Agl Resources Inc, et al. – ‘424B1’ on 5/14/01

On:  Monday, 5/14/01, at 9:46pm ET   ·   As of:  5/15/01   ·   Accession #:  931763-1-500632   ·   File #s:  333-60248, -01, -02

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Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Final Prospectus                                      52    245K 

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                                                Filed Pursuant to Rule 424(b)(1)
                                                      Registration No. 333-60248
                                                   Registration No. 333-60248-01
                                                   Registration No. 333-60248-02
PROSPECTUS                                                                      
6,000,000 8% Trust Preferred Securities 
(Liquidation Amount $25 per Trust Preferred Security) 
AGL Capital Trust II
Fully and Unconditionally Guaranteed
to the Extent Set Forth Herein by 
[Logo of AGL Resources appears here]
----------------
THE TRUST PREFERRED SECURITIES: 

.  The Trust Preferred Securities represent undivided preferred beneficial    
ownership interests in the assets of AGL Capital Trust II (the Trust). The
sole assets of the Trust will be the Junior Subordinated Debentures issued
by AGL Capital Corporation.                                               
 .  The Trust will apply to have the Trust Preferred Securities trade on the New
York Stock Exchange starting within 30 days after the Trust Preferred     
Securities are issued.                                                    
.  AGL Resources Inc. will guarantee the Trust Preferred Securities to the    
extent described in the prospectus.                                       
.  Anticipated Closing Date: May 21, 2001.                                    

DISTRIBUTIONS ON THE TRUST PREFERRED SECURITIES:

.  Each Trust Preferred Security pays a quarterly distribution at an annual   
  rate of 8% or $2.00 per Trust Preferred Security, if AGL Capital Corporation
pays interest on the Junior Subordinated Debentures.                      
.  AGL Capital Corporation may defer interest payments on the Junior          
Subordinated Debentures on one or more occasions for up to 20 consecutive 
  quarters. If AGL Capital Corporation does defer interest payments, the Trust
 will also defer payment of distributions on the Trust Preferred Securities.
 Deferred distributions will accumulate interest at an annual rate of 8%, to
the extent permitted by law.                                              
.  If AGL Capital Corporation redeems the Junior Subordinated Debentures held 
by the Trust, the Trust will redeem the Trust Preferred Securities. The   
 prices and circumstances under which the Junior Subordinated Debentures can
 be redeemed by AGL Capital Corporation and the amount you will receive upon
redemption of your Trust Preferred Securities are described in the        
prospectus.                                                               
 .  If the Trust redeems the Trust Preferred Securities or is liquidated and AGL
 Capital Corporation does not redeem its Junior Subordinated Debentures, you
  will receive $25 principal amount of Junior Subordinated Debentures for each
Trust Preferred Security you own rather than cash.                        

 Investing in the Trust Preferred Securities involves risks that are described
in "Risk Factors" beginning on Page 8 of this prospectus.                       
----------------

                                                                [Download Table]

                                                 Per Trust                  
                                             Preferred Security    Total    
                                             ------------------    -----    
                                                                            
Public offering price (1)..................        $   25       $150,000,000
Underwriters' commissions to be paid by AGL                                 
 Capital Corporation.......................        $.7875       $  4,725,000
Proceeds, before expenses, to AGL Capital                                   
 Trust II..................................        $   25       $150,000,000

 (1) Plus accumulated distributions from May 21, 2001 if settlement occurs
after that date                                                                 

Neither the Securities and Exchange Commission nor any state securities   
commission has approved or disapproved of these securities or determined if     
this prospectus is truthful or complete. Any representation to the contrary is  
a criminal offense.                                                             

  The Trust Preferred Securities will be ready for delivery in book-entry form
through The Depository Trust Company on or about May 21, 2001.                  

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

Joint Book-Running Managers 

Merrill Lynch & Co.                                   Morgan Stanley Dean Witter

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

Salomon Smith Barney
JPMorgan                                                       Robinson-Humphrey

----------------
The date of this Prospectus is May 14, 2001.

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                            Page
                                                                            ----
                                                                                
About This Prospectus.....................................................    1 
Where You Can Find More Information.......................................    1 
Incorporation of Certain Documents by Reference...........................    2 
Forward-Looking Statements................................................    3 
Summary Information--Questions and Answers................................    4 
Risk Factors..............................................................    8 
AGL Resources Inc.........................................................   10 
Capitalization............................................................   12 
AGL Capital Trust II......................................................   13 
Financial Statements of the Trust and Accounting Treatment................   14 
Use of Proceeds...........................................................   14 
Ratio of Earnings to Fixed Charges........................................   14 
Selected Financial Information............................................   15 
Description of Trust Preferred Securities.................................   16 
Description of Junior Subordinated Debentures.............................   27 
Description of Trust Preferred Guarantee..................................   36 
Description of Debenture Guarantee........................................   38 
Relationship Among the Trust Preferred Securities, the Junior Subordinated      
 Debentures, the Trust Preferred Guarantee and the Debenture Guarantee....   38 
Certain Federal Income Tax Consequences...................................   41 
ERISA Considerations......................................................   45 
Underwriting..............................................................   48 
Legal Matters.............................................................   49 
Experts...................................................................   49 

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ABOUT THIS PROSPECTUS 

You should only rely on the information provided or incorporated by 
reference in this prospectus. We have not authorized anyone else to provide you 
with different information. We are not making an offer of the Trust Preferred   
Securities to any person in any state where the offer is not permitted. You     
should not assume that the information in this prospectus is accurate as of any 
date other than the date on the front of this document.                         

As used in this prospectus, references to:                          

.   "AGL Resources" or "Guarantor" means AGL Resources Inc.;            

.   "AGL Trust" or "Trust" means AGL Capital Trust II;                  

.   "AGL Capital" or "Sponsor" means AGL Capital Corporation;           

.   References to "we," "us," "our" or similar references mean AGL      
Resources Inc., together with its subsidiaries, including AGL   
Capital Trust II and AGL Capital Corporation;                   

.   "Common Securities" means the common stock of AGL Trust that will be
purchased by AGL Capital;                                         

.   "Debenture Guarantee" means AGL Resources' guarantee of the Junior  
Subordinated Debentures;                                          

.   "Junior Subordinated Debentures" means the 8% Junior Subordinated   
 Deferrable Interest Debentures due May 15, 2041 of AGL Capital that
are deposited with AGL Trust;                                     

.   "Trust Preferred Guarantee" means AGL Resources' guarantee of the   
Trust Preferred Securities; and                                   

.   "Trust Preferred Securities" means the 8% Trust Preferred Securities
being offered by AGL Trust through this prospectus.               

    You should read this prospectus and the additional information described
under the heading "Where You Can Find More Information" to learn more about AGL 
Resources' business. You should also pay special attention to the "Risk         
Factors" section to determine whether an investment in the Trust Preferred      
Securities is appropriate for you.                                              

WHERE YOU CAN FIND MORE INFORMATION 

    We have filed with the SEC a registration statement under the Securities
Act of 1933 that registers the offer and sale of the securities described in    
this prospectus. The registration statement, including the attached exhibits    
and schedules, contains additional relevant information about us. The rules and 
regulations of the SEC allow us to omit from this prospectus certain            
information included in the registration statement.                             

     In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934. You may read and copy this   
information at the following locations of the SEC:                              

                                                                [Download Table]
                                                                              
Public Reference Room   Northeast Regional Office Midwest Regional Office     
450 Fifth Street, N.W.  7 World Trade Center      550 West Madison Street     
Room 1024               Suite 1300                Suite 1400                  
Washington, D.C. 20549  New York, New York 10048  Chicago, Illinois 60661-2511

  You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,    
D.C. 20549, at prescribed rates.                                                

The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who     
file electronically with the SEC. The address of that site is:                  

http://www.sec.gov

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You can also inspect reports, proxy statements and other information
about us at the offices of the New York Stock Exchange, 20 Broad Street, New    
York, New York 10005.                                                           

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

 The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by     
referring you to another document filed separately with the SEC. The            
information incorporated by reference is considered to be part of this          
prospectus, except for any information that is superseded by information that   
is included directly in this document or in a more recent incorporated          
document.                                                                       

     This prospectus incorporates by reference the documents listed below that
we have previously filed with the SEC. The documents contain important          
information about us and our financial condition.                               

.  Annual Report on Form 10-K for the fiscal year ended September 30,   
2000 filed on December 18, 2000;                                  

.  Quarterly Report on Form 10-Q for the quarter ended March 31, 2001   
filed on May 4, 2001;                                             

.  Quarterly Report on Form 10-Q for the quarter ended December 31, 2000
filed on February 9, 2001;                                        

.  Current Report on Form 8-K filed on April 27, 2001 (event date: April
26, 2001);                                                        

.  Current Report on Form 8-K filed on March 1, 2001 (event date:       
February 23, 2001);                                               

.  Current Report on Form 8-K filed on November 17, 2000 (event date:   
November 17, 2000);                                               

.  Current Report on Form 8-K filed on October 18, 2000 (event date:    
October 6, 2000), as amended by Form 8-K/A filed on December 20,  
2000; and                                                         

.  Proxy Statement filed December 18, 2000 relating to our 2001 Annual  
Meeting of Shareholders.                                          

  We incorporate by reference additional documents that we may file with
the SEC between the date of this prospectus and the date we sell all of the     
securities. These documents include periodic reports, such as Annual Reports on 
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as   
well as proxy statements.                                                       

 You can obtain any of the documents incorporated by reference in this
prospectus from us, or from the SEC through the SEC's Internet world wide web   
site at the address described above. Documents incorporated by reference are    
available from us without charge, excluding any exhibits to those documents,    
unless the exhibit is specifically incorporated by reference in this            
prospectus. You can obtain documents incorporated by reference in this          
prospectus by requesting them in writing or by telephone from us at the         
following address:                                                              

Investor Relations
AGL Resources Inc.
P. O. Box 4569
Atlanta, Georgia 30302-4569 
Telephone: (404) 584-9470 

We have not authorized anyone to give any information or make any   
representation about us that is different from, or in addition to, the          
information and representations contained in this prospectus or in any of the   
materials that we have incorporated into this prospectus. If anyone does give   
you information of this sort, you should not rely on it. If you are in a        
jurisdiction where offers to sell, or solicitations of offers to purchase, the  
securities offered by this document are unlawful, or if you are a person to     
whom it is unlawful to direct these activities, then the offer presented in     
this document does not extend to you. The information contained in this         
document speaks only as of the date of this document unless the information     
specifically indicates that another date applies.                               

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FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 allows public  
companies to provide cautionary remarks about forward-looking statements that   
they make in documents that are filed with the SEC. Forward-looking statements  
include, but are not limited to, statements about the following:                

.  Deregulation;                                                        

.  State and Federal regulation;                                        

.  Business prospects;                                                  

.  Industry trends;                                                     

.  Concentration of credit risk;                                        

.  Environmental investigations and cleanups;                           

.  Quantitative and qualitative disclosures about market risk;          

.  Virginia Natural Gas acquisition and integration;                    

.  Propane operations; and                                              

.  Changes required by the Public Utility Holding Company Act of 1935.  

Important factors that could cause our actual results to differ     
substantially from those in the forward-looking statements include, but are not 
limited to, the following:                                                      

.  Industrial, commercial, and residential growth in our service        
territories;                                                      

.  Changes in price and demand for natural gas and related products;    

.  Impact of changes in state and federal legislation and regulation on 
both the gas and electric industries;                             

.  Effects and uncertainties of deregulation and competition,           
  particularly in markets where prices and providers historically have
   been regulated, unknown risks related to nonregulated businesses, and
unknown issues such as the stability of certificated marketers;   

.  Concentration of credit risk in certificated marketers;              

.  Industry consolidation;                                              

.  Impact of acquisitions and divestitures;                             

.  Changes in accounting policies and practices issued periodically by  
accounting standard-setting bodies;                               

.  Interest rate fluctuations, financial market conditions, and economic
conditions, generally;                                            

.  Uncertainties about environmental issues and the related impact of   
such issues;                                                      

.  Impact of changes in weather upon the temperature sensitive portions 
of the business; and                                              

.  Other factors and the related impact of such factors.                

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SUMMARY INFORMATION--QUESTIONS AND ANSWERS

This summary includes questions and answers that highlight selected 
information from the prospectus to help you understand the Trust Preferred      
Securities. This summary may not contain all the information that may be        
important to you. You should carefully read this prospectus to fully understand 
the terms of the Trust Preferred Securities, as well as the tax and other       
considerations that should be important to you in making a decision about       
whether to invest in the Trust Preferred Securities.                            

Q: WHO IS AGL TRUST?                                                    

A: AGL Trust is a business trust established under Delaware law that    
   exists for the sole purpose of issuing the Trust Preferred Securities
 and Common Securities for cash. The proceeds from the sale of these
securities will be used by the Trust to purchase the Junior       
Subordinated Debentures from AGL Capital.                         

Q: WHAT ARE THE TRUST PREFERRED SECURITIES?                             

A: Each Trust Preferred Security represents a preferred undivided       
  beneficial ownership interest in the assets of AGL Trust. The Common
   Securities issued by the Trust are subordinate to the Trust Preferred
Securities with respect to distributions made by the Trust in the 
 event the Trust is liquidated or dissolved. AGL Capital, which is a
  wholly-owned subsidiary of AGL Resources, will own all of the Common
Securities of AGL Trust. The sole assets of AGL Trust will be the 
Junior Subordinated Debentures that will be purchased from AGL    
Capital by AGL Trust.                                             

Q: WHAT DISTRIBUTIONS WILL I RECEIVE ON THE TRUST PREFERRED SECURITIES? 

A: The Trust Preferred Securities provide for quarterly cash            
   distributions at the annual rate of 8% or $.50 per quarter ($2.00 per
year) for each Trust Preferred Security you own. Distributions are
payable on each February 15, May 15, August 15 and November 15,   
beginning August 15, 2001. Distributions will accumulate from the 
  settlement date of the Trust Preferred Securities, which is expected
 to be May 21, 2001. Because the sole asset of AGL Trust will be the
 Junior Subordinated Debentures issued by AGL Capital and guaranteed
as to principal and interest by AGL Resources on a junior         
 subordinated basis, AGL Trust's ability to pay distributions on the
Trust Preferred Securities is ultimately dependent upon interest  
 payments being made by AGL Capital or AGL Resources on those Junior
  Subordinated Debentures. If AGL Capital exercises its right to defer
   making an interest payment on its Junior Subordinated Debentures, AGL
  Trust will not be able to pay distributions to you until AGL Capital
resumes making interest payments on those Junior Subordinated     
Debentures.                                                       

Q: WHO IS AGL CAPITAL?                                                  

A: AGL Capital is a wholly-owned financing subsidiary of AGL Resources. 
  AGL Capital is a Nevada corporation and is the sponsor of the Trust.
AGL Capital's principal address is 2325-B Renaissance Drive, Las  
Vegas, Nevada 89119. Its telephone number is (702) 740-4244.      

Q: WHO IS AGL RESOURCES?                                                

A: AGL Resources is a registered public utility holding company and,    
   with its subsidiaries, is the second largest natural gas distribution
 company in the United States. AGL Resources is the guarantor of the
Trust Preferred Securities. Its principal executive offices are   
 located at 817 West Peachtree Street, N.W., Atlanta, Georgia 30308.
   Its telephone number is (404) 584-9470. For information about us, see
"AGL Resources Inc." in this prospectus. You should also read the 
other documents we have filed with the Securities and Exchange    
Commission ("SEC"), which you can find by referring to the section
entitled "Where You Can Find More Information" in this prospectus.

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Q: WHAT ARE THE JUNIOR SUBORDINATED DEBENTURES?                         

A: The Junior Subordinated Debentures are unsecured debt obligations of 
AGL Capital. They rank below any of AGL Capital's debt that is not
specifically subordinated. AGL Capital may exercise its right to  
 defer interest payments on the Junior Subordinated Debentures for a
  period of not more than 20 consecutive quarters. AGL Capital cannot,
however, defer any payments on the Junior Subordinated Debentures 
beyond their stated maturity which is May 15, 2041. In certain    
circumstances AGL Capital can elect to liquidate AGL Trust and    
 distribute the Junior Subordinated Debentures to you. AGL Resources
will guarantee on a junior subordinated basis the payment of the  
principal (and premium, if any) and interest on the Junior        
 Subordinated Debentures, except that no payment of interest will be
   made under the Debenture Guarantee during any period during which AGL
Capital has exercised its right to defer interest payments on the 
Junior Subordinated Debentures. The Debenture Guarantee will rank 
below AGL Resources' debt which is not specifically subordinated. 

Q: CAN THE TRUST PREFERRED SECURITIES BE REDEEMED?                      

A: The Trust must redeem the Trust Preferred Securities when the Junior 
Subordinated Debentures are paid at maturity or if AGL Capital    
redeems the Junior Subordinated Debentures early. AGL Capital can 
redeem the Junior Subordinated Debentures in whole or in part from
 time to time on or after May 21, 2006. Also, AGL Capital can redeem
the Junior Subordinated Debentures in whole but not in part at any
   time if there is a Tax Event or Investment Company Event as described
in this prospectus. In the event of any redemption, you will be   
   entitled to receive $25 per Trust Preferred Security plus accrued and
unpaid distributions to the redemption date.                      

The trustees of AGL Trust can elect to liquidate AGL Trust and      
distribute the Junior Subordinated Debentures to you at any time.   

Neither the Junior Subordinated Debentures nor the Trust Preferred  
Securities can be redeemed at any time at the option of their       
holders.                                                            

Q: ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT?                   

A: Yes, an investment in the Trust Preferred Securities is subject to   
risk. Please refer to the section entitled "Risk Factors" in this 
prospectus for a description of these risks.                      

Q: WHAT HAPPENS IF AGL TRUST DOES NOT PAY DISTRIBUTIONS ON THE TRUST    
PREFERRED SECURITIES?                                             

A: If your distributions are deferred, you will still accumulate        
 distributions at the annual rate of 8% plus you will be entitled to
 additional distributions at the same rate, compounded quarterly, on
any deferred distribution that remains unpaid.                    

 If distributions are deferred, during that period until all scheduled
 quarterly distributions which are due and owing are paid or set aside
 for payment to you, neither AGL Resources nor AGL Capital Corporation
may, except in limited circumstances, declare or pay dividends on,  
acquire, or make a liquidation payment with respect to, any of our  
outstanding capital stock.                                          

This limitation prevents AGL Resources and AGL Capital Corporation  
from paying cash or other dividends to our shareholders if payments 
are not being made on the Trust Preferred Securities, the Junior    
Subordinated Debentures or the guarantee issued by us in connection 
with the Trust Preferred Securities. However, these provisions will 
not restrict:                                                       

 .  our ability to pay dividends or distributions on our capital stock
  in shares of, or options, warrants or rights to subscribe for or
purchase shares of our capital stock;                         

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.  our ability to convert or exchange our common stock or preferred 
stock of one class into our common stock or preferred stock of
another class;                                                

.  our ability to redeem or purchase any rights under a rights      
   agreement applicable to our common stock or issue preferred stock
under those rights; and                                       

 .  our ability to purchase our capital stock in the open market or in
private transactions for employee benefit or similar purposes.

Q: WHAT IS THE TRUST PREFERRED GUARANTEE?                               

A: AGL Resources will guarantee on a junior subordinated basis, to the  
extent described in this prospectus and its guarantee of the Trust
Preferred Securities:                                             

.  distribution of quarterly payments on the Trust Preferred        
 Securities by AGL Trust to you to the extent AGL Trust receives
distributions on the Junior Subordinated Debentures;          

.  the redemption amount due to you if AGL Trust redeems the Trust  
Preferred Securities; and                                     

.  the liquidation amount of the Trust Preferred Securities if AGL  
Trust is liquidated.                                          

Q: WHAT IS THE DEBENTURE GUARANTEE?                                     

A: AGL Resources will guarantee on a junior subordinated basis the      
payment of the principal (and premium, if any) and interest on the
Junior Subordinated Debentures, except that no payment of interest
will be made under the Debenture Guarantee for any period during  
  which AGL Capital has exercised its right to defer interest payments
on the Junior Subordinated Debentures.                            

Q: CAN AGL TRUST BE LIQUIDATED?                                         

A: AGL Capital has the right to liquidate the Trust under certain       
   circumstances and cause cash or the Junior Subordinated Debentures to
  be distributed to you as part of the Trust liquidation. If AGL Trust
  is liquidated and cash is to be distributed, you will be entitled to
 receive $25 plus any accumulated and unpaid distributions per Trust
Preferred Security before any payment is made for the Common      
Securities. If AGL Trust is liquidated and the Junior Subordinated
Debentures are distributed, you will be entitled to receive $25   
 principal amount of Junior Subordinated Debentures plus accumulated
and unpaid distributions per Trust Preferred Security.            

Q: DO I HAVE VOTING RIGHTS?                                             

A: Except in limited circumstances you will not have any voting rights. 
AGL Capital, as holder of the Common Securities, will have sole   
  voting power on most matters. The holders of a majority of the Trust
Preferred Securities, however, have the right to direct the time, 
method and place of conducting any proceeding for any remedy      
available to the property trustee, or direct the exercise of any  
trust power conferred upon the property trustee.                  

Q: IN WHAT FORM WILL THE TRUST PREFERRED SECURITIES BE ISSUED?          

A: The Trust Preferred Securities will be issued in the form of a global
  certificate or certificates registered in the name of Cede & Co., as
   nominee for The Depository Trust Company ("DTC"). This means you will
 not receive a certificate for your Trust Preferred Securities. Your
   interests in the Trust Preferred Securities will be evidenced by, and
transfers of the Trust Preferred Securities will be effected only 
through, records maintained by the participants in DTC.           

Q: WILL THE TRUST PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE?   

A: We intend to list the Trust Preferred Securities on the New York     
Stock Exchange under the symbol "ATGPr". If approved for listing, 
trading on the New York Stock Exchange will begin within 30 days  
  after the issuance of the Trust Preferred Securities. The listing of
the Trust Preferred Securities will not necessarily ensure that a 
liquid trading market will be available for the Trust Preferred   
Securities.                                                       

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Q: HOW WILL THE PROCEEDS BE USED?                                       

A: The proceeds from the sale of the Trust Preferred Securities and the 
Common Securities will be invested by the Trust in the Junior     
Subordinated Debentures. We intend that the net proceeds from the 
  sale of the Trust Preferred Securities (estimated to be $144,733,700
 after payment of fees and expenses in the offering) will be used to
reduce short-term debt and for general corporate purposes. The    
precise amount and timing of the application of such net proceeds 
used for such corporate purposes will depend on the funding       
requirements and the availability of other funds. The net proceeds
may be temporarily invested in short-term interest bearing        
securities.                                                       

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RISK FACTORS

     Your investment in the Trust Preferred Securities will involve risks. You
should carefully consider the following information and review the information  
contained elsewhere in this prospectus and the documents that are incorporated  
by reference in this prospectus.                                                

You Will Only Receive Distributions if Payments on the Junior Subordinated      
Debentures are Made                                                             

AGL Trust's ability to pay distributions on the Trust Preferred     
Securities to you is dependent upon its receipt of payments on the Junior       
Subordinated Debentures it holds. AGL Capital may defer interest payments on    
the Junior Subordinated Debentures for up to 20 consecutive quarters. If the    
payment of interest or principal on the Junior Subordinated Debentures is not   
made, the Trust will lack the funds necessary to pay distributions on the Trust 
Preferred Securities. If AGL Trust does not make payments to you on the Trust   
Preferred Securities, we will be restricted from, among other things, paying    
cash or certain other dividends on our capital stock.                           

The Obligations of AGL Resources Under the Guarantees of the Trust Preferred    
Securities and the Junior Subordinated Debentures are Subordinated              

    The obligations of AGL Resources under the Trust Preferred Guarantee and
the Debenture Guarantee will be unsecured and rank subordinate and junior in    
right of payment to all senior indebtedness. In addition, in the case of a      
bankruptcy or insolvency proceeding, AGL Resources' obligations under the       
guarantees will also rank subordinate and junior in right of payment to all     
liabilities (other than other guarantees) of AGL Resources. This means that our 
obligations under the guarantees will not be paid unless we can satisfy in full 
all of our other obligations ranking senior to the guarantees. As of March 31,  
2001, AGL Resources had approximately $1,279.4 million of Senior Indebtedness   
(as defined in the Indenture).                                                  

 Because AGL Resources is a registered public utility holding company,
substantially all of its income is from operating subsidiaries. Required        
payments on debt at the subsidiary level will be made before funds from those   
subsidiaries are available to AGL Resources. The right of AGL Resources to      
participate in any distribution of assets of any subsidiary upon such           
subsidiary's liquidation or reorganization or otherwise (and thus the ability   
of holders of the Trust Preferred Securities to benefit indirectly from such    
distribution) is subject to the prior claims of creditors of that subsidiary,   
except to the extent that AGL Resources may itself be recognized as a creditor  
of that subsidiary. As of March 31, 2001, the subsidiaries of AGL Resources had 
total liabilities (excluding liabilities owed to AGL Resources) of              
approximately $2,013.5 million. Accordingly, since AGL Capital is funded by AGL 
Resources, the Junior Subordinated Debentures will be effectively subordinated  
to all existing and future liabilities of AGL Resources and its subsidiaries.   
None of the Indenture, the Guarantee or the Trust Agreement places any          
limitation on the amount of debt, including senior indebtedness, that may be    
incurred by AGL Resources or by any subsidiary. The principal sources of AGL    
Resources' income are dividends and fees from its subsidiaries.                 

The ability of the Trust to pay amounts due on the Trust Preferred  
Securities is solely dependent upon AGL Capital or AGL Resources making         
payments on the Junior Subordinated Debentures as and when required.            

AGL Capital's Option to Extend Interest Payment Period and Certain Tax and      
Market Considerations                                                           

AGL Capital has no current intention to exercise its right to defer 
payments of interest on the Junior Subordinated Debentures. If, however, AGL    
Capital exercises its right to defer payments of interest on the Junior         
Subordinated Debentures, each holder of Trust Preferred Securities will be      
required to accrue income (as original issue discount ("OID")) in respect of    
the deferred stated interest allocable to its Trust Preferred Securities for    
United States federal income tax purposes, which will be allocated but not      
distributed to holders                                                          

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of Trust Preferred Securities. As a result, each such holder of Trust Preferred 
Securities will recognize income for United States federal income tax purposes  
in advance of the receipt of cash and will not receive the cash related to such 
income from the Trust if the holder disposes of the Trust Preferred Securities  
prior to the record date for the payment of Distributions thereafter. See       
"Certain Federal Income Tax Consequences--Interest Income and Original Issue    
Discount" and "--Sales of Trust Preferred Securities."                          

     If AGL Capital elects to exercise its right to defer payments of interest
on the Junior Subordinated Debentures in the future, the market price of the    
Trust Preferred Securities is likely to be affected. A holder that disposes of  
the Trust Preferred Securities during an extension period, therefore, might not 
receive the same return on investment as a holder that continues to hold the    
Trust Preferred Securities. In addition, merely as a result of the existence of 
AGL Capital's right to defer payments of interest on the Junior Subordinated    
Debentures, the market price of the Trust Preferred Securities may be more      
volatile than the market prices of other securities that are not subject to     
such deferrals.                                                                 

Tax and Market Risks of Redemption of Trust Preferred Securities for Junior     
Subordinated Debentures                                                         

   AGL Capital has the right at any time to dissolve, wind-up or terminate
the Trust and cause the Junior Subordinated Debentures to be distributed to the 
holders of the Trust Securities in liquidation of the Trust. AGL Capital will   
have the right, in certain circumstances, to redeem the Junior Subordinated     
Debentures, in whole or in part, in lieu of a distribution of the Junior        
Subordinated Debentures by the Trust, in which event the Trust will redeem the  
Trust Preferred Securities on a pro rata basis to the same extent as the Junior 
Subordinated Debentures are redeemed by AGL Capital.                            

 Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a 
taxable event to holders of the Trust Preferred Securities. If, however, the    
Trust is characterized as an association taxable as a corporation at the time   
of the dissolution of the Trust, the distribution of the Junior Subordinated    
Debentures may constitute a taxable event to holders of Trust Preferred         
Securities. Upon the occurrence of a Tax Event, a dissolution of the Trust in   
which holders of the Trust Preferred Securities receive cash may be a taxable   
event to such holders. See "Certain Federal Income Tax Consequences--Receipt of 
Junior Subordinated Debentures or Cash Upon Liquidation of the Trust."          

     There can be no assurance as to the market prices for the Trust Preferred
Securities or Junior Subordinated Debentures distributed to the holders of      
Trust Preferred Securities if a termination of the Trust were to occur.         
Accordingly, the Trust Preferred Securities or the Junior Subordinated          
Debentures may trade at a discount from the price that the investor paid to     
purchase the Trust Preferred Securities offered hereby. Because holders of      
Trust Preferred Securities may receive Junior Subordinated Debentures in        
liquidation of the Trust and because Distributions are otherwise limited to     
payments on the Junior Subordinated Debentures, prospective purchasers of Trust 
Preferred Securities are also making an investment decision with regard to the  
Junior Subordinated Debentures and should carefully review all the information  
regarding the Junior Subordinated Debentures contained herein. See "Description 
of Junior Subordinated Debentures."                                             

Rights Under the Trust Preferred Guarantee                                      

The Bank of New York will act as Property Trustee under the Trust   
Agreement and as Trustee under the Indenture. The Bank of New York (Delaware)   
will act as Delaware Trustee under the Trust Agreement. The Guarantee will      
guarantee you the following payments, to the extent not paid by the Trust:      

.  any accumulated and unpaid distributions required to be paid on the  
   Trust Preferred Securities, to the extent that the Trust has funds on
hand legally available at such time,                              

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.  the applicable Redemption Price with respect to any Trust Preferred  
Securities called for redemption, to the extent that the Trust has
funds on hand legally available therefor at such time, and        

.  upon a voluntary or involuntary termination and liquidation of the   
 Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Trust Preferred Securities), the lesser of (a) the 
aggregate of the liquidation amount and all accumulated and unpaid
distributions to the date of payment, to the extent that the Trust
   has funds on hand legally available therefor at such time and (b) the
   amount of assets of the Trust remaining available for distribution to
holders of the Trust Preferred Securities upon a termination and  
liquidation of the Trust.                                         

     Additionally, AGL Resources will guarantee on a junior subordinated basis
the payment of the principal (and premium, if any) and interest on the Junior   
Subordinated Debentures, except that no payment of interest will be made under  
the Debenture Guarantee for any period during which AGL Capital has exercised   
its right to defer interest payments on the Junior Subordinated Debentures.     

You Have Limited Voting Rights                                                  

As a holder of the Trust Preferred Securities, you will have limited
voting rights and will not be entitled to vote to appoint, change or to         
increase or decrease the number of trustees of AGL Trust appointed by AGL       
Capital, except as to the Delaware Trustee and the Property Trustee, if an      
Event of Default has occurred and is continuing. Since AGL Capital owns all of  
AGL Trust's Common Securities, those rights belong exclusively to AGL Capital.  

There is No Prior Market for the Trust Preferred Securities                     

This series of Trust Preferred Securities constitutes a new issue of
securities with no established trading market. AGL Trust intends to list the    
Trust Preferred Securities on the New York Stock Exchange. There can be no      
assurance that an active market for the Trust Preferred Securities will develop 
or be sustained in the future on the New York Stock Exchange. There is no       
assurance that a trading market for the Trust Preferred Securities will exist   
and no assurance as to the liquidity of any trading market.                     

Potential Tax Law Changes                                                       

    Certain tax law changes have been proposed from time to time which could
affect the deductibility of interest paid on the Junior Subordinated            
Debentures. None of these proposals have become law. If they were to become     
law, however, that event could result in the early redemption of the Trust      
Preferred Securities.                                                           

AGL RESOURCES INC.

AGL Resources is the registered public utility holding company for: 

.  Atlanta Gas Light Company, a natural gas local distribution utility; 

.  Virginia Natural Gas, Inc., a natural gas local distribution utility 
acquired effective October 1, 2000;                               

.  Chattanooga Gas Company, a natural gas local distribution utility;   

.  AGL Energy Services, Inc., a wholesale energy services company;      

.  AGL Services Company, a service company established in accordance    
with Public Utilities Holding Company Act of 1935;                

.  AGL Capital Corporation, a financing subsidiary; and                 

.  Several other non-utility subsidiaries.                              

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     Atlanta Gas Light Company conducts its primary business, the distribution
of natural gas, in Georgia including Atlanta, Athens, Augusta, Brunswick,       
Macon, Rome, Savannah and Valdosta. Chattanooga Gas Company distributes natural 
gas in the Chattanooga and Cleveland areas of Tennessee. Virginia Natural Gas   
distributes natural gas in the Hampton Roads region of Virginia. The Georgia    
Public Service Commission regulates Atlanta Gas Light Company, the Tennessee    
Regulatory Authority regulates Chattanooga Gas Company and the Virginia State   
Corporation Commission regulates Virginia Natural Gas. AGL Energy Services      
provides wholesale energy services for AGL Resources' regulated and unregulated 
operations, as well as for unaffiliated retail gas marketers. Atlanta Gas Light 
Company, Chattanooga Gas Company and Virginia Natural Gas comprise              
substantially all of AGL Resources' assets, revenues and operating income.      

AGL Resources owns or has an interest in the following non-utility  
businesses:                                                                     

.  SouthStar Energy Services LLC, a joint venture among a subsidiary of 
  AGL Resources and subsidiaries of Dynegy Holdings, Inc. and Piedmont
Natural Gas Company. SouthStar markets natural gas and related    
   services to residential and small commercial customers in Georgia and
 to industrial customers in the Southeast. SouthStar began marketing
natural gas to customers in Georgia during the first quarter of   
fiscal 1999 under the trade name Georgia Natural Gas Services;    

.  AGL Investments, Inc., which directly or indirectly owns or manages  
certain non-utility businesses including:                         

-- AGL Propane Services, Inc., which has a 22.36% ownership interest
in US Propane LLC. US Propane owns 34% of Heritage Propane    
Partners, which engages in the sale of propane and related    
products and services in 28 states;                           

-- AGL Networks, LLC, which will install, and lease to third-party  
operators, conduit and fiber optic cable. AGL Networks was    
    incorporated on August 15, 2000 for the purpose of partnering with
telecommunication companies to serve Atlanta's rapidly growing
demand for high-speed network capacity. On April 17, 2001, the
 GPSC voted unanimously to grant AGL Networks' Competitive Local
   Exchange Carrier License, which grants AGL Networks the rights to
construct the last mile connectivity and provide dark fiber   
network services in the State of Georgia.                     

.  AGL Peaking Services, Inc., which owns a 50% interest in Etowah LNG  
Company, LLC, a joint venture with Southern Natural Gas Company.  
Etowah was formed for the purpose of constructing, owning and     
operating a liquefied natural gas peaking facility; and           

.  AGL Capital Corporation, which was established to finance the        
   acquisition of Virginia Natural Gas, to refinance existing short-term
debt and to provide working capital to AGL Resources and its      
 subsidiaries through a commercial paper program, issuance of Senior
Notes and other financing mechanisms.                             

Effective March 2, 2001, AGL Resources sold substantially all of the
assets of Utilipro, Inc. to Alliance Data Systems Corporation for $17.7         
million, resulting in a pre-tax gain of $10.9 million. AGL Resources recorded   
the gain related to the sale of Utilipro as Other Income.                       

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CAPITALIZATION

   The following table sets forth the capitalization of AGL Resources Inc.
and its subsidiaries as of March 31, 2001. The pro forma column reflects our    
capitalization as adjusted to give effect to the sale of $150 million of Trust  
Preferred Securities as well as the application of the net proceeds of the      
offering (estimated to be $144,733,700) to pay short-term debt obligations.     

  You should read this table along with our audited financial statements
contained in our most recent Annual Report on Form 10-K as well as the          
information presented in our Quarterly Report on Form 10-Q for the quarter      
ended March 31, 2001. See "Where You Can Find More Information" in this         
prospectus.                                                                     

Consolidated Capitalization 
(Dollars in Millions) 

                                                                [Download Table]

                                                  As of March 31, 2001        
                                            ----------------------------------
                                                 Actual          Pro Forma    
                                            ----------------  ----------------
                                             Amount  Percent   Amount  Percent
                                            -------- -------  -------- -------
                                                                              
Long-Term Debt............................. $  890.0   44.4%  $  890.0   44.4%
Short-Term Debt (1)........................    366.3   18.3      221.6   11.1 
Preferred Securities (1)...................     74.3    3.7      219.0   10.9 
Common Stockholders' Equity (net of shares                                    
 held in treasury, at cost)................    673.4   33.6      673.4   33.6 
                                            -------- ------   --------  ----- 
                                            $2,004.0  100.0%  $2,004.0  100.0%
                                            ======== ======   ========  ===== 

--------                                                                        
(1) Proposed financing of $150,000,000 in Trust Preferred Securities to pay     
$144,733,700 of short-term debt obligations.                            

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AGL CAPITAL TRUST II

The Trust is a statutory business trust formed under Delaware law   
pursuant to the Trust Agreement executed by AGL Capital, as Sponsor, The Bank   
of New York (Delaware), as Delaware Trustee and the Administrative Trustees     
named therein, and the filing of a Certificate of Trust with the Delaware       
Secretary of State on March 23, 2001. The Trust Agreement will be amended and   
restated among AGL Capital, as Sponsor, The Bank of New York, as Property       
Trustee, The Bank of New York (Delaware), as Delaware Trustee, and the          
Administrative Trustees. The Trust Agreement, as amended and restated, will be  
qualified as an indenture under the Trust Indenture Act of 1939, as amended.    
The Trust exists for the exclusive purposes of issuing and selling the Trust    
Preferred Securities and Common Securities, using the proceeds from the sale of 
these securities to acquire the Junior Subordinated Debentures and making       
distributions, and except as otherwise limited by the Trust Agreement, engaging 
in only those other activities necessary, advisable or incidental to the        
purposes listed above. The Junior Subordinated Debentures will be the sole      
assets of the Trust, and payments under the Junior Subordinated Debentures and  
the Agreement on Expenses and Liabilities will be the sole revenues of the      
Trust. All of the Common Securities will be owned by AGL Capital.               

   The Common Securities will rank equal in priority, and payments will be
made thereon pro rata, with the Trust Preferred Securities, except that upon    
the occurrence and continuance of an event of default under the Trust           
Agreement, the rights of AGL Capital as holder of the Common Securities to      
payments in respect of distributions and payments upon liquidation, redemption  
or otherwise will be subordinated to the rights of the holders of the Trust     
Preferred Securities. See "Description of Trust Preferred Securities--          
Subordination of Common Securities." AGL Capital will acquire Common Securities 
in a liquidation amount equal to at least 3% of the total capital of the Trust. 
The Trust has a term of 40 years, but may terminate earlier as provided in the  
Trust Agreement. The Trust's business and affairs are conducted by its          
trustees, each appointed by AGL Capital as holder of the Common Securities.     

    The trustees for the Trust will be The Bank of New York, as the Property
Trustee (the "Property Trustee"), The Bank of New York (Delaware), as the       
Delaware Trustee (the "Delaware Trustee"), and two individual trustees (the     
"Administrative Trustees") who are employees or officers of or affiliated with  
AGL Capital (collectively, the "Trustees"). The Bank of New York, as Property   
Trustee, will act as sole indenture trustee under the Trust Agreement. The Bank 
of New York will also act as indenture trustee under the Indenture. See         
"Description of Junior Subordinated Debentures." The holder of the Common       
Securities of the Trust or, if an Event of Default under the Trust Agreement    
has occurred and is continuing, the holders of a majority in liquidation amount 
of the Trust Preferred Securities, will be entitled to appoint, remove or       
replace the Property Trustee and/or the Delaware Trustee In no event will the   
holders of the Trust Preferred Securities have the right to vote to appoint,    
remove or replace the Administrative Trustees; such voting rights will be       
vested exclusively in the holder of the Common Securities. The duties and       
obligations of each Trustee are governed by the Trust Agreement and the         
Delaware Business Trust Act. AGL Capital will pay all fees, expenses, debts and 
obligations (other than the Trust Securities) related to the Trust and the      
offering of the Trust Preferred Securities and will pay, directly or            
indirectly, all ongoing costs, expenses and liabilities of the Trust. The       
rights of the holders of the Trust Preferred Securities, including economic     
rights, rights to information and voting rights, are as set forth in the        
Declaration, the Delaware Business Trust Act (the "Delaware Trust Act") and the 
Trust Indenture Act. See "Description of Trust Preferred Securities."           

     The Trust's registered office in the State of Delaware is c/o The Bank of
New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711. The  
principal executive office of the Trust is c/o AGL Resources Inc., 817 West     
Peachtree Street, N.W., Atlanta, Georgia 30308 (telephone number 404-584-9470). 

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FINANCIAL STATEMENTS OF THE TRUST AND ACCOUNTING TREATMENT  

The financial statements of the Trust will be consolidated with AGL   
Resources' financial statements, with the Trust Preferred Securities shown as   
mandatorily redeemable preferred securities. There are no separate financial    
statements of AGL Trust in this prospectus. We do not believe such financial    
statements would be helpful because:                                            

.  The Trust is a wholly-owned subsidiary of AGL Resources, which files 
consolidated financial information under the Exchange Act.        

.  The Trust does not have any independent operations other than issuing
 the Trust Preferred Securities and Common Securities and purchasing
the Junior Subordinated Debentures.                               

.  The obligations of AGL Capital and AGL Resources under the Junior    
Subordinated Debentures, the Debenture Guarantee and the Trust    
 Preferred Securities Guarantee have the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations
under the Trust Preferred Securities. Holders of Trust Preferred  
    Securities may, under certain circumstances, enforce these obligations
directly against AGL Capital and AGL Resources.                   

The Trust is not, and will not become, subject to the information     
reporting requirements of the Exchange Act.                                     

USE OF PROCEEDS 

The proceeds from the sale of the Trust Preferred Securities and the  
Common Securities, $154,639,175, will be invested by the Trust in the Junior    
Subordinated Debentures. We intend that the net proceeds from the sale of the   
Trust Preferred Securities (estimated to be $144,733,700 after payment of fees  
and expenses in the offering) will be used to reduce short-term debt and for    
general corporate purposes. The precise amount and timing of the application    
of such net proceeds used for such corporate purposes will depend on the        
funding requirements and the availability of other funds. The net proceeds may  
be temporarily invested in short-term interest bearing securities.              

RATIO OF EARNINGS TO FIXED CHARGES  

The following table shows our consolidated ratio of earnings to fixed 
charges for the periods indicated:                                              

                                                                [Download Table]

                                      Six Months    Fiscal Year Ended    
                                        Ended         September 30,      
                                      March 31,  ------------------------
                                         2001    2000 1999 1998 1997 1996
                                      ---------- ---- ---- ---- ---- ----
                                                                         
Ratio of Earnings to Fixed Charges...    3.09    2.61 2.72 2.77 2.90 3.08

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SELECTED FINANCIAL INFORMATION

The following table sets forth selected consolidated financial      
information as of and for the periods indicated below. We derived the           
consolidated financial information below for each of the five years ended       
September 30, 2000, from financial statements audited by Deloitte & Touche LLP, 
independent auditors. The consolidated financial information as of and for the  
six months ended March 31, 2001 and 2000 have not been audited. The following   
information should be read in conjunction with our consolidated financial       
statements, together with the related notes thereto.                            

                                                        [Enlarge/Download Table]

                         Six Months Ended                                              
                             March 31,              Years Ended September 30,          
                         ----------------- --------------------------------------------
                           2001     2000     2000     1999     1998     1997     1996  
                         -------- -------- -------- -------- -------- -------- --------
                                    (in millions, except per share amounts)            
                                                                                       
Operating revenues...... $  645.4 $  342.4 $  607.4 $1,070.7 $1,340.1 $1,287.6 $1,228.6

Net income.............. $   74.8 $   39.8 $   71.1 $   74.4 $   80.6 $   76.6 $   75.6

Total assets............ $2,761.2 $1,949.5 $2,019.9 $1,970.4 $1,985.3 $1,925.5 $1,823.1

Earnings per common                                                                    
 shares                                                                                
  Basic................. $   1.38 $   0.71 $   1.29 $   1.30 $   1.41 $   1.37 $   1.37
  Diluted............... $   1.37 $   0.71 $   1.29 $   1.29 $   1.41 $   1.36 $   1.36

Cash dividends paid per                                                                
 share of common stock.. $   0.54 $   0.54 $   1.08 $   1.08 $   1.08 $   1.08 $   1.06

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DESCRIPTION OF TRUST PREFERRED SECURITIES 

General                                                                         

  The Trust Preferred Securities will be issued pursuant to the terms of
the Trust Agreement and represent preferred undivided beneficial interests in   
the assets of the Trust. The holders of the Trust Preferred Securities will be  
entitled to a preference over the Common Securities in certain circumstances    
with respect to Distributions and amounts payable on redemption of the Trust    
Preferred Securities or liquidation of the Trust. See "--Subordination of       
Common Securities." The Trust Agreement will be qualified under the Trust       
Indenture Act. This summary of certain provisions of the Trust Preferred        
Securities, the Common Securities and the Trust Agreement does not purport to   
be complete and is subject to, and is qualified in its entirety by reference    
to, all the provisions of the Trust Agreement, including the definitions        
therein of certain terms, the Delaware Business Trust Act and the Trust         
Indenture Act.                                                                  

   The Trust Agreement authorizes the Trustees, on behalf of the Trust, to
issue the Trust Preferred Securities, which represent preferred undivided       
beneficial interests in the assets of the Trust, and the Common Securities,     
which represent common undivided beneficial interests in the assets of the      
Trust. All of the Common Securities will be owned by AGL Capital. The Trust     
Preferred Securities will be limited to $150,000,000 aggregate Liquidation      
Amount at any one time outstanding. The Trust Preferred Securities will rank    
equal in priority, and payments will be made thereon pro rata, with the Common  
Securities except as described under "--Subordination of Common Securities."    
Legal title to the Junior Subordinated Debentures will be held by the Property  
Trustee in trust for the benefit of the holders of the Trust Preferred          
Securities and Common Securities. The Trust Preferred Guarantee will not        
guarantee payment of Distributions or amounts payable on redemption of the      
Trust Preferred Securities or liquidation of the Trust when the Trust does not  
have funds on hand legally available for such payments. See "Description of the 
Trust Preferred Guarantee."                                                     

Distributions                                                                   

    Distributions on the Trust Preferred Securities will be cumulative, will
accumulate from May 21, 2001 and will be payable quarterly on February 15, May  
15, August 15 and November 15 of each year, commencing August 15, 2001, at the  
annual rate of 8% of the Liquidation Amount to the holders on the applicable    
record date. The amount of Distributions payable for any period will be         
computed on the basis of a 360-day year of twelve 30-day months. In the event   
that any date on which Distributions are payable on the Trust Preferred         
Securities is not a Business Day (as defined below), payment of the             
Distribution payable on such date will be made on the next succeeding day that  
is a Business Day (and without any interest or other payment in respect to any  
such delay), in each case with the same force and effect as if made on such     
date (each date on which Distributions are payable in accordance with the       
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other    
than a Saturday or a Sunday, or a day on which banking institutions in the City 
of New York, New York or Atlanta, Georgia are authorized or required by law or  
executive order to remain closed.                                               

So long as no Debenture Event of Default shall have occurred and be 
continuing, AGL Capital will have the right under the Indenture to defer the    
payment of interest on the Junior Subordinated Debentures at any time or from   
time to time for a period not exceeding 20 consecutive quarters with respect to 
each Extended Interest Payment Period, provided that no Extended Interest       
Payment Period may extend beyond the Stated Maturity Date. Upon any election,   
quarterly Distributions on the Trust Preferred Securities will be deferred by   
the Trust during the Extended Interest Payment Period. Distributions to which   
holders of the Trust Preferred Securities are entitled during the Extended      
Interest Payment Period will accumulate additional Distributions thereon at the 
rate per annum of 8% thereof, compounded quarterly from the relevant            
Distribution Date. The term "Distributions," as used herein, shall include any  
such additional Distributions.                                                  

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 Prior to the termination of any Extended Interest Payment Period, AGL
Capital may further extend such Extended Interest Payment Period, provided that 
such extension does not cause the Extended Interest Payment Period to exceed 20 
consecutive quarters or to extend beyond the Stated Maturity Date. Upon the     
termination of any Extended Interest Payment Period and the payment of all      
amounts then due, and subject to the foregoing limitations, AGL Capital may     
elect to begin a new Extended Interest Payment Period. AGL Capital must give    
the Property Trustee, the Administrative Trustees and the Debenture Trustee     
notice of its election of an Extended Interest Payment Period at least one      
Business Day prior to the earlier of (i) the date the Distributions on the      
Trust Preferred Securities would have been payable except for the election to   
begin an Extended Interest Payment Period or (ii) the date the Administrative   
Trustees are required to give notice to any securities exchange or quotation    
system or to holders of such Trust Preferred Securities of the record date or   
the date such Distributions are payable but in any event not less than one      
Business Day prior to such record date. There is no limitation on the number of 
times that AGL Capital may elect to begin an Extended Interest Payment Period.  
See "Description of Junior Subordinated Debentures--Option to Extend Interest   
Payment Date" and "Certain Federal Income Tax Consequences--Interest Income and 
Original Issue Discount."                                                       

  During any Extended Interest Payment Period, neither AGL Resources nor
AGL Capital may:                                                                

.  declare or pay any dividends or distributions on, or redeem,         
   purchase, acquire, or make a liquidation payment with respect to, any
of its capital stock (which includes common and preferred stock); 

.  make any payment of principal, interest or premium, if any, on or    
repay, repurchase or redeem any of its debt securities that rank  
   equal in priority with or junior in right of payment to, with respect
   to AGL Capital, the Junior Subordinated Debentures or with respect to
  AGL Resources, debt that is subordinated to its Senior Indebtedness;
or                                                                

.  make any guarantee payments with respect to any guarantees of the    
debt securities of any of their respective subsidiaries if such   
  guarantees rank equal in priority with or junior in right of payment
 to, with respect to AGL Capital, the Junior Subordinated Debentures
or with respect to AGL Resources, debt that is subordinated to its
Senior Indebtedness (other than (a) dividends or distributions in 
shares of, or options, warrants or rights to subscribe for or     
 purchase shares of, common stock, (b) any declaration of a dividend
   in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) 
  payments under the guarantees, (d) the purchase of fractional shares
   resulting from a reclassification of capital stock or the exchange or
   conversion of one class, or series of capital stock for another class
or series of capital stock, and (e) the purchase of fractional    
interests in shares of capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being   
converted or exchanged).                                          

Although AGL Capital may in the future exercise its option to defer 
payments of interest on the Junior Subordinated Debentures, AGL Capital has no  
such current intention.                                                         

 The revenue of the Trust available for distribution to holders of the
Trust Preferred Securities and Common Securities will be limited to payments    
under the Junior Subordinated Debentures in which the Trust will invest the     
proceeds from the issuance and sale of the Trust Securities. See "Description   
of Junior Subordinated Debentures--General." If AGL Capital does not make       
interest payments on the Junior Subordinated Debentures, the Trust will not     
have funds available to pay Distributions on the Trust Preferred Securities and 
Common Securities. AGL Resources will guarantee on a junior subordinated basis  
the payment of the principal (and premium, if any) and interest on the Junior   
Subordinated Debentures, except that no payment of interest will be made under  
the Debenture Guarantee for any period during which AGL Capital has exercised   
its right to defer interest payments on the Junior Subordinated Debentures.     

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Redemption                                                                      

     Upon the repayment on the Stated Maturity Date or prepayment prior to the
Stated Maturity Date of the Junior Subordinated Debentures, the proceeds from   
such repayment or prepayment shall be applied by the Property Trustee to redeem 
a Like Amount (as defined below) of the Trust Securities, upon not less than 10 
nor more than 60 days' notice of a date of redemption (the "Redemption Date"),  
at the applicable Redemption Price, which shall be equal to:                    

.  in the case of the repayment of the Junior Subordinated Debentures on
   the Stated Maturity Date, the Maturity Redemption Price (equal to the
principal of, and accrued interest on, the Junior Subordinated    
Debentures),                                                      

.  in the case of the optional prepayment of the Junior Subordinated    
   Debentures prior to May 21, 2006 upon the occurrence and continuation
  of a Tax Event or an Investment Company Act Event, the Special Event
Redemption Price (equal to the Special Event Prepayment Price in  
respect of the Junior Subordinated Debentures), and               

.  in the case of the optional prepayment of the Junior Subordinated    
Debentures on or after May 21, 2006, the Optional Redemption Price
(equal to the Optional Prepayment Price in respect of the Junior  
Subordinated Debentures). See "Description of Junior Subordinated 
Debentures--Optional Prepayment" and "--Special Event Prepayment."

"Like Amount" means:                                                

.  with respect to a redemption of the Trust Preferred Securities, Trust
Preferred Securities having a Liquidation Amount equal to the     
principal amount of Junior Subordinated Debentures to be paid in  
accordance with their terms and                                   

.  with respect to a distribution of Junior Subordinated Debentures upon
   the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust     
 Preferred Securities of the holder to whom such Junior Subordinated
Debentures are distributed.                                       

Redemption Procedures                                                           

If applicable, Trust Preferred Securities shall be redeemed at the  
applicable Redemption Price with the proceeds from the contemporaneous          
repayment or prepayment of the Junior Subordinated Debentures. Any redemption   
of Trust Preferred Securities shall be made and the applicable Redemption Price 
shall be payable on the Redemption Date only to the extent that the Trust has   
funds legally available for the payment of such applicable Redemption Price.    

If the Trust gives a notice of redemption in respect of the Trust   
Preferred Securities, then, by 12:00 noon, New York City time, on the           
Redemption Date, to the extent funds are legally available, with respect to the 
Trust Preferred Securities held by DTC or its nominees, the Property Trustee    
will deposit irrevocably with DTC funds sufficient to pay the applicable        
Redemption Price. See "--Form, Denomination, Book-Entry Procedures and          
Transfer." With respect to the Trust Preferred Securities held in certificated  
form, the Property Trustee, to the extent funds are legally available, will     
irrevocably deposit with the paying agent for the Trust Preferred Securities    
funds sufficient to pay the applicable Redemption Price and will give such      
paying agent irrevocable instructions and authority to pay the applicable       
Redemption Price to the holders thereof upon surrender of their certificates    
evidencing the Trust Preferred Securities. See "--Payment and Paying Agency."   
Notwithstanding the foregoing, Distributions payable on or prior to the         
Redemption Date shall be payable to the holders of such Trust Preferred         
Securities on the relevant record dates for the related Distribution Dates. If  
notice of redemption shall have been given and funds deposited as required,     
then upon the date of such deposit, all rights of the holders of the Trust      
Preferred Securities will cease, except the right of the holders of the Trust   

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Preferred Securities to receive the applicable Redemption Price, but without    
interest on such Redemption Price, and the Trust Preferred Securities will      
cease to be outstanding. In the event that any Redemption Date of Trust         
Preferred Securities is not a Business Day, then the applicable Redemption      
Price payable on such date will be paid on the next succeeding day that is a    
Business Day (and without any interest or other payment in respect of any such  
delay), except that, if such Business Day falls in the next calendar year, such 
payment will be made on the immediately preceding Business Day. In the event    
that payment of the applicable Redemption Price is improperly withheld or       
refused and not paid either by the Trust or by AGL Resources pursuant to the    
Trust Preferred Guarantee as described under "Description of Trust Preferred    
Guarantee," Distributions on Trust Preferred Securities will continue to        
accumulate at the then applicable rate, from the Redemption Date originally     
established by the Trust to the date such applicable Redemption Price is        
actually paid, in which case the actual payment date will be the Redemption     
Date for purposes of calculating the applicable Redemption Price.               

   Subject to applicable law (including, without limitation, United States
federal securities law), we may at any time and from time to time purchase      
outstanding Trust Preferred Securities by tender, in the open market or by      
private agreement.                                                              

 Notice of any redemption will be mailed at least 10 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Preferred     
Securities at its registered address. Unless AGL Resources defaults in payment  
of the applicable Prepayment Price on, or in the repayment of, the Junior       
Subordinated Debentures, on and after the Redemption Date Distributions will    
cease to accrue on the Trust Preferred Securities called for redemption.        

Liquidation of the Trust and Distribution of Junior Subordinated Debentures     

  AGL Capital will have the right at any time to terminate the Trust and
cause the Junior Subordinated Debentures to be distributed to the holders of    
the Trust Preferred Securities in liquidation of the Trust. Such right is       
subject to AGL Capital having received an opinion of counsel to the effect that 
such distribution will not be a taxable event to holders of Trust Preferred     
Securities.                                                                     

The Trust shall automatically terminate upon the first to occur of: 

.  certain events of bankruptcy, dissolution or liquidation of AGL      
Capital;                                                          

.  the distribution of a Like Amount of the Junior Subordinated         
 Debentures to the holders of the Trust Preferred Securities, if AGL
Capital, as Sponsor, has given written direction to the Property  
Trustee to terminate the Trust (which direction is optional and,  
except as described above, wholly within the discretion of AGL    
Capital, as Sponsor);                                             

.  redemption of all of the Trust Preferred Securities as described     
under "--Redemption";                                             

.  expiration of the term of the Trust; and                             

.  the entry of an order for the dissolution of the Trust by a court of 
competent jurisdiction.                                           

If a termination occurs as described in the first, second, fourth or
fifth bullet above, the Trust shall be liquidated by the Trustees as soon as    
practicable after the receipt of any required regulatory approval by            
distributing, after satisfaction of liabilities to creditors of the Trust as    
provided by applicable law, to the holders of the Trust Preferred Securities a  
Like Amount of the Junior Subordinated Debentures, unless such distribution is  
determined by the Property Trustee not to be practicable, in which event such   
holders will be entitled to receive out of the assets of the Trust legally      
available for distribution to holders, after satisfaction of liabilities to     
creditors of the Trust as provided by applicable law, cash in an amount equal   
to the aggregate of the Liquidation Amount plus accumulated and unpaid          
Distributions thereon to the date of payment (such amount being the             
"Liquidation Distribution"). If such Liquidation Distribution can be paid only  
in part because the                                                             

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Trust has insufficient assets on hand legally available to pay in full the      
aggregate Liquidation Distribution, then the amounts payable directly by the    
Trust on the Trust Preferred Securities and the Common Securities shall be paid 
on a pro rata basis, except that if a Debenture Event of Default has occurred   
and is continuing, the Trust Preferred Securities shall have a priority over    
the Common Securities. See "--Subordination of Common Securities."              

After the liquidation date is fixed for any distribution of Junior  
Subordinated Debentures to holders of the Trust Preferred Securities:           

.  the Trust Preferred Securities will no longer be deemed to be        
outstanding;                                                      

.  each registered global certificate, if any, representing Trust       
Preferred Securities and held by DTC or its nominee will receive a
   registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution and

.  any certificates representing Trust Preferred Securities not held by 
DTC or its nominee will be deemed to represent Junior Subordinated
  Debentures having a principal amount equal to the Liquidation Amount
of such Trust Preferred Securities, and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid         
Distributions on such Trust Preferred Securities until such       
certificates are presented to the Administrative Trustees or their
agent for cancellation, whereupon AGL Capital will issue to such  
holder, and the Debenture Trustee will authenticate, a certificate
representing such Junior Subordinated Debentures.                 

     There can be no assurance as to the market prices for the Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in     
exchange for the Trust Securities if a dissolution and liquidation of the Trust 
were to occur. Accordingly, the Trust Preferred Securities that an investor may 
purchase, or the Junior Subordinated Debentures that the investor may receive   
on dissolution and liquidation of the Trust, may trade at a discount to the     
price that the investor paid to purchase the Trust Preferred Securities offered 
hereby.                                                                         

Subordination of Common Securities                                              

Payment of Distributions on, and the Redemption Price of, the Trust 
Preferred Securities and Common Securities, as applicable, shall be made pro    
rata based on the Liquidation Amount of the Trust Preferred Securities and      
Common Securities; provided, however, that if on any Distribution Date or       
Redemption Date an Event of Default shall have occurred and be continuing, no   
payment of any Distribution on, or applicable Redemption Price of, any of the   
Common Securities, and no other payment on account of the redemption,           
liquidation or other acquisition of the Common Securities, shall be made unless 
payment in full in cash of all accumulated and unpaid Distributions on all of   
the outstanding Trust Preferred Securities for all Distribution periods         
terminating on or prior thereto, or in the case of payment of the applicable    
Redemption Price the full amount of such Redemption Price, shall have been made 
or provided for, and all funds available to the Property Trustee shall first be 
applied to the payment in full in cash of all Distributions on, or Redemption   
Price of, the Trust Preferred Securities then due and payable.                  

    In the case of any Event of Default, AGL Capital as holder of the Common
Securities will be deemed to have waived any right to act with respect to such  
Event of Default until the effect of such Event of Default shall have been      
cured, waived or otherwise eliminated. Until any such Event of Default has been 
so cured, waived or otherwise eliminated, the Property Trustee shall act solely 
on behalf of the holders of the Trust Preferred Securities and not on behalf of 
AGL Capital as holder of the Common Securities, and only the holders of the     
Trust Preferred Securities will have the right to direct the Property Trustee   
to act on their behalf.                                                         

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Events of Default; Notice                                                       

The occurrence of a Debenture Event of Default (see "Description of 
Junior Subordinated Debentures--Junior Subordinated Debenture Events of         
Default") constitutes an "Event of Default" under the Trust Agreement. We refer 
to such an event as a "Trust Enforcement Event." In addition, the following     
constitutes an Event of Default under the Trust Agreement:                      

.  default by the Trust or the Property Trustee in the payment of any   
Distribution when it becomes due and payable, and continuation of 
such default for a period of 30 days;                             

.  default by the Trust or the Property Trustee in the payment of any   
Redemption Price of any Trust Security when it becomes due and    
payable; or                                                       

.  default in the performance, or breach, in any material respect, of   
any other covenant or warranty of the Trustees in the Declaration,
and continuation of such default or breach for a period of 90 days
after notice to the defaulting Trustee or Trustees.               

Within 90 days after the occurrence of any Event of Default actually
known to the Property Trustee, the Property Trustee shall transmit notice of    
such Event of Default to the holders of the Trust Preferred Securities, the     
Administrative Trustees and AGL Capital, as Sponsor, unless such Event of       
Default shall have been cured or waived.                                        

     If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shall have a preference over the Common Securities as      
described under "--Liquidation of the Trust and Distribution of Junior          
Subordinated Debentures" and "--Subordination of Common Securities."            

For more information on events of default under the Indenture, see  
"Description of Junior Subordinated Debentures--Junior Subordinated Debentures  
Events of Default." Upon the occurrence and continuance of a Trust Enforcement  
Event, the Property Trustee, as the sole holder of the Junior Subordinated      
Debentures, will have the right under the Indenture to declare the principal    
amount of the Junior Subordinated Debentures due and payable.                   

If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures, the holders of Trust Preferred Securities may, to the  
extent permitted by applicable law, institute a legal proceeding against AGL    
Capital to enforce the Property Trustee's rights under the Junior Subordinated  
Debentures and the Indenture without first instituting legal proceedings        
against the Property Trustee or any other person. In addition, if a Trust       
Enforcement Event is due to AGL Capital's failure to pay interest or principal  
on the Junior Subordinated Debentures when due, then the registered holder of   
Trust Preferred Securities may institute a direct action on or after the due    
date directly against AGL Capital for enforcement of payment to that holder of  
the principal of or interest on the Junior Subordinated Debentures having a     
principal amount equal to the total liquidation amount of that holder's Trust   
Preferred Securities. In connection with such a direct action, we will have the 
right to set off any payment made to that holder by us.                         

Removal of Trustees                                                             

Unless a Debenture Event of Default shall have occurred and be      
continuing, any Trustee may be removed at any time by the holders of the Common 
Securities. If a Debenture Event of Default has occurred and is continuing, the 
Property Trustee and the Delaware Trustee may be removed at such time by the    
holders of a majority in Liquidation Amount of the outstanding Trust Preferred  
Securities. In no event will the holders of the Trust Preferred Securities have 
the right to vote to appoint, remove or replace the Administrative Trustees,    
which voting rights are vested exclusively in AGL Capital as the holder of the  
Common Securities. No resignation or removal of a Property Trustee or a         
Delaware Trustee and no appointment of a successor trustee shall be effective   
until the acceptance of appointment by the successor trustee in accordance with 
the provisions of the Trust Agreement.                                          

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Merger or Consolidation of Trustees                                             

   Any corporation into which the Property Trustee or the Delaware Trustee
or any Administrative Trustee that is not a natural person, may be merged or    
converted or with which it may be consolidated, or any corporation resulting    
from any merger, conversion or consolidation to which such Delaware or Property 
Trustee shall be a party, or any corporation succeeding to all or substantially 
all the corporate trust business of such Delaware or Property Trustee, shall be 
the successor of such Delaware or Property Trustee under the Trust Agreement,   
provided such corporation shall be otherwise qualified and eligible.            

Mergers, Consolidations, Amalgamations or Replacements of the Trust             

The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an       
entirety or substantially as an entirety to any corporation or other Person,    
except as described below. The Trust may, at the request of AGL Capital, as     
Sponsor, with the consent of the Administrative Trustees but without the        
consent of the holders of the Trust Preferred Securities, merge with or into,   
consolidate, amalgamate, or be replaced by or convey, transfer or lease its     
properties and assets as an entirety or substantially as an entirety to, a      
trust organized as such under the laws of any State; provided, that:            

.  such successor entity either (a) expressly assumes all of the        
  obligations of the Trust with respect to the Trust Securities or (b)
substitutes for the Trust Securities other securities having      
 substantially the same terms as the Trust Preferred Securities (the
  "Successor Securities") so long as the Successor Securities rank the
  same as the Trust Preferred Securities rank in priority with respect
to distributions and payments upon liquidation, redemption and    
otherwise,                                                        

.  AGL Capital expressly appoints a trustee of such successor entity    
  possessing the same powers and duties as the Property Trustee as the
holder of the Junior Subordinated Debentures,                     

.  the Trust Preferred Securities or any Successor Securities are       
  listed, or any Successor Securities will be listed upon notification
   of issuance, on any national securities exchange, quotation system or
 other organization on which the Trust Preferred Securities are then
listed or quoted, if any,                                         

.  such merger, consolidation, amalgamation, replacement, conveyance,   
transfer or lease does not cause the Trust Preferred Securities   
(including any Successor Securities) to be downgraded by any      
nationally recognized statistical rating organization,            

.  such merger, consolidation, amalgamation, replacement, conveyance,   
 transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities   
(including any Successor Securities) in any material respect,     

.  such successor entity has a purpose identical to that of the Trust,  
   (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, AGL Capital has received an opinion
  from independent counsel to the Trust experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation,     
  replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the holders of the Trust
Preferred Securities (including any Successor Securities) in any  
material respect, and (b) following such merger, consolidation,   
   amalgamation, replacement, conveyance, transfer or lease, neither the
Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, as   
amended (the "Investment Company Act"), and                       

.  AGL Resources, AGL Capital or any permitted successor or assignee    
owns all of the common securities of such successor entity and    
guarantees the obligations of such successor entity under the     
Successor Securities at least to the extent provided by the       
Guarantee.                                                        

Notwithstanding the foregoing, the Trust shall not, except with the 
consent of holders of 100% in Liquidation Amount of the Trust Securities,       
consolidate, amalgamate, merge with or into, or be replaced by, or              

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convey, transfer or lease its properties and assets as an entirety or           
substantially as an entirety to any other entity or permit any other entity to  
consolidate, amalgamate, merge with or into, or replace it if such              
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease 
would cause the Trust or the successor entity not to be classified as a grantor 
trust for United States federal income tax purposes.                            

Voting Rights; Amendment of the Trust Agreement                                 

Except as provided below and under "--Mergers, Consolidations,      
Amalgamations or Replacements of the Trust" and "Description of Guarantee--     
Amendments and Assignment" and as otherwise required by law and the Trust       
Agreement, the holders of the Trust Preferred Securities will have no voting    
rights.                                                                         

The Trust Agreement may be amended from time to time by the Delaware
Trustee or the Property Trustee, if affected by such amendment, or by the       
Administrative Trustees, without the consent of the holders of the Trust        
Preferred Securities:                                                           

.  to cure any ambiguity, correct or supplement any provisions in the   
   Trust Agreement that may be inconsistent with any other provision, or
to make any other provisions with respect to matters or questions 
arising under the Trust Agreement, which shall not be inconsistent
with the other provisions of the Trust Agreement, or              

.  to modify, eliminate or add to any provisions of the Trust Agreement 
   to such extent as shall be necessary to ensure that the Trust will be
   classified for United States federal income tax purposes as a grantor
trust at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an      
"investment company" under the Investment Company Act provided,   
  however, that such action shall not adversely affect in any material
   respect the interests of the holders of the Trust Securities, and any
  amendments of the Trust Agreement shall become effective when notice
thereof is given to the holders of the Trust Securities.          

     The Trust Agreement may be amended by the Administrative Trustees and AGL
Capital:                                                                        

.  with the consent of holders representing a majority (based upon      
Liquidation Amount) of the outstanding Trust Preferred Securities,
and                                                               

.  upon receipt by the Administrative Trustees of an opinion of counsel 
to the effect that such amendment or the exercise of any power    
granted to the Administrative Trustees in accordance with such    
 amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption
 from status as an "investment company" under the Investment Company
Act.                                                              

However, without the consent of each holder of Trust Preferred      
Securities, the Trust Agreement may not be amended to:                          

.  change the amount or timing of any Distribution on the Trust         
  Preferred Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Trust Preferred
Securities as of a specified date or                              

.  restrict the right of a holder of Trust Preferred Securities to      
institute suit for the enforcement of any such payment on or after
such date.                                                        

  So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Administrative Trustees shall not:                                 

.  direct the time, method and place of conducting any proceeding for   
   any remedy available to the Indenture Trustee, or executing any trust
or power conferred on such Property Trustee with respect to the   
Junior Subordinated Debentures,                                   

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.  waive certain past defaults under the Indenture,                     

.  exercise any right to rescind or annul a declaration of acceleration 
of the maturity of the principal of the Junior Subordinated       
Debentures or                                                     

.  consent to any amendment, modification or termination of the         
 Indenture or the Junior Subordinated Debentures, where such consent
shall be required, without, in each case, obtaining the prior     
approval of the holders of a majority in Liquidation Amount of all
  outstanding Trust Preferred Securities provided, however, that where
a consent under the Indenture would require the consent of each   
holder of Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior  
approval of each holder of the Trust Preferred Securities.        

The Administrative Trustees shall not revoke any action previously  
authorized or approved by a vote of the holders of the Trust Preferred          
Securities except by subsequent vote of such holders. The Property Trustee      
shall notify each holder of Trust Preferred Securities of any notice of default 
with respect to the Junior Subordinated Debentures. In addition to obtaining    
the foregoing approvals of such holders of the Trust Preferred Securities,      
prior to taking any of the foregoing actions, the Administrative Trustees shall 
obtain an opinion of counsel experienced in such matters to the effect that the 
Trust will not be classified as an association taxable as a corporation for     
United States federal income tax purposes on account of such action.            

 Any required approval of holders of Trust Preferred Securities may be
given at a meeting of such holders convened for such purpose or pursuant to     
written consent. The Property Trustee will cause a notice of any meeting at     
which holders of Trust Preferred Securities are entitled to vote, or of any     
matter upon which action by written consent of such holders is to be taken, to  
be given to each holder of record of Trust Preferred Securities in the manner   
set forth in the Trust Agreement.                                               

   No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in   
accordance with the Trust Agreement.                                            

Notwithstanding that holders of the Trust Preferred Securities are  
entitled to vote or consent under any of the circumstances described above, any 
of the Trust Preferred Securities that are owned by AGL Resources, AGL Capital, 
the Administrative Trustees or any affiliate of AGL Resources or any            
Administrative Trustees, shall, for purposes of such vote or consent, be        
treated as if they were not outstanding.                                        

Form, Denomination, Book-Entry Procedures and Transfer                          

Depositary Procedures                                                         

  The Depository Trust Company ("DTC") will act as securities depositary
for the Trust Preferred Securities. DTC has advised the Trust and AGL Capital   
that DTC is a limited-purpose trust company created to hold securities for its  
participating organizations (collectively, the "Participants") and to           
facilitate the clearance and settlement of transactions in those securities     
between Participants through electronic book-entry changes in accounts of its   
Participants. The Participants include securities brokers and dealers           
(including the Initial Purchasers), banks, trust companies, clearing            
corporations and certain other organizations. Access to DTC's system is also    
available to other entities such as banks, brokers, dealers and trust companies 
that clear through or maintain a custodial relationship with a Participant,     
either directly or indirectly (collectively, the "Indirect Participants").      
Persons who are not Participants may beneficially own securities held by or on  
behalf of DTC only through the Participants or the Indirect Participants. The   
ownership interest and transfer of ownership interest of each actual purchaser  
of each security held by or on behalf of DTC are recorded on the records of the 
Participants and Indirect Participants.                                         

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     DTC is organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve 
System, a "clearing corporation" within the meaning of the New York Uniform     
Commercial Code, and a "clearing agency" registered pursuant to the provisions  
of Section 17A of the Exchange Act. DTC is owned by a number of participants    
and by the New York Stock Exchange, the American Stock Exchange, Inc., and the  
National Association of Securities Dealers, inc. The rules applicable to DTC    
and its participants are on file with the Securities and Exchange Commission.   

DTC has also advised the Trust and AGL Capital that, pursuant to    
procedures established by it, (i) upon deposit of the Global Trust Preferred    
Securities, DTC will credit the accounts of Participants designated by the      
Initial Purchasers with portions of the Liquidation Amount of the Global Trust  
Preferred Securities and (ii) ownership of such interests in the Global Trust   
Preferred Securities will be shown on, and the transfer of ownership thereof    
will be effected only through, records maintained by DTC (with respect to the   
Participants) or by the Participants and the Indirect Participants (with        
respect to other owners of beneficial interests in the Global Trust Preferred   
Securities).                                                                    

Investors in the Global Trust Preferred Securities may hold their   
interests therein directly through DTC if they are Participants, or indirectly  
through organizations which are Participants. All interests in a Global Trust   
Preferred Security may be subject to the procedures and requirements of DTC.    
The laws of some states require that certain persons take physical delivery in  
certificated form of securities that they own. Consequently, the ability to     
transfer beneficial interests in a Global Trust Preferred Security to such      
persons will be limited to that extent. Because DTC can act only on behalf of   
Participants, which in turn act on behalf of Indirect Participants and certain  
banks, the ability of a person having beneficial interests in a Global Trust    
Preferred Security to pledge such interests to persons or entities that do not  
participate in the DTC system, or otherwise take actions in respect of such     
interests, may be affected by the lack of a physical certificate evidencing     
such interests. For certain other restrictions on the transferability of the    
Trust Preferred Securities, see "--Exchange of Book-Entry Trust Preferred       
Securities for Certificated Trust Preferred Securities" and "--Exchange of      
Certificated Trust Preferred Securities for Book-Entry Trust Preferred          
Securities."                                                                    

Except as described below, owners of interests in the Global Trust  
Preferred Securities will not have Trust Preferred Securities registered in     
their name, will not receive physical delivery of Trust Preferred Securities in 
certificated form and will not be considered the registered owners or holders   
thereof under the Trust Agreement for any purpose.                              

The laws of some jurisdictions require that certain purchasers of   
securities take physical delivery of securities in definitive form. Such laws   
may impair the ability to transfer beneficial interests in a Global Trust       
Preferred Security.                                                             

    Payments in respect of the Global Trust Preferred Security registered in
the name of DTC or its nominee will be payable by the Property Trustee to DTC   
in its capacity as the registered holder under the Trust Agreement. Under the   
terms of the Trust Agreement, the Property Trustee will treat the persons in    
whose names the Trust Preferred Securities, including the Global Trust          
Preferred Securities, are registered as the owners thereof for the purpose of   
receiving such payments and for any and all other purposes whatsoever.          
Consequently, neither the Property Trustee nor any agent thereof has or will    
have any responsibility or liability for:                                       

.  any aspect of DTC's records or any Participant's or Indirect         
Participant's records relating to or payments made on account of  
beneficial ownership interests in the Global Trust Preferred      
   Securities, or for maintaining, supervising or reviewing any of DTC's
records or any Participant's or Indirect Participant's records    
relating to the beneficial ownership interests in the Global Trust
Preferred Securities or                                           

.  any other matter relating to the actions and practices of DTC or any 
of its Participants or Indirect Participants.                     

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     DTC has advised the Trust and AGL Capital that its current practice, upon
receipt of any payment in respect of securities such as the Trust Preferred     
Securities, is to credit the accounts of the relevant Participants with the     
payment on the payment date, in amounts proportionate to their respective       
holdings in Liquidation Amount of beneficial interests in the relevant security 
as shown on the records of DTC unless DTC has reason to believe it will not     
receive payment on such payment date. Payments by the Participants and the      
Indirect Participants to the beneficial owners of Trust Preferred Securities    
will be governed by standing instructions and customary practices and will be   
the responsibility of the Participants or the Indirect Participants and will    
not be the responsibility of DTC, the Property Trustee, the Trust, AGL Capital  
or AGL Resources. Neither the Trust, AGL Capital or AGL Resources nor the       
Property Trustee will be liable for any delay by DTC or any of its Participants 
in identifying the beneficial owners of the Trust Preferred Securities, and the 
Trust or AGL Capital and the Property Trustee may conclusively rely on and will 
be protected in relying on instructions from DTC or its nominee for all         
purposes.                                                                       

Secondary market trading activity in interests in the Global Trust  
Preferred Securities will settle in immediately available funds, subject in all 
cases to the rules and procedures of DTC and its participants. Transfers        
between Participants in DTC will be effected in accordance with DTC's           
procedures, and will be settled in same-day funds.                              

  DTC has advised the Trust and AGL Capital that it will take any action
permitted to be taken by a holder of Trust Preferred Securities only at the     
direction of one or more Participants to whose account with DTC interests in    
the Global Trust Preferred Securities are credited and only in respect of such  
portion of the Liquidation Amount of the Trust Preferred Securities as to which 
such Participant or Participants has or have given such direction. However, if  
there is an Event of Default under the Trust Agreement, DTC reserves the right  
to exchange the Global Trust Preferred Securities for legended Trust Preferred  
Securities in certificated form and to distribute such Trust Preferred          
Securities to its Participants.                                                 

     The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Trust and AGL Capital believe to be     
reliable, but neither the Trust nor AGL Capital takes responsibility for the    
accuracy thereof.                                                               

Although DTC has agreed to the foregoing procedures to facilitate   
transfers of interest in the Global Trust Preferred Securities among            
participants in DTC, they are under no obligation to perform or to continue to  
perform such procedures, and such procedures may be discontinued at any time.   
Neither the Trust or AGL Capital nor the Property Trustee will have any         
responsibility for the performance by DTC or its participants or indirect       
participants of their respective obligations under the rules and procedures     
governing their operations.                                                     

Exchange of Book-Entry Trust Preferred Securities for Certificated Trust      
Preferred Securities                                                            

 A Global Trust Preferred Security is exchangeable for Trust Preferred
Securities in registered certificated form if:                                  

.  DTC notifies the Trust that it is unwilling or unable to continue as 
Depositary for the Global Trust Preferred Security and the Trust  
 thereupon fails to appoint a successor Depositary within 90 days or
   has ceased to be a clearing agency registered under the Exchange Act,

.  AGL Capital in its sole discretion elects to cause the issuance of   
the Trust Preferred Securities in certificated form or            

.  there shall have occurred and be continuing an Event of Default or   
any event which after notice or lapse of time or both would be an 
Event of Default under the Trust Agreement.                       

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Payment and Paying Agency                                                       

     Payments in respect of the Trust Preferred Securities held in global form
shall be made to the Depositary, which shall credit the relevant accounts at    
the Depositary on the applicable Distribution Dates or in respect of the Trust  
Preferred Securities that are not held by the Depositary, such payments shall   
be made by check mailed to the address of the holder entitled thereto as such   
address shall appear on the register. The paying agent (the "Paying Agent")     
shall initially be the Property Trustee and any co-paying agent chosen by the   
Property Trustee and acceptable to the Administrative Trustees and AGL Capital. 
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'     
written notice to the Property Trustee and AGL Capital. In the event that the   
Property Trustee shall no longer be the Paying Agent, the Administrative        
Trustees shall appoint a successor (which shall be a bank or trust company      
acceptable to the Administrative Trustees and AGL Capital) to act as Paying     
Agent.                                                                          

Information Concerning the Property Trustee                                     

     The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically 
set forth in the Trust Agreement and, after such Event of Default, must         
exercise the same degree of care and skill as a prudent person would exercise   
or use in the conduct of his or her own affairs. Subject to this provision, the 
Property Trustee is under no obligation to exercise any of the powers vested in 
it by the Trust Agreement at the request of any holder of Trust Preferred       
Securities unless it is offered indemnity reasonably satisfactory to it against 
the costs, expenses and liabilities that might be incurred thereby. If no Event 
of Default has occurred and is continuing and the Property Trustee is required  
to decide between alternative causes of action, construe ambiguous provisions   
in the Trust Agreement or is unsure of the application of any provision of the  
Trust Agreement, and the matter is not one on which holders of the Trust        
Preferred Securities or the Common Securities are entitled under the Trust      
Agreement to vote, then the Property Trustee shall take such action as is       
directed by AGL Capital and if not so directed, shall take such action as it    
deems advisable and in the best interests of the holders of the Trust Preferred 
Securities and will have no liability except for its own bad faith, negligence  
or willful misconduct.                                                          

Miscellaneous                                                                   

  The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be    
deemed to be an "investment company" required to be registered under the        
Investment Company Act or classified as an association taxable as a corporation 
for United States federal income tax purposes and so that the Junior            
Subordinated Debentures will be treated as indebtedness for United States       
federal income tax purposes. AGL Capital and the Administrative Trustees are    
authorized to take any action, not inconsistent with applicable law, the        
certificate of trust of the Trust or the Trust Agreement, that AGL Capital and  
the Administrative Trustees determine in their discretion to be necessary or    
desirable for such purposes, as long as such action does not materially         
adversely affect the interests of the holders of the Trust Preferred            
Securities.                                                                     

   Holders of the Trust Preferred Securities have no preemptive or similar
rights. The Trust may not borrow money, issue debt, execute mortgages or pledge 
any of its assets.                                                              

Governing Law                                                                   

    The Trust Agreement will be governed by and construed in accordance with
the laws of the State of Delaware.                                              

DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES 

   The Junior Subordinated Debentures are to be issued under an Indenture,
as supplemented from time to time (as so supplemented, the "Indenture"),        
between AGL Capital and The Bank of New York, as trustee                        

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(the "Debenture Trustee"). The Indenture will be qualified under the Trust      
Indenture Act of 1939, as amended (the "Trust Indenture Act"). This summary of  
certain terms and provisions of the Junior Subordinated Debentures and the      
Indenture does not purport to be complete, and where reference is made to       
particular provisions of the Indenture, such provisions, including the          
definitions of certain terms, some of which are not otherwise defined herein,   
are qualified in their entirety by reference to all of the provisions of the    
Indenture and those terms made a part of the Indenture by the Trust Indenture   
Act.                                                                            

General                                                                         

 Concurrently with the issuance of the Trust Preferred Securities, the
Trust will invest the proceeds thereof, together with the consideration paid by 
AGL Capital for the Common Securities, in Junior Subordinated Debentures issued 
by AGL Capital. The Junior Subordinated Debentures will bear interest at the    
annual rate of 8% of the principal amount thereof, will accumulate from May 21, 
2001 and will be payable quarterly in arrears on February 15, May 15, August 15 
and November 15 of each year (each, an "Interest Payment Date"), commencing     
August 15, 2001, to the person in whose name each Junior Subordinated Debenture 
is registered, subject to certain exceptions, on the record date preceding the  
relevant payment date. It is anticipated that, until the liquidation, if any,   
of the Trust, each Junior Subordinated Debenture will be held in the name of    
the Property Trustee in trust for the benefit of the holders of the Trust       
Securities. The amount of interest payable for any period will be computed on   
the basis of a 360-day year of twelve 30-day months. In the event that any date 
on which interest is payable on the Junior Subordinated Debentures is not a     
Business Day, then payment of the interest payable on such date will be made on 
the next succeeding day that is a Business Day (and without any interest or     
other payment in respect of any such delay) with the same force and effect as   
if made on the date such payment was originally payable. The term "interest",   
as used herein, shall include quarterly interest payments, interest on          
quarterly payments not paid on the applicable Interest Payment Date and         
Additional Sums (as defined below), as applicable.                              

 The Junior Subordinated Debentures will be issued in denominations of
$25.00 and integral multiples thereof. The Junior Subordinated Debentures will  
mature on May 15, 2041 (the "Stated Maturity Date").                            

   The Junior Subordinated Debentures will rank equal in priority with all
Other Debentures and will be unsecured and subordinate and junior in right of   
payment to the extent and in the manner set forth in the Indenture to all       
Senior Indebtedness. See "--Subordination." AGL Resources will guarantee on a   
junior subordinated basis the payment of the principal (and premium, if any)    
and interest on the Junior Subordinated Debentures, except that no payment of   
interest will be made under the Debenture Guarantee for any period during which 
AGL Capital has exercised its right to defer interest payments on the Junior    
Subordinated Debentures.. AGL Capital is a wholly-owned finance subsidiary of   
AGL Resources. AGL Resources is a holding company and almost all of its         
operating assets are owned by its subsidiaries. AGL Resources relies primarily  
on dividends from such subsidiaries to meet its obligations. AGL Resources is a 
legal entity separate and distinct from its subsidiaries. The principal sources 
of AGL Resources' income are dividends and fees from its subsidiaries.          

The right of AGL Resources and AGL Capital to participate in any    
distribution of assets of any subsidiary upon such subsidiary's liquidation or  
reorganization or otherwise, is subject to the prior claims of creditors of the 
subsidiary, except to the extent AGL Resources and AGL Capital may be           
recognized as a creditor of that subsidiary. Accordingly, the Junior            
Subordinated Debentures will be effectively subordinated to all existing and    
future liabilities of AGL Capital's subsidiaries, and holders of Junior         
Subordinated Debentures should look only to the assets of AGL Capital for       
payments on the Junior Subordinated Debentures. The Indenture does not limit    
the incurrence or issuance of other secured or unsecured debt of AGL Resources  
or AGL Capital, including Senior Indebtedness. See "--Subordination."           

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The Indenture does not contain provisions that afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged    
transaction or other similar transactions involving AGL Resources or AGL        
Capital that may adversely affect such holders.                                 

Form, Registration and Transfer                                                 

   If the Junior Subordinated Debentures are distributed to the holders of
the Trust Preferred Securities, the Junior Subordinated Debentures may be       
represented by one or more global certificates registered in the name of Cede & 
Co. as the nominee of DTC. The depositary arrangements for such Junior          
Subordinated Debentures are expected to be substantially similar to those in    
effect for the Trust Preferred Securities. For a description of DTC and the     
terms of the depositary arrangements relating to payments, transfers, voting    
rights, redemptions and other notices and other matters, see "Description of    
Trust Preferred Securities--Form, Denomination, Book-Entry Procedures and       
Transfer" and "Depositary Procedures."                                          

Payment and Paying Agents                                                       

    Payment of principal of (and premium, if any) and any interest on Junior
Subordinated Debentures will be made at the office of the Debenture Trustee in  
The City of New York or at the office of such Paying Agent or Paying Agents as  
AGL Capital may designate from time to time, except that at the option of AGL   
Capital payment of any interest may be made except in the case of Junior        
Subordinated Debentures in global form, by:                                     

.  check mailed to the address of the Person entitled thereto as such   
address shall appear in the register for Junior Subordinated      
Debentures or                                                     

.  by transfer to an account maintained by the Person entitled thereto  
as specified in such register, provided that proper transfer      
instructions have been received by the relevant Record Date.      

     Payment of any interest on any Junior Subordinated Debenture will be made
to the Person in whose name such Junior Subordinated Debenture is registered at 
the close of business on the Record Date for such interest, except in the case  
of defaulted interest. AGL Capital may at any time designate additional Paying  
Agents or rescind the designation of any Paying Agent; however AGL Capital will 
at all times be required to maintain a Paying Agent in each Place of Payment    
for the Junior Subordinated Debentures.                                         

   Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by AGL Capital in trust, for the payment of the principal of (and     
premium, if any) or interest on any Junior Subordinated Debenture and remaining 
unclaimed for two years after such principal (and premium, if any) or interest  
has become due and payable shall, at the request of AGL Capital, be repaid to   
AGL Capital and the holder of such Junior Subordinated Debenture shall          
thereafter look, as a general unsecured creditor, only to AGL Capital for       
payment thereof.                                                                

Option to Extend Interest Payment Date                                          

So long as no Event of Default has occurred and is continuing, AGL  
Capital will have the right under the Indenture at any time during the term of  
the Junior Subordinated Debentures to defer the payment of interest at any time 
or from time to time for a period not exceeding 20 consecutive quarters with    
respect to each Extended Interest Payment Period, provided that no Extended     
Interest Payment Period may extend beyond the Stated Maturity Date. At the end  
of such Extended Interest Payment Period, AGL Capital must pay all interest     
then accrued and unpaid (together with interest thereon at the annual rate of   
8%, compounded quarterly, to the extent permitted by applicable law).           

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   During any such Extended Interest Payment Period, neither AGL Resources
nor AGL Capital may:                                                            

.  declare or pay any dividends or distributions on, or redeem,         
   purchase, acquire, or make a liquidation payment with respect to, any
  of its capital stock (which includes common and preferred stock); or

.  make any payment of principal, interest or premium, if any, on or    
repay, repurchase or redeem any of its debt securities that rank  
   equal in priority with or junior in right of payment to, with respect
   to AGL Capital, the Junior Subordinated Debentures or with respect to
  AGL Resources, debt that is subordinated to its Senior Indebtedness;
or                                                                

.  make any guarantee payments with respect to any guarantee of the debt
  securities of any of their respective subsidiaries if such guarantee
 ranks equal in priority with or junior in right of payment to, with
respect to AGL Capital, the Junior Subordinated Debentures or with
respect to AGL Resources, debt that is subordinated to its Senior 
   Indebtedness (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares
of, common stock, (b) any declaration of a dividend in connection 
with the implementation of a stockholders' rights plan, or the    
issuance of stock under any such plan in the future, or the       
redemption or repurchase of any such rights pursuant thereto, (c) 
 payments under the Guarantee, (d) the purchase of fractional shares
   resulting from a reclassification of capital stock or the exchange or
  conversion of one class or series of capital stock for another class
or series of capital stock and (e) the purchase of fractional     
interests in shares of capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being   
converted or exchanged).                                          

  Prior to the termination of any such Extended Interest Payment Period,
AGL Capital may further extend such Extended Interest Payment Period, provided  
that such extension does not cause such Extended Interest Payment Period to     
exceed 20 consecutive periods including the first quarter during such Extended  
Interest Payment Period, or to extend beyond the Stated Maturity Date. Upon     
the termination of any such Extended Interest Payment Period and the payment    
of all amounts then due on any Interest Payment Date, AGL Capital may elect to  
begin a new Extended Interest Payment Period, subject to the above              
requirements. No interest shall be due and payable during an Extended Interest  
Payment Period, except at the end thereof, but AGL Capital may prepay at any    
time all or any portion of the interest accrued during an Extended Interest     
Payment Period. AGL Capital must give the Property Trustee, the Administrative  
Trustees and the Debenture Trustee notice of its election of any Extended       
Interest Payment Period (or an extension thereof) at least five Business Days   
prior to the earlier of:                                                        

.  the date the Distributions on the Trust Preferred Securities would   
have been payable except for the election to begin or extend such 
Extended Interest Payment Period or                               

.  the date the Administrative Trustees are required to give notice to  
any securities exchange or other quotation system or to holders of
Trust Preferred Securities of the record date or the date such    
Distributions are payable, but in any event not less than one     
 Business Day prior to such record date. The Debenture Trustee shall
give notice of AGL Capital's election to begin or extend a new    
Extended Interest Payment Period to the holders of the Trust      
 Preferred Securities. There is no limitation on the number of times
that AGL Capital may elect to begin an Extended Interest Payment  
Period.                                                           

Optional Redemption                                                             

 The Junior Subordinated Debentures will be prepayable, in whole or in
part, at the option of AGL Resources on or after May 21, 2006 (the "Initial     
Optional Redemption Date"), at a redemption price (the "Optional Redemption     
Price") equal to the percentage of the outstanding principal amount of the      
Junior Subordinated Debentures plus accrued and unpaid interest thereon to the  
date of prepayment.                                                             

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Special Event Redemption                                                        

If a Tax Event or an Investment Company Act Event shall occur and be
continuing, AGL Capital may, at its option, redeem the Junior Subordinated      
Debentures in whole (but not in part) and thereby cause the mandatory           
redemption of the Trust Preferred Securities and the Common Securities in whole 
(but not in part) at any time and within 90 days following the occurrence of    
such Tax Event or Investment Company Act Event at the Special Event Redemption  
Price. Following a Tax Event or an Investment Company Act Event, AGL Capital    
shall take such action as is necessary to promptly determine the Special Event  
Redemption Price. The Special Event Redemption Price shall be paid prior to     
12:00 noon, New York time, on the date of such redemption or such earlier time  
as AGL Capital determines, provided that AGL Capital shall deposit with the     
Trustee an amount sufficient to pay the Special Event Redemption Price by 10:00 
a.m., New York time, on the date such Special Event Prepayment Price is to be   
paid. The Company shall provide the Debenture Trustee with written notice of    
the Special Event Redemption Price promptly after the calculation thereof.      

A "Tax Event" means the receipt by AGL Capital and the Trust of an  
opinion of counsel experienced in such matters to the effect that, as a result  
of any amendment to, or change (including any announced prospective change) in, 
the laws or any regulations thereunder of the United States or any political    
subdivision or taxing authority thereof or therein, or as a result of any       
official administrative pronouncement or judicial decision interpreting or      
applying such laws or regulations, which amendment or change is effective or    
such pronouncement or decision is announced or made effective on or after the   
Issue Date, there is more than an insubstantial risk that:                      

.  the Trust is, or will be within 90 days of the date of such opinion, 
subject to United States federal income tax with respect to all or
part of the income received or accrued on the Junior Subordinated 
Debentures or the Trust Preferred Securities,                     

.  interest payable by AGL Capital on the Junior Subordinated Debentures
or the Trust Preferred Securities is not, or within 90 days of the
date of such opinion will not be, deductible by AGL Capital , in  
 whole or in part, for United States federal income tax purposes, or

.  the Trust is, or will be within 90 days of the date of such opinion, 
subject to more than a de minimis amount of other taxes, duties or
other governmental charges.                                       

  An "Investment Company Act Event" means the receipt by AGL Capital and
the Trust of an opinion of counsel experienced in such matters to the effect    
that, as a result of the occurrence of a change in law or regulation or a       
change in interpretation or application of law or regulation by any legislative 
body, court, governmental agency or regulatory authority, there is more than an 
insubstantial risk that the Trust is or will be considered an "investment       
company" that is required to be registered under the Investment Company Act,    
which change becomes effective on or after the Issue Date of the Trust          
Preferred Securities.                                                           

 Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Junior Subordinated   
Debentures to be prepaid at its registered address. Unless AGL Capital defaults 
in payment of the prepayment price, on and after the prepayment date interest   
ceases to accrue on such Junior Subordinated Debentures called for prepayment.  

Restrictions on Certain Payments                                                

Neither AGL Capital nor AGL Resources may (i) declare or pay any    
dividends or distributions on, or redeem, purchase, acquire, or make a          
liquidation payment with respect to, any of its respective capital stock (which 
includes common and preferred stock) or (ii) make any payment of principal,     
interest or premium, if any, on or repay or repurchase or redeem any of its     
debt securities that rank equal in priority with or junior in right of payment  
to, with respect to AGL Capital, the Junior Subordinated Debentures or with     
respect to AGL Resources, debt that is subordinated to its Senior Indebtedness  
or (iii) make any guarantee payments with respect to any guarantees of the debt 
securities of any of their respective subsidiaries if such guarantee ranks      

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equal in priority or junior in right of payment to, with respect to AGL         
Capital, the Junior Subordinated Debentures or with respect to AGL Resources,   
debt that is subordinated to its Senior Indebtedness (other than (a) dividends  
or distributions in shares of, or options, warrants or rights to subscribe for  
or purchase shares of, common stock, (b) any declaration of a dividend in       
connection with the implementation of a stockholder's rights plan, or the       
issuance of stock under any such plan in the future, or the redemption or       
repurchase of any such rights pursuant thereto, (c) payments under the          
Guarantee, (d) the purchase of fractional shares resulting from a               
reclassification capital stock or the exchange or conversion of one class or    
series of capital stock for another class or series capital stock and (e) the   
purchase of fractional interests in shares of capital stock pursuant to the     
conversion or exchange provisions of such capital stock or the security being   
converted or exchanged), if at such time (1) there shall have occurred and be   
continuing a Trust Agreement Event of Default, (2) there shall have occurred    
and be continuing a Debenture Event of Default, (3) there shall have occurred   
and be continuing a payment default under the Trust Agreement or the Indenture, 
(4) if such Junior Subordinated Debentures are held by the Trust, AGL Resources 
shall be in default with respect to its payment of any obligations under the    
Guarantee or (5) AGL Capital shall have given notice of its election of an      
Extended Interest Payment Period as provided in the Indenture and shall not     
have rescinded such notice, and such Extended Interest Payment Period, or any   
extension thereof, shall have commenced.                                        

Modification of Indenture                                                       

    From time to time AGL Capital and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debentures, amend, waive or       
supplement the Indenture for specified purposes, including, among other things, 
curing ambiguities, defects or inconsistencies (provided that any such action   
does not materially adversely affect the interest of the holders of Junior      
Subordinated Debentures) and qualifying, or maintaining the qualification of,   
the Indenture under the Trust Indenture Act. The Indenture contains provisions  
permitting AGL Capital and the Debenture Trustee, with the consent of the       
holders of a majority in principal amount of Junior Subordinated Debentures, to 
modify the Indenture in a manner affecting the rights of the holders of Junior  
Subordinated Debentures; provided, that no such modification may, without the   
consent of the holders of each outstanding Junior Subordinated Debenture so     
affected:                                                                       

.  extend the Stated Maturity, or reduce the principal amount of the    
  Junior Subordinated Debentures or reduce the rate or extend the time
of payment of interest thereon, or reduce any amount payable on   
redemption, or impair or affect the right of any holder of Junior 
Subordinated Debentures to institute suit for payment or          

.  reduce the percentage of principal amount of Junior Subordinated     
  Debentures, the holders of which are required to consent to any such
modification of the Indenture.                                    

Junior Subordinated Debenture Events of Default                                 

  The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a         
"Debenture Event of Default" (whatever the reason for such Debenture Event of   
Default and whether it shall be voluntary or involuntary or be effected by      
operation of law or pursuant to any judgment, decree or order of any court or   
any order, rule or regulation of any administrative or governmental body):      

.  failure for 30 days to pay any interest on the Junior Subordinated   
   Debentures or any Other Debentures, when due (subject to the deferral
  of any due date in the case of an Extended Interest Payment Period);
or                                                                

.  failure to pay any principal or premium, if any, on the Junior       
   Subordinated Debentures or any Other Debentures within three Business
   Days of when due whether at maturity, upon redemption, by declaration
of acceleration of maturity or otherwise; or                      

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.  failure to observe or perform in any material respect certain other  
  covenants or warranties contained in the Indenture for 90 days after
written notice to AGL Capital from the Debenture Trustee or the   
  holders of at least 25% in aggregate outstanding principal amount of
Junior Subordinated Debentures; or                                

.  certain events of bankruptcy, insolvency or reorganization of AGL    
Capital.                                                          

  The Debenture Trustee or the holders of not less than 33% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare  
the principal due and payable immediately upon a Debenture Event of Default.    
The holders of a majority in aggregate outstanding principal amount of the      
Junior Subordinated Debentures may annul such declaration and waive the default 
if the default (other than the non-payment of the principal of the Junior       
Subordinated Debentures which has become due solely by such acceleration) has   
been cured, waived or otherwise remedied and a sum sufficient to pay all        
matured installments of interest and principal due otherwise than by            
acceleration has been deposited with the Debenture Trustee.                     

  The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures affected thereby may, on behalf of the       
holders of all the Junior Subordinated Debentures, waive any past default,      
except a default in the payment of principal (or premium, if any) on or         
interest (unless such default has been cured and a sum sufficient to pay all    
matured installments of interest (and premium, if any) and principal due        
otherwise than by acceleration has been deposited with the Debenture Trustee)   
or a default in respect of a covenant or provision which under the Indenture    
cannot be modified or amended without the consent of the holder of each         
outstanding Junior Subordinated Debenture.                                      

Guarantee of Junior Subordinated Debenture Payments by AGL Resources            

     If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of AGL Capital to pay interest (or         
premium, if any) on principal of the Junior Subordinated Debentures on the due  
date, AGL Resources will guarantee on a junior subordinated basis the payment   
of the principal (and premium, if any) and interest on the Junior Subordinated  
Debentures, except that no payment of interest will be made under the Debenture 
Guarantee for any period during which AGL Capital has exercised its right to    
defer interest payments on the Junior Subordinated Debentures.                  

Consolidation, Merger, Sale of Assets and Other Transactions                    

 The Indenture provides that AGL Capital shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and     
assets as an entirety or substantially as an entirety to any Person, and no     
Person shall consolidate with or merge into AGL Capital or convey, transfer or  
lease its properties and assets as an entirety or substantially as an entirety  
to AGL Capital, unless:                                                         

.  in case AGL Capital consolidates with or merges into another Person  
   or conveys or transfers its properties and assets substantially as an
 entirety to any Person, the successor Person is organized under the
 laws of the United States or any State or the District of Columbia,
   and such successor Person expressly assumes AGL Capital's obligations
on the Junior Subordinated Debentures;                            

.  immediately after giving effect thereto, no Debenture Event of       
 Default, and no event which, after notice or lapse of time or both,
   would become a Debenture Event of Default, shall have occurred and be
continuing; and                                                   

.  certain other conditions as prescribed in the Indenture are met.     

The general provisions of the Indenture do not afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged or 
other transaction involving AGL Capital's that may adversely affect holders of  
the Junior Subordinated Debentures.                                             

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Satisfaction and Discharge                                                      

The Indenture provides that when, among other things, all Junior    
Subordinated Debentures not previously delivered to the Debenture Trustee for   
cancellation:                                                                   

.  have become due and payable or                                       

.  will become due and payable at maturity within one year, and AGL     
   Capital deposits or causes to be deposited with the Debenture Trustee
 funds, in trust, for the purpose and in an amount sufficient to pay
and discharge the entire indebtedness on the Junior Subordinated  
Debentures not previously delivered to the Debenture Trustee for  
   cancellation, for the principal (and premium, if any) and interest to
 the date of the deposit or to the Stated Maturity Date, as the case
   may be, then the Indenture will cease to be of further effect (except
   as to AGL Capital's obligations to pay all other sums due pursuant to
  the Indenture and to provide the officers' certificates and opinions
   of counsel described therein), and AGL Capital will be deemed to have
satisfied and discharged the Indenture.                           

Subordination                                                                   

 The Indenture provides that the Junior Subordinated Debentures issued
thereunder will be subordinate and junior in right of payment to all Senior     
Indebtedness of AGL Capital. No payment of principal (including redemption      
payments), premium, if any, or interest on the Junior Subordinated Debentures   
may be made at any time when:                                                   

.  any Senior Indebtedness of AGL Capital is not paid when due,         

.  any applicable grace period with respect to such default has ended   
  and such default has not been cured or waived or ceased to exist, or

.  the maturity of any Senior Indebtedness of AGL Capital has been      
accelerated because of a default.                                 

Upon any distribution of assets to creditors upon any liquidation,  
dissolution, winding up, reorganization, assignment for the benefit of          
creditors, marshaling of assets or any bankruptcy, insolvency, debt             
restructuring or similar proceedings in connection with any insolvency or       
bankruptcy proceeding of AGL Capital, all Senior Indebtedness of AGL Capital    
must be paid in full before the holders of the Junior Subordinated Debentures   
are entitled to receive or retain any payment in respect thereof.               

   In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness of AGL Capital outstanding   
at the time of such acceleration will first be entitled to receive payment in   
full before the holders of Junior Subordinated Debentures will be entitled to   
receive or retain any payment in respect of the Junior Subordinated Debentures. 

"Senior Indebtedness" shall mean with respect to an obligor, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such 
obligor for money borrowed, and (B) indebtedness evidenced by securities,       
debentures, bonds or other similar instruments issued by such obligor, (ii) all 
capital lease obligations of such obligor, (iii) all obligations of such        
obligor issued or assumed as the deferred purchase price of property, all       
conditional sale obligations of such obligor and all obligations of such        
obligor under any title retention agreement (but excluding trade accounts       
payable arising in the ordinary course of business, (iv) all obligations of     
such obligor for the reimbursement on any letter of credit, banker's            
acceptance, security purchase facility or similar credit transaction, (v) all   
obligations of the type referred to in clauses (i) through (v) above of other   
persons secured by any lien on any property or asset of such obligor (whether   
or not such obligation is assumed by such obligor), except for (1) any such     
indebtedness that is by its terms subordinated to or ranks equal in priority    
with the Trust Preferred Securities, and (2) all debt securities or guarantees  
in respect of those                                                             

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debt securities, issued to any other trust, or a trustee of such trust,         
partnership or other entity affiliated with AGL Capital that is a financing     
vehicle of AGL Capital (a "financing entity") in connection with the issuance   
by such financing entity of equity securities or other securities guaranteed    
by AGL Resources pursuant to an instrument that ranks equal in priority with    
or junior in right of payment to the Trust Preferred Guarantee.                 

 AGL Resources is a registered public utility holding company and almost
all of the operating assets of AGL Resources are owned by AGL Resources'        
subsidiaries. AGL Resources relies primarily on dividends from such             
subsidiaries to meet its obligations for payment of principal and interest on   
its outstanding debt obligations and corporate expenses. AGL Resources is a     
legal entity separate and distinct from its subsidiaries. The principal         
sources of AGL Resources' income are dividends and fees from its subsidiaries.  
AGL Capital is a wholly-owned financing subsidiary of AGL Resources. The right  
of AGL Resources and AGL Capital to participate in any distribution of assets   
of any subsidiary, upon such subsidiary's liquidation or reorganization or      
otherwise, is subject to the prior claims of creditors of the subsidiary.       

The Indenture places no limitation on the amount of additional Senior 
Indebtedness that may be incurred by AGL Capital. AGL Capital expects from      
time to time to incur additional indebtedness constituting Senior               
Indebtedness.                                                                   

Governing Law                                                                   

  The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York without      
regarding to principles of conflicts of law thereof.                            

Information Concerning the Indenture Trustee                                    

The Indenture Trustee shall have and be subject to all the duties and 
responsibilities specified with respect to an indenture trustee under the       
Trust Indenture Act. Subject to such provisions, the Indenture Trustee is       
under no obligation to exercise any of the powers vested in it by the           
Indenture at the request of any holder of Junior Subordinated Debentures,       
unless offered indemnity reasonably satisfactory to it by such holder against   
the costs, expenses and liabilities which might be incurred thereby. The        
Indenture Trustee is not required to expend or risk its own funds or otherwise  
incur personal financial liability in the performance of its duties if the      
Indenture Trustee reasonably believes that repayment or adequate indemnity is   
not reasonably assured to it.                                                   

Miscellaneous                                                                   

 AGL Capital has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding:                                                  

.  to maintain directly or indirectly 100% ownership of the Common      
 Securities of the Trust (provided that certain successors which are
permitted pursuant to the Indenture may succeed to AGL Capital's  
ownership of the Common Securities);                              

.  not to voluntarily terminate, wind up or liquidate the Trust, except 
    in connection with a distribution of Junior Subordinated Debentures to
 the holders of the Trust Preferred Securities in liquidation of the
Trust; and                                                        

.  to use its reasonable efforts, consistent with the terms and         
provisions of the Trust Agreement to cause the Trust to remain    
   classified as (a) a business trust, except in connection with certain
mergers, consolidations or amalgamations permitted by the Trust   
  Agreement, and (b) a grantor trust and not as an association taxable
as a corporation for United States federal income tax purposes.   

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DESCRIPTION OF TRUST PREFERRED GUARANTEE

The Trust Preferred Guarantee will be executed and delivered by AGL 
Resources concurrently with the issuance by the Trust of the Trust Preferred    
Securities for the benefit of the holders of the Trust Preferred Securities.    
The Bank of New York will act as indenture trustee ("Trust Preferred Guarantee  
Trustee") under the Trust Preferred Guarantee. The Trust Preferred Guarantee    
will be qualified under the Trust Indenture Act. This summary of certain        
provisions of the Trust Preferred Guarantee does not purport to be complete and 
is subject to, and qualified in its entirety by reference to, all of the        
provisions of the Trust Preferred Guarantee, including the definitions therein  
of certain terms, and the Trust Indenture Act. The Trust Preferred Guarantee    
Trustee will hold the Trust Preferred Guarantee for the benefit of the holders  
of the Trust Preferred Securities.                                              

General                                                                         

 AGL Resources will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Trust Preferred Guarantee Payments   
(as defined below) to the holders of the Trust Preferred Securities, as and     
when due, regardless of any defense, right of set-off or counterclaim that the  
Trust may have or assert other than the defense of payment. The following       
payments with respect to the Trust Preferred Securities, to the extent not paid 
by or on behalf of the Trust (the "Trust Preferred Guarantee Payments"), will   
be subject to the Trust Preferred Guarantee:                                    

.  any accumulated and unpaid Distributions required to be paid on Trust
  Preferred Securities, to the extent that the Trust has funds on hand
legally available therefor at such time,                          

.  the applicable Redemption Price with respect to Trust Preferred      
Securities called for redemption, to the extent that the Trust has
funds on hand legally available therefor at such time, or         

.  upon a voluntary or involuntary termination and liquidation of the   
  Trust, the lesser of (a) the Liquidation Distribution, to the extent
  that the Trust has funds on hand legally available therefor, and (b)
the amount of assets of the Trust remaining available for         
   distribution to holders of Trust Preferred Securities. AGL Resources'
obligation to make a Trust Preferred Guarantee Payment may be     
  satisfied by direct payment of the required amounts by AGL Resources
to the holders of the Trust Preferred Securities or by causing the
Trust to pay such amounts to such holders.                        

   The Trust Preferred Guarantee will rank subordinate and junior in right
of payment to all Senior Indebtedness of AGL Resources to the extent provided   
therein. See "--Status of the Trust Preferred Guarantee." Because AGL Resources 
is a holding company, the right of AGL Resources to participate in any          
distribution of assets of any subsidiary upon such subsidiary's liquidation or  
reorganization or otherwise, is subject to the prior claims of creditors of     
that subsidiary, except to the extent AGL Resources may itself be recognized as 
a creditor of that subsidiary. Accordingly, AGL Resources' obligations under    
the Trust Preferred Guarantee will be effectively subordinated to all existing  
and future liabilities of AGL Resources' subsidiaries, and claimants should     
look only to the assets of AGL Resources for payments thereunder. See           
"Description of the Junior Subordinated Debentures--General." The Trust         
Preferred Guarantee does not limit the incurrence or issuance of other secured  
or unsecured debt of AGL Resources, including Senior Indebtedness, whether      
under the Indenture, any other indenture that AGL Resources may enter into in   
the future or otherwise.                                                        

AGL Resources will, through the Trust Preferred Guarantee, fully,   
irrevocably and unconditionally guarantee all of the Trust's obligations under  
the Trust Preferred Securities but will not apply to any payment of             
Distributions except to the extent the Trust has funds legally available        
therefor. If AGL Capital does not make interest payments on the Junior          
Subordinated Debentures held by the Trust, the Trust will not pay Distributions 
on the Trust Preferred Securities and will not have funds legally available     
therefor.                                                                       

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Status of the Trust Preferred Guarantee                                         

 Generally, the Trust Preferred Guarantee will constitute an unsecured
obligation of AGL Resources and will rank subordinate and junior in right of    
payment to all of its Senior Indebtedness in the same manner as Junior          
Subordinated Debentures.                                                        

    The Trust Preferred Guarantee will rank equal in priority with all Other
Guarantees issued by AGL Resources. The Trust Preferred Guarantee will          
constitute a guarantee of payment and not of collection (i.e., the guaranteed   
party may institute a legal proceeding directly against AGL Resources to        
enforce its rights under the Trust Preferred Guarantee without first            
instituting a legal proceeding against any other person or entity). The Trust   
Preferred Guarantee will be held for the benefit of the holders of the Trust    
Preferred Securities. The Trust Preferred Guarantee will not be discharged      
except by payment of the Trust Preferred Guarantee Payments in full to the      
extent not paid by the Trust or upon distribution to the holders of the Trust   
Preferred Securities of the Junior Subordinated Debentures. The Trust Preferred 
Guarantee does not place a limitation on the amount of additional Senior        
Indebtedness that may be incurred by AGL Resources. AGL Resources expects from  
time to time to incur additional indebtedness constituting Senior Indebtedness. 

Amendments and Assignment                                                       

Except with respect to any changes that do not materially adversely 
affect the rights of holders of the Trust Preferred Securities (in which case   
no vote will be required), the Trust Preferred Guarantee may not be amended     
without the prior approval of the holders of a majority of the Liquidation      
Amount of such outstanding Trust Preferred Securities. The manner of obtaining  
any such approval will be as set forth under "Description of the Trust          
Preferred Securities--Voting Rights; Amendment of the Trust Agreement." All     
guarantees and agreements contained in the Trust Preferred Guarantee Agreement  
shall bind the successors, assigns, receivers, trustees and representatives of  
AGL Resources and shall inure to the benefit of the holders of the Trust        
Preferred Securities then outstanding.                                          

Events of Default                                                               

   An event of default under the Trust Preferred Guarantee will occur upon
the failure of AGL Resources to perform any of its payment or other obligations 
thereunder. The holders of a majority in Liquidation Amount of the Trust        
Preferred Securities will have the right to direct the time, method and place   
of conducting any proceeding for any remedy available to the Trust Preferred    
Guarantee Trustee in respect of the Trust Preferred Guarantee or to direct the  
exercise of any trust or power conferred upon the Trust Preferred Guarantee     
Trustee under the Trust Preferred Guarantee. The Trust Preferred Securities     
Guarantee Trustee may decline to follow any such direction if it shall          
determine that the action so directed would be unjustly prejudicial to the      
holders not taking part in such direction or that the action or proceeding so   
directed may not lawfully be taken or would involve the Trust Preferred         
Securities Guarantee Trustee in personal liability.                             

Any holder of the Trust Preferred Securities may institute a legal  
proceeding directly against AGL Resources to enforce its rights under the Trust 
Preferred Guarantee without first instituting a legal proceeding against the    
Trust, the Trust Preferred Guarantee Trustee or any other person or entity.     

   AGL Resources, as guarantor, will be required to file annually with the
Trust Preferred Guarantee Trustee a certificate as to whether or not AGL        
Resources is in compliance with all the conditions and covenants applicable to  
it under the Trust Preferred Guarantee.                                         

Information Concerning the Trust Preferred Guarantee Trustee                    

   The Trust Preferred Guarantee Trustee, other than during the occurrence
and continuance of an event of default by AGL Resources in performance of the   
Trust Preferred Guarantee, shall undertake to perform only                      

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such duties as are specifically set forth in the Trust Preferred Guarantee and, 
after default with respect to the Trust Preferred Guarantee, must exercise the  
same degree of care and skill as a prudent person would exercise or use in the  
conduct of his or her own affairs. Subject to this provision, the Trust         
Preferred Guarantee Trustee will be under no obligation to exercise any of the  
powers vested in it by the Trust Preferred Guarantee at the request of any      
holder of the Trust Preferred Securities unless it is offered indemnity         
reasonably satisfactory to it against the costs, expenses and liabilities that  
might be incurred thereby.                                                      

Termination of the Guarantee                                                    

   The Trust Preferred Guarantee will terminate and be of no further force
and effect upon full payment of the applicable Redemption Price of the Trust    
Preferred Securities, upon full payment of the Liquidation Amount payable upon  
liquidation of the Trust, or upon distribution of Junior Subordinated           
Debentures to the holders of the Trust Preferred Securities, or upon exchange   
of all Trust Preferred Securities for other Trust Preferred Securities in the   
Exchange Offer. The Trust Preferred Guarantee will continue to be effective or  
will be reinstated, as the case may be, if at any time any holder of the Trust  
Preferred Securities must restore payment of any sums paid under the Trust      
Preferred Securities or the Trust Preferred Guarantee.                          

Governing Law                                                                   

The Trust Preferred Guarantee will be governed by and construed in  
accordance with the laws of the State of New York without giving effect to      
principles of conflicts of law thereof.                                         

DESCRIPTION OF DEBENTURE GUARANTEE

     This summary of provisions of the Debenture Guarantee does not purport to
be complete and is subject to, and qualified in its entirety by reference to,   
all of the provisions of the Debenture Guarantee as contained in the Indenture  
and the Trust Indenture Act.                                                    

   AGL Resources will guarantee on a junior subordinated basis the payment
of principal (and premium, if any) and interest on the Junior Subordinated      
Debentures, except that no payment of interest will be made under the Debenture 
Guarantee for any period during which AGL Capital has exercised its right to    
defer interest payments on the Junior Subordinated Debentures.                  

The Debenture Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of AGL Resources to the extent provided in   
the Indenture. The right of AGL Resources to participate in any distribution of 
assets of any subsidiary upon such subsidiary's liquidation or reorganization   
or otherwise, is subject to the prior claims of creditors of that subsidiary,   
except to the extent AGL Resources may itself be recognized as a creditor of    
that subsidiary. Accordingly, AGL Resources' obligations under the Debenture    
Guarantee will be effectively subordinated to all existing and future           
liabilities of AGL Resources' subsidiaries, and claimants should look only to   
the assets of AGL Resources for payments thereunder. The Debenture Guarantee    
does not limit the incurrence or issuance of other secured or unsecured debt of 
AGL Resources, including Senior Indebtedness, whether under the Indenture, any  
other indenture that AGL Resources may enter into in the future or otherwise.   

RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES, THE TRUST PREFERRED GUARANTEE 
AND THE DEBENTURE GUARANTEE 

Full and Unconditional Trust Preferred Guarantee                                

  Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds on hand legally available for the 
payment of such Distributions) will be irrevocably guaranteed                   

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by AGL Resources as and to the extent set forth under "Description of Trust     
Preferred Guarantee." Taken together, AGL Resources' and AGL Capital's          
obligations under the Junior Subordinated Debentures, the Indenture, the Trust  
Agreement, the Trust Preferred Guarantee and the Debenture Guarantee will       
provide, in the aggregate, a full, irrevocable and unconditional guarantee of   
payments of Distributions and other amounts due on the Trust Preferred          
Securities. No single document standing alone or operating in conjunction with  
fewer than all of the other documents constitutes such guarantee. It is only    
the combined operation of these documents that has the effect of providing a    
full, irrevocable and unconditional guarantee of the Trust's obligations under  
the Trust Preferred Securities. If and to the extent that AGL Capital does not  
make the required payments on the Junior Subordinated Debentures, the Trust     
will not have sufficient funds to make the related payments, including          
Distributions, on the Trust Preferred Securities. The Trust Preferred Guarantee 
will not cover any such payment when the Trust does not have sufficient funds   
on hand legally available therefor. However, through the Debenture Guarantee,   
AGL Resources will guarantee on a junior subordinated basis the due and         
punctual payment of the principal (and premium, if any) and interest on the     
Junior Subordinated Debentures, except that no payment of interest will be made 
under the Debenture Guarantee during any period during which AGL Capital has    
exercised its right to defer interest payments on the Junior Subordinated       
Debentures. The obligations of AGL Resources under the Trust Preferred          
Guarantee and Debenture Guarantee will be subordinate and junior in right of    
payment to all Senior Indebtedness.                                             

Sufficiency of Payments                                                         

   As long as payments of interest and other payments are made when due on
the Junior Subordinated Debentures, such payments will be sufficient to cover   
Distributions and other payments due on the Trust Preferred Securities,         
primarily because:                                                              

.  the aggregate principal amount or Prepayment Price of the Junior     
 Subordinated Debentures will be equal to the sum of the Liquidation
Amount or Redemption Price, as applicable, of the Trust Preferred 
Securities and Common Securities;                                 

.  the interest rate and interest and other payment dates on the Junior 
   Subordinated Debentures will match the interest rate and interest and
other payment dates for the Trust Securities;                     

.  AGL Capital shall pay for all and any costs, expenses and liabilities
of the Trust except the Trust's obligations to holders of Trust   
Preferred Securities under such Trust Preferred Securities; and   

.  the Trust Agreement will provide that the Trust is not authorized to 
engage in any activity that is not consistent with the limited    
purposes thereof.                                                 

Enforcement Rights of Holders of Trust Preferred Securities                     

    A holder of any Trust Security may institute a legal proceeding directly
against AGL Resources to enforce its rights under the Guarantee without first   
instituting a legal proceeding against the Guarantee Trustee, the Trust or any  
other person or entity. A default or event of default under any Senior          
Indebtedness would not constitute a default or Event of Default under the Trust 
Agreement. However, in the event of payment defaults under, or acceleration of, 
Senior Indebtedness, the subordination provisions of the Indenture will provide 
that no payments may be made in respect of the Junior Subordinated Debentures   
until such Senior Indebtedness has been paid in full or any payment default     
thereunder has been cured or waived. Failure to make required payments on       
Junior Subordinated Debentures would constitute an Event of Default under the   
Trust Agreement.                                                                

If a Trust Enforcement Event occurs, the holders of Trust Preferred 
Securities would rely on the enforcement by the Property Trustee of its rights  
as registered holder of the Junior Subordinated Debentures against AGL Capital. 
In addition, generally, the holders of a majority in liquidation amount of the  
Trust Preferred Securities will have the right to direct the time, method and   
place of conducting any proceeding for any remedy available to the Property     
Trustee or to direct the exercise of any trust or power conferred upon the      

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Property Trustee under the Trust Agreement, including the right to direct the   
Property Trustee to exercise the remedies available to it as the holder of the  
Junior Subordinated Debentures. The Indenture provides that the Indenture       
Trustee will give holders of Junior Subordinated Debentures notice of all       
events of default within 90 days after their occurrence.                        

If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures in respect of an event of default under the Indenture   
after a holder of Trust Preferred Securities has made a written request, such   
holder may, to the extent permitted by applicable law, institute a legal        
proceeding against us to enforce the Property Trustee's rights under the Junior 
Subordinated Debentures. In addition, if AGL Capital fails to pay interest or   
principal on the Junior Subordinated Debentures, a holder of Trust Preferred    
Securities may institute a proceeding directly against AGL Capital for          
enforcement of payment to that holder of the principal of or interest on Junior 
Subordinated Debentures having a principal amount equal to the total            
liquidation amount of that holder's Trust Preferred Securities (which we refer  
to as a "direct action"). In connection with such a direct action, we will have 
the right to set off any payment made to such holder by AGL Capital.            

Limited Purpose of the Trust                                                    

The Trust Preferred Securities will represent preferred undivided   
beneficial interests in the assets of the Trust, and the Trust exists for the   
sole purpose of issuing and selling the Trust Securities, using the proceeds    
from the sale of the Trust Securities to acquire the Junior Subordinated        
Debentures and engaging in only those other activities necessary, advisable or  
incidental thereto.                                                             

Rights Upon Termination                                                         

   Unless the Junior Subordinated Debentures are distributed to holders of
the Trust Securities, upon any voluntary or involuntary termination and         
liquidation of the Trust, the holders of the Trust Securities will be entitled  
to receive, out of assets held by the Trust, the Liquidation Distribution in    
cash. See "Description of Trust Preferred Securities--Liquidation of the Trust  
and Distribution of Junior Subordinated Debentures." Upon any voluntary or      
involuntary liquidation or bankruptcy of AGL Capital, the Property Trustee, as  
holder of the Junior Subordinated Debentures, would be a subordinated creditor  
of AGL Capital, subordinated in right of payment to all Senior Indebtedness as  
set forth in the Indenture, but entitled to receive payment in full of          
principal (and premium, if any) and interest, before any stockholders of AGL    
Capital receive payments or distributions.                                      

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES 

General                                                                         

The following is a summary of certain of the material United States 
federal income tax consequences of the purchase, ownership and disposition of   
Trust Preferred Securities held as capital assets by a holder who purchases the 
Trust Preferred Securities upon initial issuance, and that is a citizen or      
resident of the United States, a corporation, partnership or other entity       
created or organized in or under the laws of the United States or any state     
thereof or the District of Columbia or an estate or trust treated as a United   
States person under Section 7701(a)(30) of the Internal Revenue Code of 1986,   
as amended (the "Code"). This summary does not address tax consequences for     
special classes of holders such as banks, thrifts, real estate investment       
trusts, regulated investment companies, insurance companies, dealers in         
securities or currencies, tax-exempt investors, or persons that will hold the   
Trust Preferred Securities as a position in a "straddle," as part of a          
"synthetic security" or "hedge," as part of a "conversion transaction" or other 
integrated investment, or as other than a capital asset. This summary also does 
not address the tax consequences to persons that have a functional currency     
other than the U.S. dollar or the tax consequences to shareholders, partners or 
beneficiaries of a holder of Trust Preferred Securities. If a partnership holds 
our Trust Preferred Securities, the tax treatment of a partner will generally   
depend upon the status of the partner and the activities of the partnership. If 
you are a partner of a partnership holding our Trust Preferred Securities, you  
should consult your tax advisors. This summary does not include any description 
of any alternative minimum tax consequences or the tax laws of any state or     
local government or of any foreign government that may be applicable to the     
Trust Preferred Securities. This summary is based on the Code, Treasury         
regulations thereunder, the administrative and judicial interpretations         
thereof, as of the date of this prospectus, all of which are subject to change, 
possibly on a retroactive basis. A purchaser of Trust Preferred Securities      
should consult a tax advisor regarding the tax consequences of purchasing,      
owning and selling Trust Preferred Securities.                                  

Classification of the Junior Subordinated Debentures                            

  In connection with the issuance of the Junior Subordinated Debentures,
Long Aldridge & Norman LLP will render its opinion generally to the effect      
that, under then current law and assuming full compliance with the terms of the 
Indenture (and certain other documents), and based on certain facts and         
assumptions contained in such opinion, the Junior Subordinated Debentures will  
be classified for United States federal income tax purposes as indebtedness.    
We, along with the Trust and each holder (by acceptance of a beneficial         
interest in Trust Preferred Securities) agree to treat the Junior Subordinated  
Debentures as debt of AGL Capital and the Trust Preferred Securities as         
evidence of a beneficial interest in the Trust. An opinion of tax counsel,      
however, is not binding on the Internal Revenue Service or the courts.          
Prospective investors should note that no rulings have been or are expected to  
be sought with respect to any of these issues and no assurance can be given     
that the Internal Revenue Service or the courts will not take contrary          
positions. No assurance can be given that any of the opinions expressed herein  
will not be challenged by the Internal Revenue Service or the courts or, if     
challenged, that such a challenge would not be successful. The remainder of     
this summary assumes that the Junior Subordinated Debentures will be classified 
as indebtedness of AGL Capital for United States federal income tax purposes.   

Classification of the Trust                                                     

   In connection with the issuance of the Trust Preferred Securities, Long
Aldridge & Norman LLP will render its opinion generally to the effect that,     
under then current law and assuming full compliance with the terms of the Trust 
Agreement and the Indenture (and certain other documents), and based on certain 
facts and assumptions contained in the opinion, the Trust will be classified    
for United States federal income tax purposes as a "grantor trust" and not as   
an association taxable as a corporation. Accordingly, for United States federal 
income tax purposes, each holder of Trust Preferred Securities generally will   
be considered the owner of an undivided beneficial interest in the assets of    
the Trust, including the Junior Subordinated Debentures, and each               

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holder will be required to include in its gross income any interest (or OID     
accrued) paid or accrued on the Junior Subordinated Debentures.                 

Interest Income and Original Issue Discount                                     

Under Treasury regulations (the "Regulations") applicable to debt   
instruments, a "remote" contingency that stated interest will not be timely     
paid will be ignored in determining whether a debt instrument is issued with    
OID. We believe that the likelihood of exercising the option to defer payments  
of stated interest is "remote" since exercising that option would prevent AGL   
Resources from declaring dividends on any class of its equity securities. As a  
result, we intend to take the position, based on the advice of tax counsel,     
that the Junior Subordinated Debentures will not be considered to be issued     
with OID and, accordingly, stated interest on the Junior Subordinated           
Debentures generally will be taxable to a holder as ordinary income at the time 
it is paid or accrued in accordance with the holder's method of accounting.     

 Under the Regulations, if we were to exercise the option to defer the
payments of interest on the Junior Subordinated Debentures, the Junior          
Subordinated Debentures would at that time be treated as retired and as         
reissued with OID, and all stated interest on the Junior Subordinated           
Debentures would thereafter be treated as OID as long as the Junior             
Subordinated Debentures remain outstanding. In such event, all of a holder's    
taxable interest income with respect to the Junior Subordinated Debentures      
would thereafter be treated as OID and accounted for on an economic accrual     
basis regardless of the holder's method of tax accounting over the remaining    
term of the Junior Subordinated Debentures, and actual distributions of stated  
interest would not be reported as taxable income. Consequently, a holder of     
Trust Preferred Securities would be required to include in gross income OID     
even though we did not make actual cash payments during an Extended Interest    
Payment Period. Under the Regulations, if the option to defer the payment of    
interest was determined not to be "remote," the Junior Subordinated Debentures  
would be treated as having been originally issued with OID. In such event, all  
of a holder's taxable interest income with respect to the Junior Subordinated   
Debentures would be accounted for on an economic accrual basis regardless of    
the holder's method of tax accounting, and actual distributions of stated       
interest would not be reported as taxable income.                               

     Income on the Trust Preferred Securities will constitute interest or OID.
As a result corporate holders of the Trust Preferred Securities will not be     
entitled to a dividends-received deduction for any income recognized from the   
Trust Preferred Securities.                                                     

Market Discount                                                                 

A purchaser of a Trust Preferred Security at a discount from the    
Liquidation Amount at maturity of such purchaser's pro rata share of the Junior 
Subordinated Debentures acquires such Trust Preferred Security with "market     
discount." However, market discount with respect to a Trust Preferred Security  
will be considered to be zero if it is de minimis. Market discount will be de   
minimis with respect to a Trust Preferred Security if it is less than the       
product of (i) 0.25% of the adjusted issue price of the purchaser's pro rata    
share of the Junior Subordinated Debentures multiplied by (ii) the number of    
complete years to maturity of such Junior Subordinated Debentures after the     
date of purchase. The purchaser of a Trust Preferred Security with more than a  
de minimis amount of market discount generally will be required to treat any    
gain on the sale, exchange, redemption or other disposition of all or part of   
the Trust Preferred Securities (or related Junior Subordinated Debentures) as   
ordinary income to the extent of accrued (but not previously taxed) market      
discount. Market discount generally will accrue ratably during the period from  
the date of purchase of such Trust Preferred Security to the maturity date of   
the Junior Subordinated Debentures, unless the holder irrevocably elects to     
accrue such market discount on the basis of a constant interest rate.           

     A holder who has acquired a Trust Preferred Security at a market discount
generally will be required to defer any deductions of interest expense          
attributable to any indebtedness incurred or continued to purchase or carry the 
Trust Preferred Security, to the extent such interest expense exceeds the       
related interest income.                                                        

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Any such deferred interest expense generally will be allowable as a deduction   
not later than the year in which the related market discount income is          
recognized. As an alternative to the inclusion of market discount in income     
upon disposition of all or a portion of the Trust Preferred Securities, the     
purchaser may make an election (which may not be revoked without the IRS's      
consent) to include market discount in income as it accrues on all market       
discount instruments acquired by the holder during or after the taxable year    
for which the election is made. In that case, the preceding deferral rule for   
interest expense will not apply.                                                

In lieu of the foregoing treatment of market discount and interest  
expense, a holder may elect to treat any market discount (including a de        
minimis amount) as OID and accrue such discount on a constant-yield basis in    
the same manner as the holder accrues OID.                                      

Premium                                                                         

   A purchaser who acquires its Trust Preferred Securities at a price that
is greater than the principal payable at maturity (or, if the Junior            
Subordinated Debentures are treated as having been issued or reissued with OID, 
the adjusted issue price of such purchaser's share of Junior Subordinated       
Debentures (which generally should approximate par plus any OID accrued with    
respect to unpaid interest)), the purchaser will be deemed to have acquired its 
interest in the Trust Preferred Securities with premium. Such purchaser may     
elect to reduce the amount of interest payments (and will reduce the amount of  
OID, if any) required to be included in income to reflect amortization of the   
premium over the remaining term.                                                

Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust 

   We will have the right at any time to liquidate the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust    
Preferred Securities. Under current law, such a distribution, for United States 
federal income tax purposes, would be treated as a nontaxable event to each     
holder, and each holder would receive an aggregate tax basis in the Junior      
Subordinated Debentures equal to the holder's aggregate tax basis in its Trust  
Preferred Securities. A holder's holding period in the Junior Subordinated      
Debentures so received in liquidation of the Trust would include the period     
during which the Trust Preferred Securities were held by such holder. If,       
however, the Trust is characterized for United States federal income tax        
purposes as an association taxable as a corporation at the time of its          
dissolution, the distribution of the Junior Subordinated Debentures may         
constitute a taxable event to holders of Trust Preferred Securities and a       
holder's holding period in Junior Subordinated Debentures would begin on the    
date such Junior Subordinated Debentures were received.                         

   Under certain circumstances described herein (see "Description of Trust
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for  
cash and the proceeds of such redemption distributed to holders in redemption   
of their Trust Preferred Securities. Under current law, such a redemption       
would, for United States federal income tax purposes, constitute a taxable      
disposition of the redeemed Trust Preferred Securities, and a holder could      
recognize gain or loss as if the holder sold such redeemed Trust Preferred      
Securities for cash. See "Sales of Trust Preferred Securities."                 

Sales of Trust Preferred Securities                                             

 A holder that sells Trust Preferred Securities will recognize gain or
loss equal to the difference between its adjusted tax basis in the Trust        
Preferred Securities and the amount realized on the sale of such Trust          
Preferred Securities (other than with respect to accrued and unpaid interest    
which has not yet been included in income, which will be treated as ordinary    
income). A holder's adjusted tax basis in the Trust Preferred Securities        
generally will be its initial purchase price increased by OID and market        
discount (if any) previously includable in such holder's gross income to the    
date of disposition and decreased by payments (if any) received on the Trust    
Preferred Securities in respect of OID and any premium that the holder has      
taken into account. Subject to the market discount rules described above, such  
gain or loss generally will be a capital                                        

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gain or loss and generally will be a long-term capital gain or loss if the      
Trust Preferred Securities have been held for more than one year.               

The Trust Preferred Securities may trade at a price that does not   
accurately reflect the value of accrued but unpaid interest with respect to the 
underlying Junior Subordinated Debentures. A holder who uses the accrual method 
of accounting for tax purposes (and a cash method holder, if the Junior         
Subordinated Debentures are deemed to have been issued with OID) who disposes   
of the Trust Preferred Securities between record dates for payments of          
distributions thereon will be required to include accrued but unpaid interest   
on the Junior Subordinated Debentures through the date of disposition in income 
as ordinary income (i.e., interest or, possibly, OID), and to add such amount   
to the adjusted tax basis in the holder's pro rata share of the underlying      
Junior Subordinated Debentures deemed disposed of. To the extent the selling    
price is less than the holder's adjusted tax basis (which will include all      
accrued but unpaid interest) a holder will recognize a capital loss. Subject to 
certain limited exceptions, capital losses cannot be applied to offset ordinary 
income for United States federal income tax purposes.                           

Possible Tax Legislation                                                        

    Certain tax law changes have from time to time been proposed that would,
among other things, generally deny corporate issuers a deduction for interest   
on debt obligations similar to the Junior Subordinated Debentures. Although     
none of the proposals have been enacted into law, there can be no assurance     
that any tax legislation will not be enacted in the future or that any such tax 
legislation would not be retroactive. Nor can there be any assurance that other 
legislation enacted after the date hereof will not otherwise adversely affect   
our ability to deduct the interest payable on the Junior Subordinated           
Debentures. There can be no assurance, therefore, that a Tax Event will not     
occur. A Tax Event would permit us to cause a redemption of the Trust Preferred 
Securities.                                                                     

United States Alien Holders                                                     

  For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder 
for United States federal income tax purposes. A "U.S. Holder" is a holder of   
Trust Preferred Securities who or which is a citizen or individual resident (or 
is treated as a citizen or individual resident) of the United States for        
federal income tax purposes, a corporation or partnership created or organized  
(or treated as created or organized for federal income tax purposes) in or      
under the laws of the United States or any political subdivision thereof, an    
estate the income of which is includable in its gross income for federal income 
tax purposes without regard to its source, or any trust that (i) is subject to  
the supervision of a court within the United States and the control of one or   
more United States persons or (ii) has a valid election in effect under         
applicable United States Treasury regulations to be treated as a United States  
person. Under present United States federal income tax laws: (i) payments by    
the Trust or any of its paying agents to any holder of Trust Preferred          
Securities who or which is a United States Alien Holder will not be subject to  
United States federal withholding tax; provided that, (a) the beneficial owner  
of the Trust Preferred Securities does not actually or constructively own 10    
percent or more of the total combined voting power of all classes of stock of   
AGL Resources entitled to vote, (b) the beneficial owner of the Trust Preferred 
Securities is not a controlled foreign corporation that is related to AGL       
Resources through stock ownership, (c) the beneficial owner is not a bank whose 
receipt of interest on the Trust Preferred Securities (or Junior Subordinated   
Debentures) is described in section 881(c)(3)(A) of the Code; and (d) the       
beneficial owner of the Trust Preferred Securities provides their name and      
address on an IRS Form W-8BEN (or successor form), and certifies, under penalty 
of perjury, that they are not a United States person or the beneficial owner    
satisfies the certification requirements of applicable United States Treasury   
regulations if the Trust Preferred Securities (or Junior Subordinated           
Debentures) are held through certain foreign intermediaries or certain foreign  
partnerships. Special certification rules apply to certain United States Alien  
Holders that are entities rather than individuals.                              

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Information Reporting to Holders and Backup Withholding                         

Subject to the qualifications discussed below, income on the Trust  
Preferred Securities will be reported to holders on Forms 1099, which forms     
should be mailed to holders of Trust Preferred Securities by January 31         
following each calendar year. Payments made on, and proceeds from the sale of,  
the Trust Preferred Securities may be subject to a "backup" withholding tax of  
31 percent unless the holder complies with certain identification or            
certification requirements. Any withheld amounts will be allowed as a credit    
against the holder's United States federal income tax, provided the required    
information is provided to the IRS.                                             

   The Trust will be obligated to report annually to Cede & Co., as holder
of record of the Trust Preferred Securities, the interest (and OID, if any)     
with respect to the Trust Preferred Securities that accrued during that year.   
The Trust currently intends to report such information on Form 1099 prior to    
January 31 following each calendar year even though the Trust is not legally    
required to report to record Holders until April 15 following each calendar     
year. The Initial Purchasers have indicated to the Trust that, to the extent    
that they hold Trust Preferred Securities as nominees for beneficial holders,   
they currently expect to report to such beneficial holders on Forms 1099 by     
January 31 following each calendar year. Under current law, record holders of   
Trust Preferred Securities who hold as nominees for beneficial holders will not 
have any obligation to report information regarding the beneficial holders to   
the Trust. The Trust, moreover, will not have any obligation to report to       
beneficial holders who are not also record holders. Thus, beneficial holders of 
Trust Preferred Securities who hold their Trust Preferred Securities through    
another entity will receive Forms 1099 reflecting the income on their Trust     
Preferred Securities from such nominee holders rather than the Trust.           

THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS  
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON  
A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH 
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND          
DISPOSITION OF THE TRUST PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES   
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF      
CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.                             

ERISA CONSIDERATIONS

     The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
and the Internal Revenue Code of 1986, as amended ("Code") impose certain       
duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or  
Section 4975 of the Code and prohibit certain transactions involving the assets 
of a Plan and its fiduciaries or other interested parties. Under ERISA and the  
Code, any person who exercises any discretionary authority or control over the  
administration of such a Plan or the management or disposition of the assets of 
such a Plan, or who renders investment advice for a fee or other compensation   
to such a Plan, is generally considered to be a fiduciary of the Plan.          

In considering an investment in the Trust Preferred Securities of a 
portion of the assets of any Plan, a fiduciary should determine whether the     
investment is in accordance with the documents and instruments governing the    
Plan and the applicable provisions of ERISA, the Code or any other law relating 
to a fiduciary's duties to the Plan including, without limitation, the          
prudence, diversification, delegation of control and prohibited transaction     
provisions of ERISA, the Code and any other applicable laws.                    

   Any insurance company proposing to invest assets of its general account
in the Trust Preferred Securities should consider the extent that such          
investment would be subject to the requirements of ERISA in light of the U.S.   
Supreme Court's decision in John Hancock Mutual Life Insurance Co. v. Harris    
Trust and Savings Bank and under any subsequent legislation or other guidance   
that has or may become available relating to that decision, including the       
enactment of Section 401(c) of ERISA by the Small Business Job Protection Act   
of 1996 and the regulations promulgated thereunder.                             

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    Each of AGL Capital (the obligor with respect to the Junior Subordinated
Debentures held by the Trust) and its affiliates and the Property Trustee may   
be considered a "party in interest" (within the meaning of ERISA) or a          
"disqualified person" (within the meaning of Section 4975 of the Code) with     
respect to many employee benefit plans ("Plans") that are subject to ERISA. Any 
purchaser proposing to acquire Trust Preferred Securities with assets of any    
Plan should consult with its counsel. The purchase and/or holding of Trust      
Preferred Securities by a Plan that is subject to the fiduciary responsibility  
provisions of ERISA or the prohibited transaction provisions of Section 4975 of 
the Code (including individual retirement arrangements and other plans          
described in Section 4975(e)(1) of the Code) and with respect to which AGL      
Capital, the Property Trustee or any affiliate is a service provider (or        
otherwise is a party in interest or a disqualified person) may constitute or    
result in a prohibited transaction under ERISA or Section 4975 of the Code,     
unless such Trust Preferred Securities are acquired pursuant to and in          
accordance with an applicable exemption, such as Prohibited Transaction Class   
Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by   
an independent qualified professional asset manager), PTCE 91-38 (an exemption  
for certain transactions involving bank collective investment funds), PTCE 90-1 
(an exemption for certain transactions involving insurance company pooled       
separate accounts), PTCE 95-60 (an exemption for transactions involving certain 
insurance company general accounts), or PTCE 96-23 (an exemption for certain    
transactions determined by an in-house asset manager).                          

     In addition, a Plan fiduciary considering the purchase of Trust Preferred
Securities should be aware that the assets of the Trust may be considered "plan 
assets" for ERISA purposes. In such event, service providers with respect to    
the assets of the Trust may become parties in interest or disqualified persons  
with respect to investing Plans, and any discretionary authority exercised with 
respect to the Junior Subordinated Debentures by such persons could be deemed   
to constitute a prohibited transaction under ERISA or the Code. In order to     
avoid such prohibited transactions, each investing Plan, by purchasing the      
Trust Preferred Securities, will be deemed to have directed the Trust to invest 
in the Junior Subordinated Debentures and to have appointed the Property        
Trustee.                                                                        

   ERISA and the Code do not define "Plan Assets." However, the Department
of Labor has issued a regulation (29 C.F.R. section 2510.3-101) (the "Plan      
Assets Regulation"), which generally provides that, as a general rule, the      
underlying assets and properties of corporations, partnerships, trusts and      
certain other entities in which a Plan makes an "equity" investment will be     
deemed, for purposes of ERISA, to be assets of the investing Plan unless        
certain exceptions apply.                                                       

  Pursuant to an exception contained in the Plan Assets Regulations, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans  
if the equity interests acquired by employee benefit plans are "publicly-       
offered securities"--that is, they are (1) widely held (i.e., owned by more     
than 100 investors independent of the issuer and of each other), (2) freely     
transferable and (3) sold as part of an offering pursuant to an effective       
registration statement under the Securities Act and then timely registered      
under Section 12(b) or 12(g) of the Exchange Act. It is expected that the Trust 
Preferred Securities will meet the criteria of "publicly-offered securities"    
above although no assurance can be given in this regard. The Initial Purchasers 
expect that the Trust Preferred Securities will be held by at least 100         
independent investors at the conclusion of the offering; there are no           
restrictions imposed on the transfer of the Trust Preferred Securities and the  
Trust Preferred Securities will be sold as part of an offering pursuant to an   
effective registration statement under the Securities Act, and then will be     
timely registered under the Exchange Act.                                       

     Although it is expected that the assets of the Trust should not be deemed
to be "plan assets" of an investing Plan, if AGL Capital or the Trust is a      
party in interest with respect to the Plan, in the absence of an applicable     
exemption, the Plan's purchase of the Trust Preferred Securities from the Trust 
would likely constitute a prohibited transaction under Section 406(a)(1)(A) or  
ERISA and Section 4975(c)(1)(A) of the Code. In addition, in the absence of an  
applicable exemption, certain other transactions coincident to the Trust        
Preferred Securities may involve a prohibited transaction, such as a            
distribution of the Junior Subordinated Debentures from the Trust to a Plan     
investor.                                                                       

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   Any plans or other entities whose assets include plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Trust Preferred          
Securities should consult with their own counsel to confirm that such           
investment will not result in a prohibited transaction that is not subject to   
an exemption and will satisfy any other applicable requirements of ERISA and    
the Code. Each purchaser using assets of a Plan to acquire Trust Preferred      
Securities will be deemed to have represented that its purchase and holding of  
such Trust Preferred Securities will not result in a non-exempt prohibited      
transaction under ERISA or the Code or will be covered by the exemptive relief  
provided by PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable       
exemption.                                                                      

Governmental Plans, non-U.S. plans and certain church plans are not 
subject to ERISA, and are also not subject to the prohibited transaction        
provisions of Section 4975 of the Code. However, other federal, state, local,   
non-U.S. or other laws or regulations governing the investment and management   
of the assets of such plans may contain fiduciary and prohibited transaction    
provisions similar to those under ERISA and the Code discussed above.           
Accordingly, fiduciaries of governmental and church plans, in consultation with 
their advisers, should consider the impact of their respective considerations   
discussed above to the extent applicable.                                       

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UNDERWRITING

Under the terms and subject to the conditions contained in an       
Underwriting Agreement dated the date of this prospectus, each of the           
Underwriters named below has severally agreed to purchase and the Trust has     
agreed to sell to each of the Underwriters, for whom Merrill Lynch, Pierce,     
Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated are acting as 
the representatives, severally, the number of Trust Preferred Securities listed 
opposite its name below:                                                        

                                                                [Download Table]

                                                                  Number of 
                                                                    Trust   
                                                                  Preferred 
     Underwriter                                                  Securities
     -----------                                                  ----------
                                                                            
Merrill Lynch, Pierce, Fenner & Smith                                       
     Incorporated................................................ 1,535,000 
Morgan Stanley & Co. Incorporated................................ 1,535,000 
Salomon Smith Barney Inc......................................... 1,530,000 
J.P. Morgan Securities Inc.......................................   300,000 
The Robinson-Humphrey Company, LLC...............................   300,000 
Banc of America Securities LLC...................................   100,000 
BB&T Capital Markets, a Division of Scott & Stringfellow.........   100,000 
Dain Rauscher Wessels............................................   100,000 
First Union Securities, Inc......................................   100,000 
Quick & Reilly, Inc..............................................   100,000 
Legg Mason Wood Walker, Inc. ....................................   100,000 
SunTrust Equitable Securities....................................   100,000 
Wachovia Securities, Inc. .......................................   100,000 
                                                                  --------- 
     Total....................................................... 6,000,000 
                                                                  ========= 

   The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Trust Preferred Securities   
are subject to the approval of specified legal matters by their counsel and to  
other conditions. In the Underwriting Agreement, the several Underwriters have  
agreed, subject to the terms and conditions described in the Underwriting       
Agreement, to purchase all the Trust Preferred Securities offered in this       
issuance if any of the Trust Preferred Securities are purchased. In the event   
of default by an Underwriter, the Underwriting Agreement provides that, in some 
circumstances, the purchase commitments of the nondefaulting Underwriters may   
be increased or the Underwriting Agreement may be terminated.                   

The Underwriters initially propose to offer the Trust Preferred     
Securities directly to the public at the initial public offering price set      
forth on the cover page of this prospectus and to dealers at the price less a   
concession not in excess of $.50 per Trust Preferred Security. The Underwriters 
may allow, and the dealers may reallow, a concession not in excess of $.25 per  
Trust Preferred Security to other dealers. After the initial offering of the    
Trust Preferred Securities, the public offering price, concession and other     
selling terms may be charged.                                                   

   Because the proceeds of the sale of the Trust Preferred Securities will
ultimately be used to purchase the Junior Subordinated Debentures of AGL        
Capital, the Underwriting Agreement provides that AGL Capital will pay to the   
Underwriters as compensation for their services $.7875 per Trust Preferred      
Security, or $4,725,000 in the aggregate. AGL Capital will also pay other       
expenses of the offering which it expects to be approximately $541,300.         

     AGL Capital and AGL Resources have agreed that, without the prior written
consent of the representatives, on behalf of the Underwriters, they will not,   
during the period ending 30 days after the date of this prospectus directly or  
indirectly, issue, sell, offer or contract to sell, grant any option for the    
sale of, or otherwise transfer or dispose of, any securities of such entities   
which are of the same class as the Trust Preferred Securities.                  

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     AGL Capital and AGL Resources have agreed that, without the prior written
consent of the representatives, on behalf of the Underwriters, they will not,   
from the date of this prospectus through the Closing Date, directly or          
indirectly, issue, sell, offer or contract to sell or grant any option for the  
sale of, any debt securities with a maturity greater than one year or           
guarantees of any such securities.                                              

    Prior to this offering, there has been no market for the Trust Preferred
Securities. The Trust plans to list the Trust Preferred Securities on the New   
York Stock Exchange, and trading of the Trust Preferred Securities is expected  
to begin within a 30 day period after the Trust Preferred Securities are first  
issued. In order to meet all of the requirements for listing the Trust          
Preferred Securities on the New York Stock Exchange, the Underwriters have      
agreed to sell in lots of 100 or more the Trust Preferred Securities to a       
minimum of 400 beneficial holders. The Underwriters have advised AGL Capital    
that they intend to make a market in the Trust Preferred Securities but are not 
obligated to do so and may discontinue market making at any time without        
notice. No assurance can be given as to the liquidity of the trading market for 
the Trust Preferred Securities.                                                 

  In order to facilitate the offering of the Trust Preferred Securities,
the Underwriters may engage in transactions that stabilize, maintain, or        
otherwise affect the price of the Trust Preferred Securities. Specifically, the 
Underwriters may over-allot in connection with the offering, creating a short   
position in the Trust Preferred Securities for their account. In addition, to   
cover over-allotments or stabilize the price of the Trust Preferred Securities, 
the Underwriters may bid for, and purchase, the Trust Preferred Securities in   
the open market. Finally, the underwriting syndicate may reclaim selling        
concessions allowed to an Underwriter or a dealer for distributing the Trust    
Preferred Securities in the offering if the syndicate repurchases previously    
distributed Trust Preferred Securities in transactions to cover syndicate short 
positions, in stabilization transactions, or otherwise. Any of these activities 
may stabilize or maintain the market price of the Trust Preferred Securities    
above independent market levels. The Underwriters are not required to engage in 
these activities, and may end any of these activities at any time.              

 AGL Capital, AGL Resources and the Trust have agreed to indemnify the
Underwriters against, or contribute to payments the Underwriters may be         
required to make in respect of, certain liabilities, including liabilities      
under the Securities Act.                                                       

  Some of the Underwriters engage in transactions with, and from time to
time have performed services for, AGL Capital and its subsidiaries in the       
ordinary course of business.                                                    

LEGAL MATTERS 

 Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities and Common Securities will be passed upon by Richards,     
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to AGL    
Resources and the Trust. The validity of the Junior Subordinated Debentures and 
certain matters relating thereto will be passed upon on behalf of AGL Capital   
by Marshall Hill Cassas & de Lipkau, Reno, Nevada. The validity of the          
Guarantee and certain matters relating thereto will be passed upon on behalf of 
AGL Resources by Long Aldridge & Norman LLP, Atlanta, Georgia. Long Aldridge &  
Norman LLP will also pass upon certain matters relating to United States        
federal income tax consequences. Certain legal matters will be passed upon for  
the Underwriters by Simpson Thacher & Bartlett, New York, New York. Counsel for 
AGL Resources, AGL Capital, the Trust and the Underwriters will rely on the     
opinion of Richards, Layton & Finger, P.A., as to matters of Delaware law.      

EXPERTS 

     The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from AGL Resources Inc.'s 
Annual Report on Form 10-K for the year ended September 30, 2000 have been      
audited by Deloitte & Touche LLP, independent auditors, as stated in their      
report, which is incorporated herein by reference, and have been so             
incorporated in reliance upon the report of such firm given upon their          
authority as experts in accounting and auditing.                                

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6,000,000 8% Trust Preferred Securities 
(Liquidation Amount $25 Per Trust Preferred Security) 

AGL Capital Trust II

Fully and unconditionally guaranteed by 
AGL Resources Inc.

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

PROSPECTUS

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

Merrill Lynch & Co. 

Morgan Stanley Dean Witter

Salomon Smith Barney

JPMorgan

Robinson-Humphrey 

May 14, 2001

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

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B1’ Filing		Date		First		Last			Other Filings
		5/21/06		7		32
		8/15/01		6		30
		5/21/01		1		30
Filed as of:		5/15/01
Filed on:		5/14/01		1		52			8-K
		5/4/01		4					10-Q,  S-3
		4/27/01		4					8-K
		4/26/01		4					8-K
		4/17/01		13
		3/31/01		4		17			10-Q,  U-9C-3
		3/23/01		15
		3/2/01		13					U-1/A
		3/1/01		4					8-K
		2/23/01		4					424B2,  8-K
		2/9/01		4					10-Q
		12/31/00		4					10-Q,  U-9C-3
		12/20/00		4					8-K/A
		12/18/00		4					10-K405,  DEF 14A
		11/17/00		4					8-K
		10/18/00		4					35-CERT,  8-K
		10/6/00		4					8-K,  8-K/A
		10/1/00		12
		9/30/00		4		51			10-K405
		8/15/00		13
		3/31/00		17					10-Q
									List all Filings