
     incentive program based on actual corporate and business unit performance
     calculations for the applicable fiscal year and assuming target performance
     of the Executive's individual performance objectives, with such proration
     based on the portion of the fiscal year completed at the time of the
     Qualifying Termination; provided, however, that if the Qualifying
     Termination and the Consummation of a Change in Control Transaction occur
     in the same fiscal year, then the Company shall provide the Executive with
     a lump sum cash payment equal to a prorata portion of the Executive's
     incentive payment under the Company's annual incentive program assuming
     target performance of the corporate, business unit and individual
     performance objectives, with such proration based on the portion of the
     fiscal year completed at the time of the Qualifying Termination.  Payments
     made under this paragraph shall constitute full satisfaction to the
     Executive for the accrued pay and benefits described in this paragraph.
     For purposes of this paragraph, the term "Earned and Unused Vacation Pay"
     shall mean the product of (i) the Executive's annual base salary in effect
     on the date of the Qualifying Termination divided by 2080, and (ii) the
     Executive's Earned and Unused Vacation (as hereinafter defined).  The term
     "Earned and Unused Vacation" shall mean the difference between (i) Earned
     Vacation (as hereinafter defined) and (ii) the actual number of hours of
     vacation taken by the Executive from January 1 of the calendar year in
     which the Qualifying Termination occurs through and including the date of
     the Qualifying Termination; provided that if the difference between (i) and
     (ii) is a negative number, then Executive's Earned and Unused Vacation
     shall be deemed to be zero.  As used in this paragraph, the term "Earned
     Vacation" means the product of (i) the aggregate number of hours of
     vacation which Executive is entitled to take during the calendar year in
     which the Qualifying Termination occurs, and (ii) the quotient obtained by
     dividing (A) the number of calendar days from January 1 of the year in
     which the Qualifying Termination occurs through and including the date of
     the Qualifying Termination, by (B) 365.

          (b) Severance Benefit.  As soon as practicable following a Qualifying
              -----------------
     Termination, but no later than 10 business days following such Qualifying
     Termination, the Company shall provide the Executive with a lump sum cash
     payment equal to three (3) multiplied by the sum of (i) and (ii), where (i)
     equals the greater of the Executive's annual rate of base salary in effect
     upon the date of the Qualifying Termination, or the Executive's annual rate
     of base salary in effect as of the date of the Announcement (which annual
     base salary shall not include any amounts under the Company's Executive
     Allowance Fund), and (ii) equals the greater of the Executive's target
     payment under the Company's annual incentive program for the fiscal year in
     which the date of the Qualifying Termination occurs, or the Executive's
     target payment for the fiscal year in which the Announcement occurs.

          (c) Welfare Benefits.  The Company shall provide the Executive with
              ----------------
     continued medical, dental and life insurance coverage for the Executive and
     the Executive's eligible dependents on the same basis (including premium)
     as active employees as in effect as of the date of the Executive's
     Qualifying Termination, until the earlier of (A) 36 months after the
     Executive's

                                       5
<PAGE>

     Qualifying Termination, or (B) the commencement of comparable coverage with
     a subsequent employer; provided, however, that such continued coverage
     shall not count against any COBRA continuation coverage required by law.

          (d) Retirement Plan.  For purposes of computing the Executive's
              ---------------
     accrued benefit under the Company's Retirement Plan (which as of the date
     of this Agreement consists of the Company's defined benefit plan and the
     Company's related Excess Benefit Plan), the Company shall calculate
     benefits based on the following:

               (i)  if the Executive is vested under the Retirement Plan as of
                    the date of the Qualifying Termination, then he or she shall
                    be deemed to have attained at least age 55 on the date of
                    the Qualifying Termination, and benefits shall be calculated
                    as though the Executive were age 55 or his or her actual age
                    at termination, whichever is greater, but payment of the
                    benefit shall not be payable prior to actual attainment of
                    age 55;

               (ii) if the Executive has attained age 50 on or before the date
                    of the Qualifying Termination, he or she will be deemed
                    vested in his or her benefit as of the date of the
                    Qualifying Termination, and may, upon actual attainment of
                    age 55, begin receiving a retirement benefit based on actual
                    age and years of service at commencement of the payment of
                    the retirement benefit, without any terminated vested
                    penalty.

          Payment of any additional retirement benefits resulting from the
          deemed treatment under this paragraph shall be paid from the general
          assets of the Company rather than the assets of the Retirement Plan.
          Any additional retirement benefit resulting from the deemed treatment
          under this section shall be payable in the same form as the
          Executive's benefits from the Retirement Plan, if any; if no benefits
          are payable to the Executive from the Retirement Plan, the Executive
          may choose the form of payment of the benefits provided under this
          paragraph from among lump sum payment or any one of the forms
          available under the Retirement Plan. Benefits payable under this
          section may not commence prior to the date on which the Executive
          attains age 55.

          (e) Retirement Savings Plus Plan and Nonqualified Savings Plan.  The
              ----------------------------------------------------------
     Company shall provide a cash lump sum payment to the Executive equal to the
     amount, if any, of the Company's matching contributions forfeited from the
     Executive's account in the Company's Retirement Savings Plus Plan and the
     Company's Nonqualified Savings Plan due to his Qualifying Termination.
     Payment of this amount shall be paid from the general assets of the
     Company.

          (f) Stock Options, Restricted Stock and Performance-Based Stock
              -----------------------------------------------------------
     Awards.  In the event of a Qualifying Termination after an Announcement but
     -------
     prior to the Consummation of a Change in Control Transaction, any
     outstanding stock options, restricted stock awards, performance share
     awards or performance unit awards of the Executive shall become vested
     and/or exercisable in accordance with the terms of the plan under which
     such grants and awards were made as if a change in control (as defined in
     each applicable plan) had occurred immediately prior to the Qualifying
     Termination.  Upon the occurrence of a change in control (as defined in

                                       6
<PAGE>

     each applicable plan), all grants and awards shall be subject to the
     provisions of the plan under which they were made.  With regard to any
     outstanding stock options, the Executive shall have a period of thirty (30)
     days following the date of the Qualifying Termination in which to exercise
     such options; provided, that if the plan under which such options were
     granted provides a longer period of exercise for which the Executive would
     be eligible, then such longer period shall be available to the Executive.

          (g) Outplacement Benefits.  If so requested by the Executive,
              ---------------------
     outplacement services shall be provided by a professional outplacement
     provider, in accordance with existing Company policy; provided, however,
     that in no event shall such services be less than under Company policy in
     effect as of the date of the Announcement; provided, further, that such
     outplacement services shall be provided at a cost to the Company of not
     more than 25% of the Executive's base salary in effect as of the date of
     the Announcement.

                                   SECTION 4

                                  Excise Tax

     4.1  Excise Tax.  If the payments and benefits provided to the Executive
          ----------
under this Agreement or under any other agreement with, or plan of, the Company
constitute a "parachute payment" as defined in Code Section 280G, the Company
shall provide to Executive, in cash, an additional payment in an amount to cover
the full excise tax due under Code Section 4999, plus the Executive's state and
federal income and employment taxes on this additional payment (the "Gross-Up
Payment").   Any amount payable under this Section 4.1 shall be paid as soon as
possible following the date of the Executive's Qualifying Termination, but in no
event later than thirty (30) calendar days after such date.

     All determinations required to be made under this Section 4.1, including
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
the assumptions to be used in determining such payment, shall be made by the
accounting firm used by the Company at the time of such determination (the
"Accounting Firm").  The Accounting Firm shall provide detailed supporting
calculations both to the Company and to Executive within fifteen (15) business
days of the receipt of notice from the Company or Executive that there has been
a Qualifying Termination, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity, or group effecting the Change in Control transaction,
the Executive may appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder).  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.

     4.2  Subsequent Recalculation.  In the event the Internal Revenue Service
          ------------------------
subsequently increases the excise tax computation described in Section 4.1, the
Company shall reimburse the Executive for the full amount necessary to make the
Executive whole on an after-tax basis (less any amounts received by the
Executive that the Executive would not have received had the computations
initially been computed as subsequently adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service.

                                       7
<PAGE>

                                   SECTION 5
                           Successors and Assignment

     5.1  Successors.  The Company shall require any successor (whether pursuant
          ----------
to a Change in Control transaction, direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business of the
Company to expressly assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform them if no such succession had taken place.  Failure of
the Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall constitute a material breach of the Agreement and
shall entitle the Executive to terminate the Executive's employment with Good
Reason immediately prior to or at any time after such succession.

     5.2  Assignment by Executive.  This Agreement shall inure to the benefit of
          -----------------------
and be enforceable by the Executive's executor and/or administrators, heirs,
devisees, and legatees.  If the Executive should die while any amount would be
payable to Executive hereunder had the Executive continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's estate.  Executive's rights hereunder
shall not otherwise be assignable.

                                   SECTION 6

            Confidentiality of Company Information; Nonsolicitation

     Without the prior written consent of the Company, during the term of this
Agreement, and if Executive either experiences a Qualifying Termination or
voluntarily terminates employment without Good Reason, for a period of twenty-
four (24) calendar months thereafter, Executive agrees hereby not to, directly
or indirectly, disclose or use (except as may be required for the performance of
duties assigned by the Company) any trade secret or other confidential material
pertaining to the conduct of the Company's business.  The Company's business, as
that term is used herein, includes, but is not limited to, the Company's
records, processes, methods, data, reports, information, documents, equipment,
training manuals, customer lists and business secrets.  Executive further
agrees, that during the twenty-four (24) month period following a Qualifying
Termination, Executive shall not initiate contact with or attempt to recruit
employees of the Company or its subsidiaries for employment outside the Company.
Nothing herein, however, shall prevent Executive from responding to contacts
initiated by such employees.

                                   SECTION 7

                                 Miscellaneous

     7.1  Contractual Rights to Benefits.  This Agreement establishes in
          ------------------------------
Executive a right to the benefits to which Executive is entitled hereunder.
However, except as expressly stated herein, nothing herein contained shall
require or be deemed to require, or prohibit or be deemed to prohibit, the
Company to segregate, earmark, or otherwise set aside any funds or other assets,
in trust or otherwise, to provide for any payments to be made or required
hereunder.

                                       8
<PAGE>

     7.2  Obligation Absolute; No Effect on Other Rights.  The obligations of
          ----------------------------------------------
the Company to make the payments to the Executive, and to make the arrangements,
provided for herein shall be absolute and unconditional and shall not be reduced
by any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or a third party at any time.  The provisions of this Agreement, and
any payment provided for herein, shall not supercede or in any way limit the
rights, benefits, duties or obligations which the Executive may have now or in
the future under any benefit, incentive or other plan or arrangement of the
Company or any other agreement with the Company.

     7.3  Legal Fees and Expenses.  In addition to all other amounts payable to
          -----------------------
the Executive under this Agreement, the Company shall pay or reimburse the
Executive for legal fees (including, without limitation, any and all court costs
and attorneys' fees and expenses), up to a maximum Company cost of $100,000,
incurred by the Executive in connection with or as a result of any claim, action
or proceeding brought by the Company or the Executive with respect to or arising
out of this Agreement or any provision hereof; unless, in the case of an action
brought by the Executive, it is determined by an arbitrator or by a court of
competent jurisdiction that such action was frivolous and not brought in good
faith.

     7.4  Dispute Resolution.  Notice of any dispute or controversy arising
          ------------------
under this Agreement shall be provided in writing to the other party.  If such
dispute is not resolved by mutual agreement of the parties within 60 calendar
days of the provision of such notice, Executive shall have the right and option
to elect (in lieu of litigation) to have any such dispute or controversy settled
by binding arbitration.  Such arbitration shall be conducted before a panel of
three (3) arbitrators sitting in a location selected by Executive in the
metropolitan area nearest to, and in the same county as, the Executive's place
of residence, in accordance with the rules of the American Arbitration
Association then in effect. Executive's election to arbitrate, as herein
provided, and the decision of the arbitrators in that proceeding, shall be
binding on the Company and Executive.  The Company may elect to have a dispute
or controversy settled by binding arbitration only if such dispute or
controversy arises under Section 6 of this Agreement.

     7.5  Notices.  Any notice required to be delivered to the Company or the
          -------
Committee by Executive hereunder shall be properly delivered to the Company when
personally delivered to, or received through the U.S. mail, postage prepaid, by:

     AGL Resources Inc.
     Attn: Senior Vice President and General Counsel
     817 West Peachtree Street
     Suite 1000
     Atlanta, GA  30308

     Any notice required to be delivered to Executive by the Company or the
Committee hereunder shall be properly delivered to Executive when personally
delivered to, or actually received through the U.S. mail, postage prepaid, by
Executive.

     7.6  Amendment.  No provision of this Agreement may be amended, altered,
          ---------
modified, waived or discharged unless such amendment, alteration, modification,
waiver or discharge is agreed to in a writing signed by both the Executive and
such officer of the Company as is specifically designated by the Committee or
the Board.  No waiver by either party, at any time, of any breach by the other
party of, or of compliance by the other party with, any condition or provision
of this Agreement to be

                                       9
<PAGE>

performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar provision or condition of this Agreement or any other
breach or failure to comply with the same condition or provision at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.

     7.7  Employment Status.  Nothing herein contained shall be deemed to create
          -----------------
an employment agreement between the Company and Executive providing for the
employment of Executive by the Company for any fixed period of time.  Subject to
the terms of any other agreement between the Company and the Executive, if any,
Executive's employment with the Company is terminable at will by the Company or
Executive and each shall have the right to terminate Executive's employment with
the Company at any time, with or without Cause, subject to the Company's
obligation to provide any benefits required hereunder.  In no event shall
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under any of the provisions of
this Agreement, nor, except as specifically provided hereunder, shall the amount
of any payment hereunder be reduced by any compensation earned by Executive as a
result of employment by another employer.

     7.8  Entire Agreement.  This Agreement represents the entire agreement
          ----------------
between the parties with respect to the subject matter hereof, and supersedes
all prior discussions, negotiations, and agreements concerning the subject
matter hereof, including, but not limited to, any prior severance agreement made
between Executive and the Company.

     7.9  Tax Withholding.  The Company shall withhold from any amounts payable
          ---------------
under this Agreement all federal, state, city, payroll or other taxes legally
required to be withheld.

     7.10 Severability.  In the event any provision of the Agreement shall be
          ------------
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.

     7.11 Applicable Law.  To the extent not preempted by the laws of the United
          --------------
States, the law of the State of Georgia shall be the controlling law in all
matters relating to this Agreement.

     7.12 Counterparts.  This Agreement may be executed in two or more
          ------------
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.

     IN WITNESS WHEREOF, the Company and Executive have executed this Agreement,
to be effective as of the day and year first written above.

                                       10
<PAGE>

                                     COMPANY:

                                     AGL RESOURCES INC.

                                     By:/s/ D. Raymond Riddle
                                        ---------------------------
                                     D. Raymond Riddle
                                     Chairman, Nominating and Compensation
                                     Committee of the Board of Directors

                                     EXECUTIVE:

                                     /s/ Paula G. Rosput
                                     ------------------------------
                                     Paula G. Rosput

                [THIS DOCUMENT HAS BEEN EXECUTED IN DUPLICATE.]

                                       11

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