UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
     
FORM 8-K
     
CURRENT REPORT
     
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
     
     
Date of Report (Date of earliest event reported): December 7, 2011
     
     
AGL RESOURCES INC.
(Exact name of registrant as specified in its charter)
     
Georgia
1-14174
58-2210952
(State or other jurisdiction of incorporation)
(Commission File No.)
(I.R.S. Employer Identification No.)
     
     
Ten Peachtree Place NE, Atlanta, Georgia 30309
(Address and zip code of principal executive offices)
     
     
404-584-4000
(Registrant's telephone number, including area code)
     
     
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 

 

Item 5.03.    Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On December 6, 2010, AGL Resources Inc. (“AGL Resources” or the “Company”) and Nicor Inc. (“Nicor”) entered into an Agreement and Plan of Merger, a copy of which was filed with the Securities and Exchange Commission (“SEC”) on December 7, 2010, that provides for the merger of a wholly owned subsidiary of AGL Resources into Nicor. 
 
On December 9, 2011, in connection with the closing of the merger and as previously approved by the Company’s shareholders at a special meeting of the shareholders of the Company held on June 14, 2011, the Company adopted and filed Articles of Amendment to the Company’s Amended and Restated Articles of Incorporation (Articles of Amendment) to increase the number of directors who may serve on the Company's Board of Directors ("Board") from 15 to 16, each of whom will serve one-year terms upon their election or reelection at the annual meeting of shareholders.  Effective the same date, the Company amended its Bylaws to increase the number of directors who may serve on the Board from 15 to 16 and to delete the Board membership criteria requiring directors of the Company to own at least 100 shares of Company common stock.  These amendments reflect changes contemplated or necessitated by the Merger Agreement, which are described in the Company’s Registration Statement on Form S-4 filed with the SEC on February 4, 2011, as amended.
 
The Articles of Amendment and amended Bylaws are effective as of December 9, 2011.  A copy of the Articles of Amendment and amended Bylaws are attached hereto as Exhibit 3.1 and Exhibit 3.2, respectively, and are incorporated herein by reference.
 
Item 8.01.   Other Events.
 
As previously disclosed, on December 6, 2010, the Company and Nicor entered into the Merger Agreement, which  provides for the merger of a wholly owned subsidiary of AGL Resources into Nicor.  On December 7, 2011, AGL Resources and Nicor jointly announced that the companies received regulatory approval from the Illinois Commerce Commission for the merger in accordance with Section 7-204 of the Illinois Public Utilities Act.  A copy of the press release is attached hereto as Exhibit 99.1. Additionally, on December 9, 2011, AGL Resources announced that it had completed its merger with Nicor.
 
Item 9.01.   Financial Statements and Exhibits.

(a)  
Financial Statements of Businesses Acquired.
 
The historical audited consolidated balance sheets of Nicor as of December 31, 2010 and 2009, and the audited consolidated statements of income, cash flows, common equity, and comprehensive income for each of the three years in the period ended December 31, 2010 are attached as Exhibit 99.2. The historical unaudited condensed consolidated financial statements, and explanatory notes, of Nicor as of September 30, 2011 and 2010 are attached as Exhibit 99.3.

(b)  
Pro Forma Financial Information.
 
The unaudited pro forma condensed combined consolidated financial statements and explanatory notes relating to AGL Resources Inc.’s acquisition of Nicor are attached as Exhibit 99.4. The unaudited pro forma condensed combined consolidated statements of income for the nine months ended September 30, 2011, and the year ended December 31, 2010, give effect to the merger as if it were completed on January 1, 2010. The unaudited pro forma condensed combined statement of financial position as of September 30, 2011, gives effect to the merger as if it were completed on September 30, 2011.

(d) Exhibits.
     
Exhibit No.
 
Description
3.1   Amended and Restated Articles of Incorporation of AGL Resources Inc., filed December 9, 2011 with the Secretary of State of the state of Georgia.
3.2   Bylaws of AGL Resources Inc., as amended on December 9, 2011.
23.1
 
Consent of Deloitte & Touche LLP, independent registered public accounting firm.
99.1
 
Press release dated December 7, 2011.
99.2
 
Audited consolidated balance sheets of Nicor Inc. as of December 31, 2010 and 2009, and the audited consolidated statements of income, cash flows, common equity, and comprehensive income for each of the three years in the period ended December 31, 2010.
99.3
 
Unaudited condensed consolidated financial statements, and explanatory notes, of Nicor Inc. as of September 30, 2011 and 2010.
99.4
 
Unaudited pro forma condensed combined consolidated financial statements and explanatory notes.



 
 

 

SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
 
AGL RESOURCES INC.
 
(Registrant)
 
Date: December 13, 2011
/s/Andrew W. Evans
 
Andrew W. Evans
Executive Vice President and Chief Financial Officer



 
 

 


Exhibit Index


Exhibit No.
Description
  3.1 Amended and Restated Articles of Incorporation of AGL Resources Inc., filed December 9, 2011 with the Secretary of State of the state of Georgia.
  3.2 Bylaws of AGL Resources Inc., as amended on December 9, 2011.
23.1
Consent of Deloitte & Touche LLP, independent registered public accounting firm.
99.1
Press release dated December 7, 2011.
99.2
Audited consolidated balance sheets of Nicor Inc. as of December 31, 2010 and 2009, and the audited consolidated statements of income, cash flows, common equity, and comprehensive income for each of the three years in the period ended December 31, 2010.
99.3
Unaudited condensed consolidated financial statements, and explanatory notes, of Nicor Inc. as of September 30, 2011 and 2010.
99.4
Unaudited pro forma condensed combined consolidated financial statements and explanatory notes.

 

Exhibit 3.1


CERTIFICATE OF RESTATEMENT
OF
AGL RESOURCES INC.


Pursuant to the provisions of Section 14-2-1007 of the Georgia Business Corporation Code (the “Code”), AGL Resources Inc., a Georgia corporation (the “Corporation”), certifies as follows:

1.
The attached Amended and Restated Articles of Incorporation of the Corporation contain
an amendment of Section 3.01 of the Amended and Restated Articles of Incorporation of the Corporation, as amended (the “Amendment”), which amendment was adopted by the Board of Directors of the Corporation on December 6, 2010.

2.
The Amendment was duly approved by the shareholders of the Corporation on June 14, 2011 in accordance with the provisions of Section 14-2-1003 of the Code.

3.
The attached Amended and Restated Articles of Incorporation of the Corporation supersede the previously existing Amended and Restated Articles of Incorporation of the Corporation, as amended.


IN WITNESS WHEREOF, the undersigned executes this Certificate of Restatement this 9th day of December, 2011.

AGL RESOURCES INC.


By: /s/ Myra C. Bierria
Myra C. Bierria
       Corporate Secretary


 
 

 
 
 
AMENDED AND RESTATED
 
ARTICLES OF INCORPORATION
 
OF
 
AGL RESOURCES INC.
 
I.
 
CORPORATE NAME
 
The name of the Corporation is AGL Resources Inc. (hereinafter, the "Corporation").
 
 
II.
 
AUTHORIZED SHARES

Section 2.01.Common Stock:  The Corporation shall have authority to issue not more than Seven Hundred Fifty Million (750,000,000) shares of Common Stock, par value $5.00 per share (the "Common Stock"), which shall have unlimited voting rights and be entitled to receive the net assets of the Corporation upon dissolution.

Section 2.02.  Preferred Stock:  The Corporation shall have authority to issue Ten Million (10,000,000) shares of Preferred Stock, with or without par value, which may be of one or more series, with such voting power, preferences, designations, rights, qualifications, limitations, or restrictions, and subject to application dependent upon determination of facts ascertainable outside the Articles of Incorporation, as the Board of Directors may from time to time determine in the resolution and statement filed with the Secretary of State of Georgia as an amendment to these Articles of Incorporation.

Section 2.03.  Class A Junior Participating Preferred Stock:  The Corporation shall have authority to issue Ten Million (10,000,000) shares of Class A Junior Participating Preferred Stock (the "Class A Preferred Stock"), with such voting power, preferences, designations, rights, qualifications, limitations, or restrictions as set forth below.

(1)  Dividends:  Subject to the rights of the holders of any shares of any class or series of Preferred Stock of the Corporation (the "Preferred Stock") ranking prior and superior to the Class A Preferred Stock with respect to dividends, the holders of the Class A Preferred Stock, in preference to the holders of Common Stock and of any other stock of the Corporation ranking junior to the Class A Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly, dividends payable in cash on the last day of January, April, July, and October in each year (each such date being referred to herein as a "Dividend Payment Date"), commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a share of Class A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) One Dollar ($1.00) or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock, declared on the Common Stock since the immediately preceding Dividend Payment Date or, with respect to the first Dividend Payment Date, since the first issuance of any share or fraction of a share of Class A Preferred Stock.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Class A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(2)  Declaration of Dividends:  The Corporation shall declare a dividend or distribution on the Class A Preferred Stock as provided in paragraph (1) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Dividend Payment Date and the next subsequent Dividend Payment Date, a dividend of One Dollar ($1.00) per share on the Class A Preferred Stock shall nevertheless be payable, when, as and if declared, on such subsequent Dividend Payment Date.

(3)  Dividends to be Cumulative:  Dividends shall begin to accrue and be cumulative, whether or not earned or declared, on outstanding shares of Class A Preferred Stock from the Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Dividend Payment Date or is a date after the record date for the determination of holders of shares of Class A Preferred Stock entitled to receive a quarterly dividend and before such Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Dividend Payment Date.  Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Class A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date for the determination of holders of shares of Class A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

(4)  Voting Rights:  The holders of shares of Class A Preferred Stock shall have the following voting rights:

(a)  Subject to the provision for adjustment hereafter set forth and except as otherwise provided in this Article or required by law, each share of Class A Preferred Stock shall entitle the holder thereof to 100 votes on all matters upon which the holders of the Common Stock of the Corporation are entitled to vote.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Class A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b)  Except as otherwise provided herein, in this Article or in any Articles of Amendment of the Articles of Incorporation creating a class or series of Preferred Stock or any similar stock, and except as otherwise provided by law, the holders of shares of Class A Preferred Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

(c)  Except as set forth herein, or as otherwise provided by law, holders of Class A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

(5)Certain Restrictions:  (a)  Whenever quarterly dividends or other dividends or distributions payable on the Class A Preferred Stock as provided in subsection (2) are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not earned or declared, on shares of Class A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i)  declare or pay dividends, or make any other distributions, on any class or series of stock ranking junior (as to dividends) to the Class A Preferred Stock;

(ii)  declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (as to dividends) with the Class A Preferred Stock, except dividends paid ratably on the Class A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii)  redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (as to dividends and upon dissolution, liquidation, or winding up) to the Class A Preferred Stock or rights, warrants or options to acquire such junior stock; or

(iv)  redeem or purchase or otherwise acquire for consideration any shares of Class A Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Class A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(b)  The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration, any shares of stock of the Corporation, unless the Corporation could, under paragraph (a) of this Section 2.03(5), purchase or otherwise acquire such shares at such time and in such manner.

(6)  Reacquired Shares:  Any shares of Class A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof.

(7)  Liquidation, Dissolution or Winding Up:  Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of the Common Stock or of shares of any other stock of the Corporation ranking junior, upon liquidation, dissolution or winding up, to the Class A Preferred Stock unless, prior thereto, the holders of shares of Class A Preferred Stock shall have received One Hundred Dollars ($100) per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or declared, to the date of such payment, provided that the holders of shares of Class A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provisions for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (ii) to the holders of shares of stock ranking on a parity upon liquidation, dissolution or winding up with the Class A Preferred Stock, except distributions made ratably on the Class A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Class A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(8)  Consolidation, Merger, or Other Business Combinations:  In case the Corporation shall enter into any consolidation, merger, combination, share exchange or other transaction in which the shares of Common Stock are converted into, exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Class A Preferred Stock shall at the same time be similarly converted into, exchanged for or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted or exchanged.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Class A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(9)  No Redemption:  The shares of Class A Preferred Stock shall not be redeemable from any holder.

(10)  Rank:  The Class A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, junior to all other classes and series of Preferred Stock and senior to the Common Stock.

(11)  Amendment:  If any proposed amendment to these Articles of Incorporation would alter, change or repeal any of the preferences, powers or special rights given to the Class A Preferred Stock so as to affect the Class A Preferred Stock in any manner specified in Section 14-2-1004 of the Georgia Business Corporation Code (the “Code”), as now in effect or hereafter amended, then the holders of the Class A Preferred Stock shall be entitled to vote separately as a group upon such amendment, and the affirmative vote of two-thirds of the outstanding shares of the Class A Preferred Stock shall be necessary for the adoption thereof, in addition to such other vote as may be required by the Code.


III.
 
DIRECTORS

Section 3.01.  Size of Board:  The business of the Corporation shall be managed by or under the authority of a Board of Directors of not less than five (5) nor more than sixteen (16) Directors, as may from time to time be fixed solely by the Board of Directors.

Section 3.02. Beginning with the 2010 annual meeting of shareholders, and at each annual meeting of shareholders thereafter, all directors elected at the annual meeting of shareholders shall be elected for a one-year term expiring at the next annual meeting of shareholders. Each director who is serving as a director immediately following the 2010 annual meeting of shareholders, or is thereafter elected a director, shall hold office until the expiration of the term for which he or she was elected, and until his or her successor shall be elected and shall qualify, or until his or her earlier death, resignation, retirement, removal or disqualification from office. During the intervals between annual meetings of shareholders, any vacancy occurring in the Board of Directors caused by resignation, removal, death or other incapacity, and any newly created Directorships resulting from an increase in the number of Directors, shall be filled by a majority vote of the Directors then in office, whether or not a quorum.  Directors may be elected by shareholders only at an annual meeting of shareholders.  Each Director chosen to fill a vacancy shall hold office for the unexpired term in respect of which such vacancy occurred.  Each Director chosen to fill a newly created Directorship shall hold office until the election and qualification of his or her successor at the next election of Directors by the shareholders.

IV.
 
CONSIDERATIONS AVAILABLE TO THE BOARD OF DIRECTORS

In discharging the duties of their respective positions and in determining what is believed to be in the best interests of the Corporation, the Board of Directors, committees of the Board of Directors, and individual Directors, in addition to considering the effects of any action on the Corporation or its shareholders, may consider the interests of the employees, customers, suppliers and creditors of the Corporation and its subsidiaries, the communities in which offices or other establishments of the Corporation and its subsidiaries are located, and all other factors the Directors consider pertinent.
V.
 
LIMITATIONS ON DIRECTOR LIABILITY

No Director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach of duty of care or other duty as a Director, except for liability (1) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (2) for acts or omissions which involve intentional misconduct or a knowing violation of the law; (3) for the types of liability set forth in Section 14-2-832 of the Code; or (4) for any transaction from which the Director received an improper personal benefit.  If the Code is amended after the effective date of this Article to authorize corporate action further limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be limited to the fullest extent permitted by the Code, as so amended.  Any repeal or modification of the foregoing paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a Director of the Corporation existing at the time of such repeal or modification.
 
VI.
 
REPURCHASED SHARES

Shares of stock of the Corporation acquired by the Corporation shall constitute treasury shares, unless the Board of Directors by resolution otherwise provides.

VII.
 
INDEMNIFICATION OF DIRECTORS

Section 7.01.  Right to Indemnification:  Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, derivative, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact he or she, or a person of whom he or she is a legal representative, is or was a Director shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Code, as the same exists or may hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than the Code permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such Director in connection with any such proceeding.  Such indemnification shall continue as to a Director who has ceased to be a Director and shall inure to the benefit of the Director's heirs, executors and administrators.  Except with respect to proceedings to enforce rights to indemnification by a Director, the Corporation shall indemnify any such Director in connection with a proceeding (or part thereof) initiated by such Director only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.  The right to indemnification conferred in this Article shall be a contract right.

Section 7.02.  Advance for Expenses:  The Corporation shall pay for or reimburse the actual and reasonable expenses incurred by a Director who is a party to a proceeding in advance of final disposition of the proceeding if the Director furnishes the Corporation:  (1) a written affirmation of his or her good faith belief that  his or her conduct does not constitute behavior of the kind set forth in Section 14-2-856(b) of the Code; and (2) a written undertaking, executed personally or on his or her behalf, to repay any advances if it is ultimately determined that he or she is not entitled to indemnification for such expenses under this Article or otherwise.  The undertaking must be an unlimited general obligation of the Director but need not be secured and may be accepted without reference to the Director's financial ability to make repayment.

Section 7.03.  Enforcement:  The rights to indemnification provided by this Article shall apply to all proceedings described in Section 7.01 of this Article, regardless of whether any provision of this Article has been amended or repealed subsequent to such acts or omissions.  If a claim for indemnification under this Article is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the Director may apply for indemnification or advancement of expenses to a court of competent jurisdiction pursuant to Section 14-2-854 of the Code.  If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Director also shall be entitled to be paid the expenses of prosecuting or defending such suit.  For purposes of this Article, references to the "Corporation" shall include, in addition to the Corporation, any merging or consolidating corporation (including any merging or consolidating corporation of a merging or consolidating corporation) absorbed in a merger or consolidation with the Corporation, so that any person who is or was a Director of such merging or consolidating corporation or who is or was serving at the request of such merging or consolidating corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the Corporation as he would if he had served the Corporation in the same capacity.

VIII.
 
SPECIAL MEETINGS OF SHAREHOLDERS

At any time in the interval between annual meetings of shareholders, special meetings of the shareholders may be called by the Chairman of the Board of Directors, the President, the Board of Directors or the Executive Committee by vote at a meeting, by a majority of the Directors in writing without a meeting, or by the holders of not less than 100% of the shares of Common Stock then outstanding and entitled to vote.

IX.
 
SHAREHOLDERS' RIGHT TO DISSENT

Section 9.01.  Dissenters' Rights:  A record shareholder of the Corporation is entitled to dissent from, and to obtain payment of the fair value of his shares in the event of the occurrence of, any of the events described in Section 11.01(4) of these Articles of Incorporation with an "Interested Shareholder" as defined in Section 9.02 of these Articles of Incorporation unless the transaction is approved by the Board of Directors in the manner described in Section 11.05 of these Articles of Incorporation.

Section 9.02.  "Interested Shareholder:"  For purposes of this Article, an "Interested Shareholder" shall mean any person, other than the Corporation or its subsidiaries, that:

(1)  Is the beneficial owner of 10% or more of the voting power of the outstanding voting shares of the Corporation; or

(2)  Is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Corporation and, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting shares of the Corporation (an "Affiliate").

For the purpose of determining whether a person is an Interested Shareholder, the number of voting shares deemed to be outstanding shall not include any unissued voting shares which may be issuable pursuant to any agreement, arrangement, or understanding.

Section 9.03.  "Record Shareholder:"  For purposes of this Article, a "record shareholder" shall mean any person in whose name shares are registered in the records of the Corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the Corporation.
X.
 
AMENDMENT OF BYLAWS

Section 10.01.  Amendment of Bylaws:  No action shall be taken by the shareholders with respect to altering, amending or repealing the Bylaws of the Corporation, unless such action has been recommended by the Board of Directors, except by the affirmative vote of the holders of at least two-thirds (66-2/3%) of all of the outstanding shares entitled to vote.  Such affirmative vote shall be in addition to any shareholder vote that would be required without reference to this Article.

Section 10.02.  Amendment of Article X:  The affirmative vote of shareholders required to alter, amend or repeal this Article, or to alter, amend or repeal any other provision of the Articles of Incorporation of the Corporation in any respect which would or might have the effect, directly or indirectly, of modifying, permitting any action inconsistent with, or permitting circumvention of, this Article shall be at least two-thirds (66-2/3%) of all of the outstanding shares entitled to vote, excluding from the number of shares deemed to be outstanding shares for purposes of such vote to amend, alter or repeal this Article, all shares beneficially owned by an "Interested Shareholder" as that term is defined in Section 9.02 of these Articles of Incorporation; provided, however, that if such proposed alteration, amendment or repeal is approved by a majority of the "Continuing Directors" as that term is defined in Section 11.01(5) of these Articles of Incorporation, provided at the time of such approval the Continuing Directors constitute at least a majority of the Board of Directors, then such proposed alteration, amendment or repeal shall require for approval only such affirmative vote as is required by law and by any other provision of these Articles of Incorporation or the Bylaws.  The two-thirds (66-2/3%) affirmative vote provided for herein shall be in addition to any shareholder vote that would be required without reference to this Article.
 
XI.
 
BUSINESS COMBINATIONS WITH RELATED PERSONS

Section 11.01.  Definitions:

The following definitions shall apply for purposes of this Article XI:

(1)  Affiliate:  An "Affiliate" of, or Person "affiliated with," a specified Person is a Person that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a specified Person.  The term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise and the beneficial ownership of shares representing 10% or more of the votes entitled to be cast by the Corporation's voting shares shall create an irrebuttable presumption of control.

(2)  Associate:  The term "Associate," when used to indicate a relationship with any Person, means (a) any Person (other than the Corporation or a subsidiary of the Corporation) of which such Person is an officer, director or partner or is the Beneficial Owner of 10% or more of any class of equity securities, (b) any trust or other estate in which such Person has a beneficial interest of 10% or more or as to which such Person serves as a trustee or in a similar fiduciary capacity, and (c) any relative or spouse of such Person, or any relative of such spouse who has the same home as such Person.

(3)  Beneficial Owner:  A Person shall be considered to be the "Beneficial Owner" of any equity securities of the Corporation:

(a)  which such Person or any of such Person's Affiliates or Associates owns, directly or indirectly;

(b)  which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has (i) the right to acquire, whether such right is exercisable immediately or only after the passage of time, by agreement, arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise; or (ii) the right to vote pursuant to any agreement, arrangement, or understanding; or

(c)  which are owned, directly or indirectly, by any other Person  with which such Person or any of its Affiliates or Associates has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of equity securities of the Corporation.

(4)  Business Combination:  The term "Business Combination" shall mean:

(a)  a merger or consolidation of the Corporation or any Subsidiary with or into any other Person, or of such other Person with or into the Corporation or any Subsidiary;

(b)  any sale, exchange, lease, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, of the assets of the Corporation or any Subsidiary having an aggregate book value as of the end of the Corporation's most recently ended fiscal quarter of 10% or more of the net assets of the Corporation to any other Person;

(c)  any sale, exchange, lease, mortgage, pledge, transfer or other disposition for value by any other Person of any assets to the Corporation or any Subsidiary in exchange for Outstanding Shares, or outstanding shares of any Subsidiary, where the result of such transaction is that such other Person is the Beneficial Owner of a majority of the Outstanding Shares;

(d)  the liquidation or dissolution of the Corporation or any Subsidiary proposed by or on behalf of a Related Person;

(e)  any share exchange in which the shares of Common Stock of the Corporation or of any Subsidiary having an aggregate book value as of the end of the Corporation's most recently ended fiscal quarter of 10% or more of the net assets of the Corporation are exchanged for shares, other securities, cash or other property; or

(f)  any amendment of these Articles of Incorporation which would effect a reclassification of any securities of the Corporation (including a reverse stock split or the equivalent thereof) or any merger of the Corporation with any of its Subsidiaries, which has the effect, directly or indirectly, of increasing the proportionate share of any class of the Outstanding Shares of the Corporation or any Subsidiary beneficially owned by a Related Person.

(5)  Continuing Director:  The term "Continuing Director" shall mean any member of the Board of Directors who is not a Related Person or an Affiliate or Associate of a Related Person or of any such Affiliate or Associate, or a representative of a Related Person or of any such Affiliate or Associate, and was a Director of the Corporation prior to the time a Related Person became such, and any successor to such Continuing Director who is not an Affiliate or Associate of a Related Person and was recommended by a majority of the Continuing Directors then on the Board of Directors, provided that at the time of such recommendation, Continuing Directors comprise a majority of the Board.  If there is no Related Person, all members of the Board of Directors shall be deemed to be "Continuing Directors."

(6)  Date of Determination:  The term "Date of Determination" shall mean (a) the date on which a binding agreement (except for the fulfillment of conditions precedent, including, without limitation, votes of shareholders to approve such transaction) is entered into by the Corporation, as authorized by the Board of Directors, and another Person providing for any Business Combination, or (b) if such an agreement as referred to in (a) above is amended so as to make it less favorable to the Corporation or its shareholders, the date on which such amendment is entered into by the Corporation, as authorized by the Board of Directors, or (c) in cases where neither (a) nor (b) shall be applicable, the record date for the determination of shareholders of the Corporation entitled to notice of and to vote upon the transaction in question.  The Board of Directors shall have the power and duty to determine pursuant to the foregoing the Date of Determination as to any transaction for purposes of this Article XI.  Any such determination made by the Board of Directors in good faith shall be conclusive and binding for all purposes of Article XI.

(7)  Fair Market Value:  The term "Fair Market Value" shall mean, as of any date:  (a) in the case of stock, either (i) the median of the averages of the daily high and low sale prices during the 30-day period immediately preceding such date of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed; or (ii) if such stock is not listed on any such exchange, the median of the averages of the daily closing bid and closing asked quotations on the National Association of Securities Dealers Automated Quotations System ("NASDAQ") (or any successor system then in use), or the median of the averages of the daily high and low sales prices on the NASDAQ National Market System, if applicable, for such stock during the 30-day period preceding such date, or if no such quotations are then available, the fair market value as determined in good faith by a majority of the Continuing Directors; and (b) in the case of property other than cash or stock, the fair market value of such property on such date as determined in good faith by a majority of the Continuing Directors.

(8)  Outstanding Shares:  The term "Outstanding Shares" shall mean any issued shares of capital stock of the Corporation with the right generally to vote for the election of Directors, but shall not include any shares (prior to issue) which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants, options or otherwise.

(9)  Person:  The term "Person" shall mean any individual, partnership, corporation, group or other entity (other than the Corporation, any Subsidiary of the Corporation or a trustee holding stock for the benefit of employees of the Corporation or its Subsidiaries, or any one of them, pursuant to one or more employee benefit plans or arrangements).  When two or more Persons act as a partnership, limited partnership, syndicate, association or other group for the purposes of acquiring, holding, voting or disposing of the Outstanding Shares, such partnership, syndicate,  association, or group shall be deemed a "Person."

(10)  Related Person:  The term "Related Person" shall mean any Person which, together with the Affiliates and Associates of such Person, is the Beneficial Owner as of the Date of Determination or immediately prior to the consummation of a Business Combination, or both, of at least that number of shares of stock of the Corporation equal to 20% of all of the Outstanding Shares, but does not include any one or a group of more than one Continuing Director.  The term "Related Person" shall include the Affiliates and Associates of such Related Person.

(11)  Subsidiary:  The term "Subsidiary" shall mean any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation.

Section 11.02.  Determination of Application of Article XI: The Board of Directors shall have the power and the duty to determine for the purposes of Article XI, on the basis of the information known to the Board of Directors, any fact determinable under Article XI and the applicability of all definitions to transactions contemplated by Article XI, including but not limited to the following:

1)  the number of shares of stock of the Corporation owned by a Person;

(2)  whether a Person is an Affiliate or Associate of another; and

(3)  the fair market value, to be determined pursuant to the definition of "Fair Market Value" contained in Section 11.01, of consideration other than cash received or to be received for Outstanding Shares.

Any such determination shall be conclusive and binding for all purposes of Article XI, provided that such determination is approved by a majority of the Continuing Directors then in office.

Section 11.03.  Voting Requirements for Business Combinations with Related Persons: Except as set forth in Sections 11.04 and 11.05 of this Article XI, if as of the Date of Determination with respect to any Business Combination, any Person that is a party to such Business Combination is a Related Person, the affirmative vote or consent of the holders of at least 75% of all Outstanding Shares shall be required to approve such Business Combination.  Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise, and shall be in addition to any shareholder vote which would be required without reference to this Article XI.

Section 11.04.  Nonapplicability of Special Voting Requirements: The provisions of Section 11.03 shall not apply if all of the following conditions shall have been met, provided, however, that nothing contained in this Article XI shall be construed to relieve any Related Person from any fiduciary obligation imposed by law:

(1)  The consideration to be received by the Corporation or per share by holders of Outstanding Shares shall be in cash or in the same form as the consideration given by the Related Person in acquiring Outstanding Shares at any time during the period commencing on the date of the first acquisition by such Related Person of any Outstanding Shares and ending on and including the date upon which the Related Person became a Related Person.  If the Related Person paid for Outstanding Shares with varying forms of consideration, the form of consideration to be received by the Corporation or per share by holders of Outstanding Shares shall be either cash or the form of consideration used to acquire the largest number of Outstanding Shares acquired by the Related Person during such two-year period.

(2)  The Fair Market Value of the consideration received in such Business Combination by the Corporation (analyzed on a per share basis) or per share by holders of Outstanding Shares is not less than the highest per share price (including brokerage commissions, transfer taxes and soliciting dealers' fees) paid by such Related Person in acquiring any of its holdings of Outstanding Shares.

(3)  The ratio of:

(a) the Fair Market Value of the consideration to be received in such Business Combination by the Corporation (analyzed on a per share basis) or per share by holders of Outstanding Shares to

(b) the per share market price of Outstanding Shares immediately prior to the announcement of the Business Combination is at least as great as the ratio of

(c) the highest per share price (including brokerage commissions, transfer taxes and soliciting dealers' fees) which such Related Person has paid for any of the Outstanding Shares acquired by it prior to the Date of Determination to

(d) the per share market price of Outstanding Shares immediately prior to the initial acquisition by such Related Person of any Outstanding Shares.

(4)  If the Related Person is a corporation, the Fair Market Value of the consideration to be received in such Business Combination by the Corporation (analyzed on a per share basis) or per share by holders of Outstanding Shares shall be not less than the earnings per share of Outstanding Shares during the four full consecutive fiscal quarters immediately preceding the Date of Determination for solicitation of votes on such Business Combination multiplied by the then price/earnings multiple (if any) of such Related Person as customarily computed and reported in the financial community.

(5)  The Fair Market Value of consideration to be received in such Business Combination by the Corporation (analyzed on a per share basis) or per share by holders of Outstanding Shares shall be not less than the sum of:

(a)  the higher of (i) the highest gross per share price paid or agreed to be paid by the Related Person to acquire any of the Outstanding Shares of the Corporation beneficially owned by such Related Person or (ii) the highest per share market price for such Outstanding Shares since the Related Person became a Related Person, plus

(b)  an amount equal to the highest price/earnings multiple of the Corporation, as customarily computed and reported in the financial community, attained by the Corporation during the five fiscal years immediately preceding the Date of Determination multiplied by the aggregate amount, if any, by which 10% of such higher per share price determined under (a) above exceeds the smallest quarterly common stock dividend per share (annualized) paid in cash since the date on which such Related Person became a Related Person.

(6)  The Fair Market Value of the consideration to be received in such Business Combination by the Corporation (analyzed on a per share basis) or per share by holders of Outstanding Shares shall not be less than the per share book value of Outstanding Shares at the end of the most recent fiscal year preceding the Date of Determination, calculated in accordance with generally accepted accounting methods.

(7)  After such Related Person has become a Related Person and prior to the consummation of such Business Combination:  (a)  except as approved by two-thirds of the Continuing Directors, there shall have been no failure to declare and pay at the regular date therefor any dividends (whether or not cumulative) on any outstanding Preferred Stock of the Corporation; and (b) there shall have been (i) no reduction in the annual dividend from that most recently paid on Outstanding Shares (except as necessary to reflect any subdivision of the Outstanding Shares through stock dividend, stock split, or otherwise), except as approved by two-thirds of the Continuing Directors, and (ii) an increase in such annual dividend as necessary to reflect any reclassification (including a reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of Outstanding Shares, unless the failure so to increase such annual dividend is approved by two-thirds of the Continuing Directors.

(8)  After such Related Person has become a Related Person, such Related Person shall not have received the benefit, directly or indirectly (except proportionately as a shareholder of the Corporation) of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise.

Section 11.05.  Approval by Continuing Directors: The provisions of Sections 11.03 and 11.04 shall not be applicable to any particular Business Combination or other event covered thereby, and such Business Combination or other event covered thereby shall require only such affirmative vote as is required by law and by any other provision of these Articles of Incorporation, if both of the following conditions with respect to such Business Combination or other event shall have been satisfied:  (1)  the Business Combination or other event shall have been approved by two-thirds of the Continuing Directors; and (2) at the time of such approval, Continuing Directors comprised at least a majority of the Board of Directors.

Section 11.06.  Amendment: The affirmative vote of shareholders required to alter, amend or repeal this Article XI, or to alter, amend, or repeal any other provision of the Articles of Incorporation of the Corporation in any respect which would or might have the effect, directly or indirectly, of modifying, permitting any action inconsistent with, or permitting circumvention of, this Article XI (including, but not limited to, any amendment of the Articles of Incorporation which would effect a reclassification of any securities of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of Outstanding Shares, or outstanding shares of any Subsidiary, beneficially owned by a Related Person) shall be at least 75% of all of the Outstanding Shares; provided, however, that if such proposed alteration, amendment or repeal is approved by two-thirds of the Continuing Directors and at the time of such approval Continuing Directors comprise at least a majority of the Board of Directors, then such proposed alteration, amendment or repeal shall require for approval only such affirmative vote as is required by law and by any other provision of these Articles of Incorporation.  The 75% affirmative vote provided for above shall be in addition to any shareholder vote which would be required without reference to this Article XI.

Exhibit 3.2



AGL RESOURCES INC.
(as amended December 9, 2011)







BYLAWS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

 

TABLE OF CONTENTS

Page

ARTICLE I
 
SHAREHOLDERS
1
 
SECTION 1.1.
Date, Time and Place of Meetings
1
 
SECTION 1.2.
Annual Meetings
1
 
SECTION 1.3.
Special Meetings
2
 
SECTION 1.4.
Determination of Validity of Notice of Shareholder
 
   
  Proposal for Business
3
 
SECTION 1.5.
Notice of Meetings
3
 
SECTION 1.6.
Record Date
3
 
SECTION 1.7.
Shareholders' List for Meeting
4
 
SECTION 1.8.
Quorum
4
 
SECTION 1.9.
Adjournment of Meetings
4
 
SECTION 1.10.
Vote Required
4
 
SECTION 1.11.
Voting Entitlement of Shares; Proxies
4
 
SECTION 1.12.
Inspectors of Election
5
       
ARTICLE II
 
BOARD OF DIRECTORS
5
 
SECTION 2.1.
General Powers
5
 
SECTION 2.2.
Number and Tenure
5
 
SECTION 2.3.
Qualifications of Directors
6
 
SECTION 2.3.1.
Vote Required in Uncontested Elections
6
 
SECTION 2.3.2.
Re election after Termination of Principal Employment
7
 
SECTION 2.3.3.
Terminating Events
7
 
SECTION 2.4.
Vacancies
8
 
SECTION 2.5.
Meetings
8
 
SECTION 2.6.
Quorum and Voting
8
 
SECTION 2.7.
Action Without Meeting
9
 
SECTION 2.8.
Remote Participation in a Meeting
9
 
SECTION 2.9.
Compensation of Directors
9
 
SECTION 2.10.
Removal of Directors by Shareholders
9
 
SECTION 2.11.
Nomination of Directors
9
 
SECTION 2.15.
Indemnification
10
 
SECTION 2.15.1.
Determination of Eligibility for Indemnification
10
 
SECTION 2.15.2.
Rights Not Exclusive
10
 
SECTION 2.15.3.
Insurance
11
 
SECTION 2.15.4.
Reports to Shareholders
11
       
ARTICLE III
 
COMMITTEES
11
 
SECTION 3.1.
Committees
11
 
SECTION 3.2.
Meetings of Committees
12
       
ARTICLE IV
 
NOTICES
12
 
SECTION 4.1.
Notice
12
 
SECTION 4.2.
Waiver of Notice
13

 
 

 

ARTICLE V
 
OFFICERS
13
 
SECTION 5.1.
Appointment
13
 
SECTION 5.2.
Resignation and Removal of Officers
14
 
SECTION 5.3.
Vacancies
14
 
SECTION 5.4.
Powers and Duties
14
 
SECTION 5.4.1.
Chairman of the Board of Directors
14
 
SECTION 5.4.2.
Chief Executive Officer
14
 
SECTION 5.4.3.
President
15
 
SECTION 5.4.4.
Vice Presidents
15
 
SECTION 5.4.5
Chief Financial Officer
15
 
SECTION 5.4.6.
Chief Operating Officer
15
 
SECTION 5.4.7.
Corporate Secretary
15
 
SECTION 5.4.8.
Treasurer
16
 
SECTION 5.4.9.
Controller
16
 
SECTION 5.4.10.
Assistant Vice President, Assistant Corporate Secretary and Assistant Treasurer
16
 
 
   
 
SECTION 5.4.11.
Other Officers
17
 
SECTION 5.5.
Officers Holding More Than One Office
17
 
SECTION 5.6.
Compensation
17
       
ARTICLE VI
CAPITAL STOCK
17
 
SECTION 6.1.
Share Certificates
17
 
SECTION 6.2.
Record of Shareholders
17
 
SECTION 6.3.
Lost Certificates
18
 
SECTION 6.4.
Transfers of Shares
18
 
SECTION 6.5.
Transfer Agents and Registrars
18
       
ARTICLE VII
GENERAL PROVISIONS
18
 
SECTION 7.1.
Indemnification of Officers, Employees and Agents
18
 
SECTION 7.2.
Seal
19
 
SECTION 7.3.
Voting Shares in Other Corporations
19
 
SECTION 7.4.
Amendment of Bylaws
19
 
SECTION 7.5.
Execution of Bonds, Debentures, Evidences of Indebtedness, Checks, Drafts and Other Obligations and Orders for Payment
19
 
SECTION 7.6.
Business Combinations
20
       
ARTICLE VIII
EMERGENCY BYLAWS
20
 
SECTION 8.1.
Emergency Bylaws
20
 
SECTION 8.2.
Meetings
20
 
SECTION 8.3
Quorum
20
 
SECTION 8.4.
Bylaws
20
 
SECTION 8.5.
Liability
20
 
SECTION 8.6.
Repeal or Change
20
 
 
  ii

 


ARTICLE I

SHAREHOLDERS

SECTION 1.1.                                Date, Time and Place of Meetings.  Annual and special meetings of the shareholders shall be held on such date and at such time and place, within or without the State of Georgia, as may be stated in the notice of the meeting, or in a duly executed waiver of notice thereof.  If no designation is made, the place of the meeting shall be the principal executive offices of the Company.

SECTION 1.2.                                Annual Meetings.  The annual meeting of the shareholders of the Company shall be held each year for the purposes of electing Directors and of transacting such other business as properly may be brought before the meeting.  To be properly brought before the meeting, business must be brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the Company entitled to vote at the meeting who complies with the procedures set forth in Section 1.2 of this Article; provided, in each case, that such business proposed to be conducted is, under the law, an appropriate subject for shareholder action.

For business to be properly brought before an annual meeting by a shareholder, the shareholder must give timely notice thereof in writing to the Corporate Secretary of the Company.  To be timely, a shareholder's notice must be received by the Corporate Secretary at the principal executive offices of the Company at least 120 calendar days before the first anniversary of the date that the Company's proxy statement was released to shareholders in connection with the previous year's annual meeting of shareholders.  However, if no annual meeting of shareholders was held in the previous year or if the date of the annual meeting of shareholders has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, the notice shall be received by the Corporate Secretary at the principal executive offices of the Company not fewer than the later of (i) 150 calendar days prior to the date of the contemplated annual meeting or (ii) the date which is 10 calendar days after the date of the first public announcement or other notification to the shareholders of the date of the contemplated annual meeting.

Such shareholder's notice to the Corporate Secretary shall set forth with respect to any proposal such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address, as they appear on the Company's books, of the shareholder proposing such business; (iii) the class and number of shares of the Company which are beneficially owned by such shareholder; (iv) the dates upon which the shareholder acquired such shares; (v) documentary support for any claim of beneficial ownership; (vi) any material interest of such shareholder in such business; (vii) a statement in support of the matter and, for proposals sought to be included in the Company's proxy statement, any other information required by Securities and Exchange Commission Rule 14a-8; and (viii) as to each person whom the shareholder proposes to nominate for election or re-election as Director all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended  (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected, and evidence satisfactory to the Company that such nominee has no interests that would limit their ability to fulfill their duties of office).

In addition, if the shareholder intends to solicit proxies from the shareholders of the Company, such shareholder shall notify the Company of this intent in accordance with Securities and Exchange Commission Rule 14a-4 and/or Rule 14a-8.

 

 
 
SECTION 1.3.                                Special Meetings.  The Company shall hold a special meeting of shareholders on call of the Board of Directors or the Executive Committee, the Chairman of the Board of Directors, the President, or, upon delivery to the Company's Corporate Secretary of a signed and dated written demand for the meeting describing the purpose or purposes for the meeting, on call of the holders of 100% of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting.  Only business within the purpose or purposes described in the notice of special meeting required by Section 1.5 below may be conducted at a special meeting of the shareholders.

For business to be properly brought before a special meeting by a shareholder, the shareholder must give timely notice thereof in writing to the Corporate Secretary of the Company. To be timely, a shareholder's notice must be received by the Corporate Secretary at the principal executive offices of the Company at least 120 calendar days prior to the date of the special meeting.

Such shareholder's notice to the Corporate Secretary shall set forth with respect to any proposal such shareholder proposes to bring before the special meeting (i) a brief description of the business desired to be brought before the special meeting and the reasons for conducting such business at the special meeting; (ii) the name and address, as they appear on the Company's books, of the shareholder proposing such business; (iii) the class and number of shares of the Company which are beneficially owned by such shareholder; (iv) the dates upon which the shareholder acquired such shares; (v) documentary support for any claim of beneficial ownership; (vi) any material interest of such shareholder in such business; (vii) a statement in support of the matter and, for proposals sought to be included in the Company's proxy statement, any other information required by Securities and Exchange Commission Rule 14a-8; and (viii) if the shareholder requesting the special meeting proposes to nominate one or more persons for election or reelection as Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected, and evidence reasonably satisfactory to the Company that such nominee has no interests that would limit their ability to fulfill their duties of office).

 
2

 
In addition, if the shareholder intends to solicit proxies from the shareholders of the Company, such shareholder shall notify the Company of this intent in accordance with Securities and Exchange Commission Rule 14a-4 and/Rule or 14a-8.

SECTION 1.4.                                Determination of Validity of Notice of Shareholder Proposal for Business.  The chairman of a meeting may, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of Sections 1.2 and 1.3 of this Article, and, if the chairman should so determine, shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted, or in the case of persons so nominated, not be eligible for election.

SECTION 1.5.                                Notice of Meetings.  The Corporate Secretary or an Assistant Corporate Secretary shall deliver, either personally or by mailing it, postage prepaid, a written notice of the place, day, and time of all meetings of the shareholders not less than ten (10) nor more than sixty (60) days before the meeting date to each shareholder of record entitled to vote at such meeting.  Unless otherwise required or permitted by law, written notice is effective when mailed, if mailed with postage prepaid and correctly addressed to the shareholder's address shown in the Company's current record of shareholders.  It shall not be necessary that notice of an annual meeting include a description of the purpose or purposes for which the meeting is called.  In the case of a special meeting, the purpose or purposes for which the meeting is called shall be included in the notice of the special meeting.  If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice of the new date, time, or place need not be given if the new date, time, or place is announced at the meeting before adjournment.  However, if a new record date for the adjourned meeting is or must be fixed under Section 1.9 herein, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date.

SECTION 1.6.                                Record Date.  The Board of Directors, in order to determine the shareholders entitled to notice of or to vote at any meeting of the shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, shall fix in advance a record date that may not be more than seventy (70) days before the meeting or action requiring a determination of shareholders.  Only such shareholders as shall be shareholders of record on the date fixed shall be entitled to such notice of or to vote at such meeting or any adjournment thereof, or to receive payment of any such dividend or other distribution or allotment of any rights, or to exercise any such rights in respect of stock, or to take any such other lawful action, as the case may be, notwithstanding any transfer of any stock on the books of the Company after any such record date fixed as aforesaid.  The record date shall apply to any adjournment of the meeting unless the Board of Directors shall fix a new record date for the adjourned meeting, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

 
3

 
SECTION 1.7.                                Shareholders' List for Meeting.  After fixing a record date for a meeting, the Company shall prepare an alphabetical list of the names of all shareholders who are entitled to notice of the shareholders' meeting.  The list shall be arranged by voting group (and within each voting group by class or series of shares) and show the address of and number of shares held by each shareholder.  The Company shall make the shareholders' list available for inspection by any shareholder, his agent, or his attorney at the time and place of the meeting.

SECTION 1.8.                                Quorum.  Subject to any express provision of law or the Articles of Incorporation, a majority of the votes entitled to be cast by all shares voting together as a group shall constitute a quorum for the transaction of business at all meetings of the shareholders.  Whenever a class of shares or series of shares is entitled to vote as a separate voting group on a matter, a majority of the votes entitled to be cast by each voting group so entitled shall constitute a quorum for purposes of action on any matter requiring such separate voting.  Once a share is represented, either in person or by proxy, for any purpose at a meeting other than solely to object to holding a meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is set for the adjourned meeting.

SECTION 1.9.                                Adjournment of Meetings.  The holders of a majority of the voting shares represented at a meeting, or the Chairman of the Board or the President, whether or not a quorum is present, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting.  At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.  If after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting.

SECTION 1.10.                                Vote Required.  When a quorum exists, action on a matter (other than the election of Directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, a bylaw authorized by the Articles of Incorporation or express provision of law requires a greater number of affirmative votes.  Unless otherwise provided in the Articles of Incorporation, Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.  Shareholders do not have the right to cumulate their votes unless the Articles of Incorporation so provide.

SECTION 1.11.                                Voting Entitlement of Shares; Proxies.  Unless otherwise provided in the Articles of Incorporation or by law, each shareholder, at every meeting of the shareholders, shall be entitled to cast one vote, on each matter voted on at the meeting, for each share standing in the name of such shareholder on the books of the Company as of the record date.  A shareholder may vote his or her shares in person or by proxy.  A shareholder or his or her agent or attorney in fact may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form or by an electronic transmission that is suitable for the retention, retrieval and reproduction of information by the recipient.  An electronic transmission must contain or be accompanied by information from which it can be determined that the shareholder, the shareholder's agent or the shareholder's attorney in fact authorized the electronic transmission.  An appointment of proxy is effective when received by the Corporate Secretary of the Company or other officer or agent authorized to tabulate votes and is valid for eleven (11) months unless a longer period is expressly provided in the appointment.  An appointment of proxy is revocable by the shareholder unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest.  Any copy, facsimile transmission or other reliable reproduction of the appointment form or electronic transmission may be substituted or used in lieu of the original appointment form or electronic transmission for any and all purposes for which the original appointment form or electronic transmission could be used, provided that such copy, facsimile transmission or other reproduction shall be a complete reproduction of the entire original appointment form or electronic transmission.

 
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SECTION 1.12.                                Inspectors of Election.  The Board of Directors, in advance of any shareholders' meeting, shall appoint an Inspector of Elections to act at the meeting or any adjournment thereof.  The Inspector of Elections shall take and sign an oath faithfully to execute the duties of Inspector of Elections with strict impartiality and according to the best of his or her ability.  The Inspector of Elections shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting, determine the validity of proxies and ballots, count all votes, determine the results and make a written report of his or her determinations.  The Inspector of Elections may be an officer or employee of the Company.  Any vacancy may be filled by the appointment of the Board in advance of the meeting or at the meeting by the person presiding thereat.


ARTICLE II

BOARD OF DIRECTORS

SECTION 2.1.                                General Powers.  Subject to the Articles of Incorporation and these Bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Company managed under the direction of, the Board of Directors and those committees of the Board of Directors designated in Article III of these Bylaws.

SECTION 2.2.                                Number and Tenure.  The Board of Directors shall consist of at least five (5) members and not more than sixteen (16) members, the exact number of Directors to be fixed from time to time by resolution of the Board of Directors of the Company.  No decrease in the number or minimum number of Directors, through amendment of the Articles of Incorporation or of these Bylaws or otherwise, shall have the effect of shortening the term of any incumbent Director.  All directors elected at the annual meeting of shareholders shall be elected for a one-year term expiring at the next annual meeting of shareholders. Each director who is elected a director, shall hold office until the expiration of the term for which he or she was elected, and until his or her successor shall be elected and shall qualify, or until his or her earlier death, resignation, retirement, removal or disqualification from office. During the intervals between annual meetings of shareholders, any vacancy occurring in the Board of Directors caused by resignation, removal, death or other incapacity, and any newly created Directorships resulting from an increase in the number of Directors, shall be filled by a majority vote of the Directors then in office, whether or not a quorum.  Directors may be elected by shareholders only at an annual meeting of shareholders.  Each Director chosen to fill a vacancy shall hold office for the unexpired term in respect of which such vacancy occurred.  Each Director chosen to fill a newly created Directorship shall hold office until the election and qualification of his or her successor at the next election of Directors by the shareholders.

 
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SECTION 2.3.                                Qualifications of Directors.  Directors shall be natural persons who have attained the age of 18 years.  Directors do not need to be residents of the State of Georgia.

SECTION 2.3.1.                                Vote Required in Uncontested Elections.  In the case of an election for Directors where the number of nominees does not exceed the number of Directors to be elected, if a nominee for Director does not receive the vote of at least the Majority of Votes Cast, the Director will promptly tender his or her resignation to the Board of Directors following certification of the shareholder vote.  For purposes of this Bylaw provision, a Majority of Votes Cast means that, at a meeting for the election of Directors at which a quorum is present, the number of shares voted “for” a Director’s election exceeds 50% of the number of votes cast with respect to that Director’s election.  Votes cast include votes to withhold authority in each case and exclude abstentions with respect to that Director’s election.

The Nominating and Corporate Governance Committee will make a recommendation to the Board of Directors as to whether to accept or reject the tendered resignation, or whether other action should be taken.  The Board of Directors will act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results.  The Nominating and Corporate Governance Committee in making its recommendation, and the Board of Directors in making its decision, may each consider any factors or other information that it considers appropriate and relevant including, without limitation, the stated reasons why shareholders “withheld” votes for election of such Director, the length of service and qualifications of the Director whose resignation has been tendered, the Director’s contributions to the Company and the Company’s Corporate Governance Guidelines.  The Director who tenders his or her resignation will not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board of Directors with respect to his or her resignation.  If such Director’s resignation is not accepted by the Board of Directors such Director shall continue to serve until his or her successor is duly elected or until his or her earlier death, resignation or removal.  If a majority of the Nominating and Corporate Governance Committee does not receive a Majority of Votes Cast, then the independent Directors who did not fail to receive a Majority of Votes Cast, shall appoint a committee amongst themselves to consider the resignation offers and recommend to the Board of Directors whether to accept them.  If the only Directors who did not fail to receive a Majority of Votes Cast, constitute three or fewer Directors, all Directors may participate in the action regarding whether to accept the resignation offers.

 
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If a Director’s resignation is accepted by the Board of Directors, then any resulting vacancy may be filled pursuant to the provisions of Section 2.4 of these Bylaws or the Board of Directors may decrease the size of the Board of Directors pursuant to the provisions of Section 2.2 of these Bylaws.

This Bylaw provision will be summarized or included in each proxy statement relating to an election of Directors of the Company.

This Section 2.3.1 shall not apply in the case of an election for Directors where the number of nominees exceeds the number of Directors to be elected.

SECTION 2.3.2.                                Re-election after Termination of Principal Employment.  If any Director ceases to hold the position in such Director's principal employment profession, trade or calling that such Director held at the beginning of the current term for which such Director was elected a Director, such person shall not be eligible for re-election to the Board of Directors after the expiration of such current term unless the Board of Directors decides that such person should be eligible for re-election.

SECTION 2.3.3.  Terminating Events.  Any Director who retires from or discontinues his or her employment with the Company (said termination of employment being hereinafter referred to as a “Terminating Event”) shall promptly upon the occurrence of such Terminating Event, tender his or her resignation to the Board of Directors which resignation shall be effective as of the annual meeting of shareholders next following the date of the Terminating Event; provided, however, that the requirements of this sentence shall not apply to anyone who, upon retirement, is Chairman of the Board or President of the Company.  Any Director who attains his or her 75th birthday, shall thereafter, upon completion of the term for which he or she was elected as a Director, cease to be an active Director.

 
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SECTION 2.4.                                Vacancies.  Unless the Articles of Incorporation provide otherwise, if a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of Directors, the vacancy may be filled only by the Board of Directors, or, if the Directors remaining in office constitute fewer than a quorum of the Board, by the affirmative vote of a majority of all Directors remaining in office.  If the vacant office was held by a Director elected by a voting group of shareholders, only the holders of shares of that voting group or the remaining Directors elected by that voting group are entitled to vote to fill the vacancy.

A Director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor in office or, if such vacancy occurs by reason of an increase in the number of Directors, until the next election of Directors by shareholders and the election and qualification of the successor, as provided by law.

SECTION 2.5.                                Meetings.  The annual meeting of the Board of Directors shall be held each year immediately following the annual meeting of shareholders.  The annual meeting of the Board of Directors shall be held at the time and place, within or without the State of Georgia, as may be stated in the notice of the meeting or in a duly executed waiver of notice thereof.  If no designation is made, the place of the annual meeting shall be the principal executive offices of the Company.

Regular meetings of the Board of Directors or any committee may be held between annual meetings at such times and at such places, within or without the State of Georgia, as from time to time shall be determined by the Board or committee, as the case may be.  No notice of such regular meetings need be given.

Special meetings of the Board of Directors may be called at any time by a majority of the Board of Directors, the Chairman of the Board, the President or the Executive Committee by giving each Director two (2) days notice of the date, time and place of the meeting.  Such notice may be given orally or in writing in accordance with the provisions of Section 4.1.  Unless otherwise provided in the Articles of Incorporation, these Bylaws or by law, neither the business to be transacted at, nor the purpose of, any regular or special meeting need be specified in the notice or any waiver of notice.

SECTION 2.6.                                Quorum and Voting.  A majority of the number of Directors or Board committee members fixed or prescribed by the Board or, if no number is fixed or prescribed, a majority of the number of Directors or committee members in office immediately before the meeting begins, shall be present at any meeting of the Board of Directors or such committee in order to constitute a quorum, unless otherwise specifically provided by statute or by the Articles of Incorporation or by these Bylaws.  The affirmative vote of a majority of the Directors present at any meeting at which there is a quorum at the time of such act shall be the act of the Board or of the committee, except as might be otherwise specifically provided by statute or by the Articles of Incorporation or these Bylaws.  In the absence of a quorum, the Directors present by majority vote may adjourn the meeting from time to time without notice other than by verbal announcement at the meeting until a quorum shall attend.  At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

 
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SECTION 2.7.                                Action Without Meeting.  Unless the Articles of Incorporation or Bylaws provide otherwise, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if the action is taken by all members of the Board or committee, as the case may be.  The action must be evidenced by one or more written consents describing the action taken, signed by each Director or committee member, and filed with the minutes of the proceedings of the Board or committee or filed with the corporate records.

SECTION 2.8.                                Remote Participation in a Meeting.  Unless otherwise restricted by the Articles of Incorporation or the Bylaws, any meeting of the Board of Directors or any committee thereof may be conducted by the use of any means of communication by which all Directors participating may simultaneously hear each other during the meeting.  A Director participating in a meeting by this means is deemed to be present in person at the meeting.

SECTION 2.9.                                Compensation of Directors.  The Board of Directors may fix the compensation of the Directors for their services as Directors or as a member of any committee thereof.  Compensation shall be fixed from time to time by a resolution of the Board of Directors, and may be on the basis of an annual sum or a fixed sum for attendance at each regular or special meeting and every adjournment thereof, or a combination of these methods.  Members may be reimbursed for all reasonable traveling expenses incurred in attending meetings.  No provision of these Bylaws shall be construed to preclude any Director from serving the Company in any other capacity and receiving compensation therefor.

SECTION 2.10.                                Removal of Directors by Shareholders.  Subject to the requirements of Section 14-2-808 of the Georgia Business Corporation Code (the "Code") for the removal of Directors elected by cumulative voting, voting group or staggered terms, any one or more Directors may be removed from office, only with cause, at any meeting of shareholders with respect to which notice of such purpose has been given, by the affirmative vote of the holder or holders of a majority of the outstanding shares of the Company.

SECTION 2.11.                                Nomination of Directors.  Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors.  Nominations of persons for election to the Board of Directors of the Company may be made at a meeting of shareholders (i) by the Board of Directors or at the direction of the Board by any nominating committee or person appointed by the Board or (ii) by any shareholder of the Company entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in Sections 1.2 and 1.3 of Article I of these Bylaws.  Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Corporate Secretary of the Company.  Such notice to the Corporate Secretary shall set forth the information required in Section 1.2 and 1.3 of Article I of these Bylaws.  The Company may require any proposed nominee to furnish such other information as reasonably may be required by the Company to determine the eligibility of such proposed nominee to serve as a Director of the Company.  The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedures, and if the chairman should so determine, shall so declare to the meeting and the defective nomination shall be disregarded.

 
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SECTION 2.15.                                Indemnification.  The indemnification authorized in the Articles of Incorporation shall be subject to the following provisions and procedures:

SECTION 2.15.1.                                 Determination of Eligibility for Indemnification.  In the case of actions brought by or in the right of the Company, a Director’s right to indemnification as authorized in the Articles of Incorporation shall be determined:

(i)           If there are two or more directors not at the time parties to the proceeding ("Disinterested Directors"), by the board of directors by a majority vote of all the Disinterested Directors (a majority of whom shall for such purpose constitute a quorum), or by a majority of the members of a committee of two or more Disinterested Directors appointed by such a vote;

(ii)           By special legal counsel:

 
(a)
Selected in the manner prescribed in paragraph (i) of this subsection; or

 
(b)
If there are fewer than two Disinterested Directors, selected by the Board of Directors (in which selection directors who do not qualify as Disinterested Directors may participate); or

(iii)           By the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the determination.

SECTION 2.15.2.                                Rights Not Exclusive.  The rights to indemnification and advance of expenses granted in the Articles of Incorporation and in these Bylaws are not exclusive, and do not limit the Company's power to pay or reimburse expenses to which a Director may be entitled, whether by agreement, vote of shareholders or Disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office, and do not limit the Company's power to pay or reimburse expenses incurred by a Director in connection with his appearance as a witness in a proceeding at a time when he is not a party.

SECTION 2.15.3.                                Insurance.  The Company and its officers shall have the power to purchase and maintain insurance on behalf of an individual who is or was a Director, officer, employee or agent of the Company or who, while a Director, officer, employee, or agent of the Company, is or was serving as a Director, officer, partner, trustee employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against liability asserted against or incurred by him in that capacity or arising from his status as a Director, officer, employee or agent, whether or not the Company would have the power to indemnify him against the same liability under the provisions of these Bylaws.

 
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SECTION 2.15.4.                                Reports to Shareholders.  If the Company indemnifies or advances expenses to a Director, otherwise than by action of the shareholders or by an insurance carrier pursuant to insurance maintained by the Company, the Company shall report the indemnification or advance in writing to the shareholders with or before the notice of the next annual shareholders’ meeting.

ARTICLE III

COMMITTEES

SECTION 3.1.                                Committees.  The Board of Directors may, by resolution, designate from among its members one or more committees, each committee to consist of one or more Directors, except that committees appointed to take action with respect to indemnification of Directors, Directors' conflicting interest transactions or derivative proceedings shall consist of two or more Directors qualified to serve pursuant to the Code.  If a Lead Director shall have been appointed by the Board of Directors from among the independent directors, then the Lead Director shall serve as Chairman of the Executive Committee.  If no Lead Director shall have been appointed, then either the Chairman of the Board of Directors, a former Chairman of the Board or the Chief Executive Officer, as designated by the Board of Directors, shall serve as Chairman of the Executive Committee.  For all other committees, the Board of Directors shall designate one member of each committee to be a chairman.  Each committee member shall serve at the pleasure of the Board of Directors.

Each Director of the Company who is not designated as a member of a particular Committee hereby is designated as an alternate member of any such Committee, who may act in the place and stead of any absent member or members at any meeting of such Committee in the event (i) a quorum of such Committee is not present and (ii) the Chairman of the Board or, in his absence, the President, appoints such alternate member to act for that meeting as a member of such Committee; and such alternate member shall serve only at the meeting for which such appointment is made, but shall have at that meeting all the powers of a regular member of such Committee.

 
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Any such committee, to the extent specified by the Board of Directors, Articles of Incorporation or Bylaws, shall have and may exercise all of the authority of the Board of Directors in the management of the business affairs of the Company, except that it may not (i) approve or propose to shareholders action that the Code requires to be approved by shareholders; (ii) fill vacancies on the Board of Directors or any of its committees; (iii) amend the Articles of Incorporation, except that a committee may, to the extent authorized in a resolution or resolutions adopted by the Board, amend the Articles of Incorporation to fix the designations, preferences, limitations and relative rights of shares pursuant to Section 14-2-602 of the Code or to increase or decrease the number of shares contained in a series of shares established in accordance with said Code Section but not below the number of such shares then issued; (iv) adopt, amend, or repeal Bylaws; or (v) approve a plan of merger not requiring shareholder approval.

SECTION 3.2.                                Meetings of Committees.  Regular meetings of any committee may be held without notice at such time and at such place, within or without the State of Georgia, as from time to time shall be determined by such committee.  A special meeting of any such committee appointed by the Board may be called by the Chairman of the Board of Directors, the President, the Board of Directors or the committee by vote at a meeting, or by two members of any committee in writing without a meeting by giving each such committee member two (2) days notice of the date, time and place of the meeting.  Such notice may be given orally or in writing in accordance with the provisions of Section 4.1.  Unless otherwise provided in the Articles of Incorporation, these Bylaws or by law, neither the business to be transacted at, nor the purpose of, any regular or special meeting of any such committee need be specified in the notice or any waiver of notice.


ARTICLE IV

NOTICES

SECTION 4.1.                                Notice.  Whenever, under the provisions of the Articles of Incorporation or these Bylaws or by law, notice is required to be given to any Director or shareholder, such notice may be given in writing, by mail; by telegram, telex or facsimile transmission; by other form of wire or wireless communication; or by private carrier.  Unless otherwise required or permitted by law, such notice shall be deemed to be effective at the earliest of when received, or when delivered, properly addressed, to the addressee's last known principal place of business or residence; or, except as provided in the immediate next sentence, five days after the same shall be deposited in the United States mail if mailed with first-class postage prepaid and correctly addressed; or on the date shown on the return receipt, if sent by registered or certified mail or statutory overnight delivery, return receipt requested, and the receipt is signed by or on behalf of the addressee.  Written notice to the Company's shareholders, if in comprehensible form, is effective when mailed, if mailed with first-class postage prepaid and correctly addressed to the shareholder's address shown in the Company's current record of shareholders; provided, however, that if the Company has more than 500 shareholders of record entitled to vote at a meeting, it may utilize a class of mail other than first class if the notice of meeting is mailed, with adequate postage prepaid, not less than 30 days before the date of the meeting.  Notice to any Director or shareholder may also be oral if oral notice is reasonable under the circumstances.  Oral notice is effective when communicated if communicated in a comprehensible manner.  If these forms of personal notice are impractical, notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television, or other form of public broadcast communication.

 
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SECTION 4.2.                                Waiver of Notice.  Whenever any notice is required to be given under provisions of the Articles of Incorporation or of these Bylaws or by law, a waiver thereof, signed by the person entitled to notice and delivered to the Company for inclusion in the minutes or filing with the corporate records, whether before or after the time stated therein, shall be deemed equivalent to notice.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting and of all objections to the place or time of the meeting or the manner in which it has been called or convened, except when the person attends a meeting for the express purpose of stating, at the beginning of the meeting, any such objection and, in the case of a Director, does not thereafter vote for or assent to action taken at the meeting.  Neither the business to be transacted at nor the purpose of any regular or special meeting of the shareholders, Directors or a committee of Directors need be specified in any written waiver of notice; provided, however, that any waiver of notice of a meeting of shareholders required with respect to an amendment of the Articles of Incorporation, a plan of merger or share exchange, a plan of consolidation, a sale of assets or any other action which would entitle the shareholder to dissent pursuant to Section 14-2-1302 of the Code and obtain payment for his shares shall be effective only upon compliance with Section 14-2-706(c) of the Code or successor provisions.


ARTICLE V

OFFICERS

SECTION 5.1.                                Appointment.  Appointment.  The Board of Directors shall appoint such officers of the Company and its subsidiaries as it shall deem necessary, which  officers shall include: (a) for the Company, a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer and a Corporate Secretary; and (b) any other executive officer of the Company who is designated by the Board of Directors as an “executive officer” for reporting purposes under Section 16 of the Securities Exchange Act of 1934, as amended.    Each of the officers appointed by the Board shall exercise such powers and perform such duties as may be specified in the applicable Bylaws or as shall otherwise be determined from time to time by the Board of Directors consistent with the applicable Bylaws.  Each such officer shall hold office until the corresponding meeting of the Board of Directors in the next year and until each such successor officer shall have been duly appointed and qualified or until such officer shall have resigned or shall have been removed in the manner provided in Section 5.2 of this Article V.  Any number of offices may be held by the same person unless the Articles of Incorporation or these Bylaws otherwise provide.  The appointment of an officer does not itself create contract rights.

 
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SECTION 5.2.                                Resignation and Removal of Officers.  An officer may resign at any time by delivering notice to the Company and such resignation is effective when the notice is delivered unless the notice specifies a later effective date.  The Board of Directors or the Executive Committee (except in the case of an officer appointed by the Board of Directors) or an officer upon whom the power of appointment may have been conferred may remove any officer at any time with or without cause.

SECTION 5.3.                                Vacancies.  Any vacancy in office resulting from any cause may be filled by the Board of Directors at any regular or special meeting.

SECTION 5.4.                                Powers and Duties.  Each officer has the authority and shall perform the duties set forth below or, to the extent consistent with these Bylaws, the duties prescribed by the Board of Directors or by direction of an officer authorized by the Board of Directors to prescribe the duties of other officers.

SECTION 5.4.1.                                Chairman of the Board of Directors.  The Chairman of the Board of Directors may be chosen from among the Directors of the Company and need not be an Executive Officer or employee of the Company.  The Chairman shall preside at all meetings of the Board of Directors and may serve as Chairman of and preside at all meetings of the Executive Committee.  The Chairman shall have the usual powers and duties incident to the office of the chairman of the board of directors of a corporation and such other powers and duties as from time to time may be assigned by the Board of Directors.

SECTION 5.4.2.                                Chief Executive Officer.  The Board of Directors may designate as the Chief Executive Officer of the Company the President or any other officer of the Company including the Chairman if the Chairman is a full-time officer and employee of the Company.  The Chief Executive Officer of the Company shall have general and active management responsibility for the business of the Company and shall see that all orders and resolutions of the Board of Directors are carried into effect.  The Chief Executive Officer shall preside at all meetings of the shareholders and may serve as Chairman of and preside at all meetings of the Executive Committee. Except where by law the signature of the President is required, the Chief Executive Officer shall have the same powers as the President to sign all authorized certificates, contracts, bonds, deeds, mortgages and other instruments.  The Chief Executive Officer shall have the usual powers and duties incident to the position of chief executive officer of a corporation and such other powers and duties as from time to time may be assigned by the Board of Directors.  In the event there is no Chairman of the Board, the Chief Executive Officer shall also have all the powers and authority that the Chairman is given in these Bylaws or otherwise.  During the absence or disability of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the Board of Directors.  The Board of Directors may, or if it does not, the Chief Executive Officer may, from time to time designate an Executive Officer of the Company to assume and perform the duties and powers of the Chief Executive Officer during the absence or disability of the Chief Executive Officer.

 
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SECTION 5.4.3.                                President.  The President shall be responsible for the general supervision of the affairs of the Company.  The President shall have the power to make and execute certificates, contracts, bonds, deeds, mortgages and other instruments on behalf of the Company, except in cases in which the signing thereof shall have been expressly delegated to some other officer or agent of the Company and to delegate such power to others. The President shall have the usual powers and duties incident to the office of a president of a corporation and such other powers and duties as are specifically imposed on the President by law and as from time to time may be assigned by the Board of Directors.  If the Board of Directors designates the President as the Chief Executive Officer of the Company, the President shall also have the powers and duties of the Chief Executive Officer.

SECTION 5.4.4.                                Vice Presidents.  The Senior or Executive Vice Presidents shall be senior in authority among the Vice Presidents.   During the absence or disability of the President, the Board of Directors shall designate which of the Senior or Executive Vice Presidents shall exercise all the powers and discharge all of the duties of the President, provided, however, that if such Senior or Executive Vice President is not a Director, such Senior or Executive Vice President shall not preside at any meetings of the Board of Directors or the Executive Committee.  The Vice Presidents shall perform such duties as vice presidents customarily perform and shall have the usual powers and duties incident to the office of a vice president of a corporation and such other powers and duties as from time to time may be assigned by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President.

SECTION 5.4.5                                Chief Financial Officer.  The Chief Financial Officer shall be charged with the management of the financial affairs of the Company and shall cause to be maintained complete and true accounts of all financial transactions of the Company.  The Chief Financial Officer shall render to the Board of Directors, the Chairman of the Board, the Chief Executive Officer and the President, whenever requested, an account of the financial condition of the Company.  The Chief Financial Officer shall have the usual powers and duties incident to the position of chief financial officer of a corporation and such other powers and duties as from time to time may be assigned by the Board of Directors.

SECTION 5.4.6.                                Chief Operating Officer.  The Chief Operating Officer shall have general and active responsibility for the operations of the Company.  The Chief Operating Officer shall have the usual powers and duties incident to the position of chief operating officer of a corporation and such other powers and duties as from time to time may be assigned by the Board of Directors.

SECTION 5.4.7.                                Corporate Secretary.  The Corporate Secretary shall attend all meetings of the shareholders and all meetings of the Board of Directors and shall record all votes and minutes of all proceedings in books to be kept for that purpose, and shall perform like duties for the standing committees when required.  The Corporate Secretary shall have custody of the corporate seal of the Company, shall have the authority to affix the same to any instrument the execution of which on behalf of the Company under its seal is duly authorized and shall attest to the same whenever required.  The Board of Directors may give general authority to any other officer to affix the seal of the Company and to attest to the same.  The Corporate Secretary shall give, or cause to be given, any notice required to be given of any meetings of the shareholders, the Board of Directors and of the standing committees when required.  The Corporate Secretary shall cause to be kept such books and records as the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President may require and shall cause to be prepared, recorded, transferred, issued, sealed and canceled certificates of stock as required by the transactions of the Company and its shareholders.  The corporate Secretary shall attend to such correspondence and shall perform such other duties as may be incident to the office of a corporate secretary or as may be assigned to the Corporate Secretary by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President.

 
15

 
SECTION 5.4.8.                                Treasurer.  The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Company, and shall deposit or cause to be deposited, in the name of the Company, all moneys or other valuable effects in such banks, trust companies, or other depositaries as shall from time to time be selected by the Board of Directors, the Chief Executive Officer, the President or the Chief Financial Officer. In general, the Treasurer shall perform such duties as treasurers usually perform and shall perform such other duties and shall exercise such other powers as the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Chief Financial Officer may from time to time designate and shall render to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Chief Financial Officer, whenever requested, an account of the financial condition of the Company.

SECTION 5.4.9.                                Controller.  The Controller shall have charge of and be responsible for preparation of financial and management reports, budgeting, rate material, property accounting, taxes and such other duties as are commonly incident to the office of Controller.  The Controller shall perform such other duties and shall exercise such other powers as the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Chief Financial Officer may from time to time designate.

SECTION 5.4.10.                                Assistant Vice President, Assistant Corporate Secretary and Assistant Treasurer.  One or more Assistant Vice Presidents, Assistant Corporate Secretaries and Assistant Treasurers, in the absence or disability of any Vice President, the Corporate Secretary or the Treasurer, respectively, shall perform the duties and exercise the powers of those offices, and, in general, they shall perform such other duties and shall exercise such other powers as the Board of Directors or the person appointing them may from time to time designate.  Specifically the Assistant Corporate Secretaries may affix the corporate seal to all necessary documents and attest the signature of any officer of the Company.

SECTION 5.4.11.                                Other Officers.  The Board of Directors may appoint such other officers as it may deem desirable.  Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe.  The Board of Directors may from time to time authorize any officer to appoint other officers of the Company and its major subsidiaries, to prescribe the powers, term, duties and salary, if any, of such appointed officers, and to remove any officers thus appointed, consistent with the applicable Bylaws and the resolutions of the Board of Directors authorizing such appointment and removal.

 
16

 
SECTION 5.5.                                Officers Holding More Than One Office. The same person may simultaneously hold more than one office, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument be required by statute, by the Articles of Incorporation or by these Bylaws to be executed, acknowledge or verified by any two or more officers.

SECTION 5.6.                                Compensation.  The Board of Directors shall have power to fix the compensation of all officers of the Company.  It may authorize any officer, upon whom the power of appointing other officers may have been conferred, to fix the compensation of such other officers.

ARTICLE VI

CAPITAL STOCK

SECTION 6.1.                                Share Certificates.  Unless the Articles of Incorporation or these Bylaws provide otherwise, the Board of Directors may authorize the issue of some or all of the shares of any or all of its classes or series with or without certificates.  Unless the Code provides otherwise, there shall be no differences in the rights and obligations of shareholders based on whether or not their shares are represented by certificates.

In the event that the Board of Directors authorizes shares with certificates, each certificate representing shares of stock of the Company shall be in such form as shall be approved by the Board of Directors and shall set forth upon the face thereof the name of the Company and that it is organized under the laws of the State of Georgia, the name of the person to whom the certificate is issued, and the number and class of shares and the designation of the series, if any, the certificate represents.  The Board of Directors may designate any one or more officers to sign each share certificate, either manually or by facsimile.  In the absence of such designation, each share certificate must be signed by the President or a Vice President and the Corporate Secretary or an Assistant Corporate Secretary.  If the person who signed a share certificate, either manually or in facsimile, no longer holds office when the certificate is issued, the certificate is nevertheless valid.

SECTION 6.2.                                Record of Shareholders.  The Company or an agent designated by the Board of Directors shall maintain a record of the Company's shareholders in a form that permits preparation of a list of names and addresses of all shareholders, in alphabetical order by class or shares showing the number and class of shares held by each shareholder.  The Company shall be entitled to treat the person in whose name shares are registered in the records of the Company as the owner thereof for all purposes unless it accepts for its records a nominee certificate naming a beneficial owner of shares other than the record owner, and shall not otherwise be bound to recognize any equitable or other claim to or interest in such shares except as may be provided by law.

 
17

 
SECTION 6.3.                                Lost Certificates.  In the event that a share certificate is lost, stolen, mutilated or destroyed, the Board of Directors may direct that a new certificate be issued in place of such certificate.  When authorizing the issue of a new certificate, the Board of Directors may require such proof of loss as it may deem appropriate as a condition precedent to the issuance thereof, including a requirement that the owner of such lost, stolen or destroyed certificate, or the owner's legal representative, advertise the same in such manner as the Board shall require and/or that the owner give the Company a bond in such sum as the Board may direct as indemnity against any claim that may be made against the Company with respect to the certificate alleged to have been lost, stolen or destroyed.

SECTION 6.4.                                Transfers of Shares.  Transfers of shares of the capital stock of the Company shall be made only upon the books of the Company by the registered holder thereof, or by the registered holder's duly authorized attorney, or with a transfer clerk or transfer agent appointed as provided in Section 6.5 hereof, and, in the case of a share represented by certificate, on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon.  The Company shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided in Section 6.2 hereof or by law.

SECTION 6.5.                                Transfer Agents and Registrars.  The Board of Directors may establish such other regulations as it deems appropriate governing the issue, transfer, conversion and registration of share certificates, including appointment of transfer agents, clerks or registrars.


ARTICLE VII

GENERAL PROVISIONS

SECTION 7.1.                                Indemnification of Officers, Employees and Agents.  The Company shall indemnify any officer who was or is made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, derivative, criminal, administrative or investigative, to the same extent as it is obligated to indemnify any Director of the Company, but without being subject to the same procedural conditions imposed for the indemnification of Directors.  The Company may indemnify and advance expenses to an employee or agent who is not a Director or officer to the extent, consistent with public policy, permitted by the Articles of Incorporation, the Bylaws or by law.

 
18

 
SECTION 7.2.                                Seal.  The Company may have a seal, which shall be in such form as the Board of Directors may from time to time determine.  In the event that the use of the seal is at any time inconvenient, the signature of an officer of the Company, followed by the word "Seal" enclosed in parentheses, shall be deemed the seal of the Company.

SECTION 7.3.                                Voting Shares in Other Corporations.  In the absence of other arrangements by the Board of Directors, shares of stock issued by another corporation and owned or controlled by the Company, whether in a fiduciary capacity or otherwise, may be voted by the President or any Vice President, in the absence of action by the President, in the same order as they preside in the absence of the President, or, in the absence of action by the President or any Vice President, by any other officer of the Company, and such person may execute the aforementioned powers by executing proxies and written waivers and consents on behalf of the Company.

SECTION 7.4.                                Amendment of Bylaws.  These Bylaws may be amended or repealed and new bylaws may be adopted by the Board of Directors at any regular or special meeting of the Board of Directors unless the Articles of Incorporation or the Code reserve this power exclusively to the shareholders in whole or in part or the shareholders, in amending or repealing the particular bylaw, provide expressly that the Board of Directors may not amend or repeal that bylaw.  Unless the shareholders have fixed a greater quorum or voting requirement, these Bylaws also may be altered, amended or repealed and new bylaws may be adopted, unless such action has been recommended by the Board of Directors, by an affirmative vote of the holders of at least two-thirds of all outstanding shares entitled to vote.

SECTION 7.5.                                Execution of Bonds, Debentures, Evidences of Indebtedness, Checks, Drafts and Other Obligations and Orders for Payment.  The signatures of any officer or officers of the Company executing a corporate bond, debenture or other debt security of the Company or attesting the corporate seal thereon, or upon any interest coupons annexed to any such corporate bond, debenture or other debt security of the Company, and the corporate seal affixed to any such bond, debenture or other debt security of the Company, may be facsimiles, engraved or printed, provided that such bond, debenture or other debt security of the Company is authenticated or countersigned with the manual signature of an authorized officer of the corporate trustee designated by the indenture or other agreement under which said security is issued by a transfer agent, or registered by a registrar, other than the Company itself, or an employee of the Company.  If the person who signed such, bond, debenture or other debt security of the Company, either manually or in facsimile, no longer holds office when the certificate is issued, the certificate is nevertheless valid.

SECTION 7.6.                                Business Combinations.  All of the requirements of Sections 14-2-1131 to 1133, inclusive, of the Code, as now in effect and as hereafter from time to time amended, shall be applicable to this Company and to any business combination approved or recommended by the Board of Directors.

 
19

 
ARTICLE VIII

EMERGENCY BYLAWS

SECTION 8.1.                                Emergency Bylaws.  This Article shall be operative during any emergency resulting from some catastrophic event that prevents a quorum of the Board of Directors or any committee thereof from being readily assembled (an "emergency"), notwithstanding any different or conflicting provisions set forth elsewhere in these Bylaws or in the Articles of Incorporation.  To the extent not inconsistent with the provisions of this Article, the bylaws set forth elsewhere herein and the provisions of the Articles of Incorporation shall remain in effect during such emergency, and upon termination of such emergency, the provisions of this Article shall cease to be operative.

SECTION 8.2.                                Meetings.  During any emergency, a meeting of the Board of Directors or any committee thereof may be called by any Director, or by the President, any Vice President, the Corporate Secretary or the Treasurer (the "Designated Officers") of the Company.  Notice of the time and place of the meeting shall be given by any available means of communication by the person calling the meeting to such of the Directors and/or Designated Officers as may be feasible to reach.  Such notice shall be given at such time in advance of the meeting as, in the judgement of the person calling the meeting, circumstances permit.

SECTION 8.3                                Quorum.  At any meeting of the Board of Directors or any committee thereof called in accordance with this Article, the presence or participation of two Directors, one Director and a Designated Officer, or two Designated Officers shall constitute a quorum for the transaction of business.

SECTION 8.4.                                Bylaws.  At any meeting called in accordance with this Article, the Board of Directors or committee thereof, as the case may be, may modify, amend or add to the provisions of this Article so as to make any provision that may be practical or necessary for the circumstance of the emergency.

SECTION 8.5.                                Liability.  Corporate action taken in good faith in accordance with the emergency bylaws may not be used to impose liability on a Director, officer, employee or agent of the Company.

SECTION 8.6.                                Repeal or Change.  The provisions of this Article shall be subject to repeal or change by further action of the Board of Directors or by action of shareholders, but no such repeal or change shall modify the provisions of the immediately preceding section of this Article with regard to action taken prior to the time of such repeal or change.
20

Exhibit 23.1


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
We consent to the incorporation by reference in the AGL Resources Inc.’s Registration Statements Nos. 33-50301, 33-62155, 333-01519, 333-02353, 333-26961, 333-26963, 333-86983, 333-86987, 333-75524, 333-97121, 333-104701, 333-115044, 333-127161, 333-136241, 333-142575, 333-154965, and 333-174375 on Forms S-8; Registration Statements Nos. 333-22867, 333-145606, 333-160975, and 333-168901 on Forms S-3; and Registration Statement No. 333-172084 on Form S-4 of our report dated February 24, 2011, relating to the consolidated financial statements and financial statement schedule of Nicor Inc. and subsidiaries (“Nicor Inc.”), and the effectiveness of Nicor Inc.’s internal control over financial reporting, appearing in the Current Report on Form 8-K of AGL Resources Inc. dated December 13, 2011.

/s/ DELOITTE & TOUCHE LLP
 
Chicago, Illinois
December 13, 2011
 

Exhibit 99.1 

Press Release

 
Illinois Commerce Commission Approves Merger of
AGL Resources and Nicor

ATLANTA and NAPERVILLE, ILL., Dec. 7, 2011 – AGL Resources Inc. (NYSE: AGL) and Nicor Inc. (NYSE: GAS) today received approval of their merger from the Illinois Commerce Commission.  This is the final approval required to close the transaction.

“We are pleased with the ICC’s decision to approve our merger,” said John W. Somerhalder II, chairman, president and chief executive officer of AGL Resources.  “We will review the ICC’s final order and plan to close the transaction in a timely manner.”

Once completed, the merger is expected to create the largest system of affiliated natural gas-only distribution companies in the country based on customer count, serving approximately 4.5 million customers in seven states. The increased scale and scope of the combined company is expected to create long-term benefits for customers.


About AGL Resources
AGL Resources (NYSE: AGL), an Atlanta-based energy services company, serves approximately 2.3 million customers in six states. The company also owns Houston-based Sequent Energy Management, an asset manager serving natural gas wholesale customers throughout North America. As an 85-percent owner in the SouthStar partnership, AGL Resources markets natural gas to consumers in Georgia under the Georgia Natural Gas brand. The company also owns and operates two high-deliverability natural gas storage facilities: Jefferson Island Storage & Hub near the Henry Hub in Louisiana and Golden Triangle Storage in Texas. For more information, visit http://www.aglresources.com/.

About Nicor Inc.
Nicor Inc. (NYSE:GAS) is a holding company and is a member of the Standard & Poor's 500 Index. Its primary business is Nicor Gas, one of the nation's largest natural gas distribution companies. Nicor owns Tropical Shipping, a containerized shipping business serving the Caribbean region and the Bahamas. In addition, the company owns and/or has an equity interest in several energy-related businesses. For more information, visit the Nicor website at www.nicor.com.

Forward Looking Statements
To the extent any statements made in this document contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, “forward-looking statements”).

These forward-looking statements relate to, among other things, the Company’s expectation to be the largest system of affiliated natural gas-only distribution companies in the country and the expected benefits from the Company’s increased scale and scope. Forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “estimate”, “intend”, “continue”, “plan”, “project”, “will”, “may”, “should”, “could”, “would”, “target”, “potential” and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although certain of these statements set out herein are indicated above, all of the statements in this release that contain forward-looking statements are qualified by these cautionary statements. Although AGL Resources and Nicor believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including, but not limited to, factors and assumptions regarding the items outlined above. Actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things, the following: the risk that a condition to closing of the merger may not be satisfied; the possibility that the anticipated benefits and synergies from the proposed merger cannot be fully realized or may take longer to realize than expected; the possibility that costs or difficulties related to the integration of AGL Resources and Nicor operations will be greater than expected; the ability of the combined company to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; the impact of legislative, regulatory, competitive and technological changes; the risk that the credit ratings of the combined company may be different from what the companies expect; and other risk factors relating to the energy industry, as detailed from time to time in each of AGL Resources’ and Nicor’s reports filed with the Securities and Exchange Commission (“SEC”). There can be no assurance that the proposed merger will in fact be consummated.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in the body of this release, as well as under Item 1.A. in each of AGL Resources’ and Nicor’s Annual Report on Form 10-K for the fiscal year December 31, 2010. AGL Resources and Nicor caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements to make decisions with respect to AGL Resources and Nicor, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to AGL Resources and Nicor or any other person acting on their behalf are expressly qualified in their entirety by the cautionary statements referenced above. The forward-looking statements contained herein speak only as of the date of this presentation. Neither AGL Resources nor Nicor undertakes any obligation to update or revise any forward-looking statement, except as may be required by law.

Additional Information
In connection with the proposed Merger, a definitive joint proxy statement/prospectus was mailed on or about May 10, 2011 to shareholders of record of AGL Resources and Nicor Inc. (“Nicor”) as of April 18, 2011.  WE URGE INVESTORS TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY, AS WELL AS OTHER DOCUMENTS FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT AGL RESOURCES, NICOR AND THE PROPOSED TRANSACTION.  The definitive joint proxy statement/prospectus, as well as other filings containing information about AGL Resources and Nicor, can be obtained free of charge at the website maintained by the SEC at www.sec.gov.  You may also obtain these documents, free of charge, from AGL Resources’ website (www.aglresources.com) under the tab Investor Relations/SEC Filings or by directing a request to AGL Resources Inc., P.O. Box 4569, Atlanta, GA, 30302-4569.  You may also obtain these documents, free of charge, from Nicor’s website (www.nicor.com) under the tab Investor Information/SEC Filings or by directing a request to Nicor Inc., P.O. Box 3014, Naperville, IL 60566-7014.
The respective directors and executive officers of AGL Resources and Nicor, and other persons, may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction.  Information regarding AGL Resources’ directors and executive officers is available in the definitive joint proxy statement/prospectus and its definitive proxy statement filed with the SEC by AGL Resources on March 14, 2011, and information regarding Nicor directors and executive officers is available in the definitive joint proxy statement/prospectus and its definitive proxy statement filed with the SEC by Nicor on April 19, 2011.  These documents can be obtained free of charge from the sources indicated above.  Other information regarding the interests of the participants in the proxy solicitation are included in the definitive joint proxy statement/prospectus and other relevant materials filed with the SEC.  This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Exhibit 99.2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of Nicor Inc.
 
We have audited the accompanying consolidated balance sheets of Nicor Inc. and subsidiaries (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of income, common equity, comprehensive income, and cash flows for each of the three years in the period ended December 31, 2010.  Our audits also included the financial statement schedule at Item 15(a)(2).  We also have audited the Company’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.  Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances.  We believe that our audits provide a reasonable basis for our opinions.
 
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.  Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 
 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (concluded)

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.  Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 
/s/ DELOITTE & TOUCHE LLP
 
 
Chicago, Illinois
February 24, 2011
 

 
 

 

Management’s Report on Internal Control Over Financial Reporting

Internal control over financial reporting refers to the process designed by, or under the supervision of, the company’s Chief Executive Officer and Chief Financial Officer, and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

1.  
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

2.  
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

3.  
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.  Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.  Internal control over financial reporting also can be circumvented by collusion or improper management override.  Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.  However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.  Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company.

Management has used the framework set forth in the report entitled “Internal Control—Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of the company’s internal control over financial reporting.  Management has concluded that the company’s internal control over financial reporting was effective as of December 31, 2010.  Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on the company’s internal control over financial reporting.

There has been no change in the company’s internal controls over financial reporting during the company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
 
 
 

 


Nicor Inc.
                 
Consolidated Statements of Income
                 
(millions, except per share data)
                 
                   
   
Year ended December 31
 
   
2010
   
2009
   
2008
 
Operating revenues
                 
Gas distribution (includes revenue taxes of $148.1, $150.3
                 
and $174.0, respectively)
  $ 2,204.4     $ 2,140.8     $ 3,206.9  
Shipping
    345.0       352.6       425.2  
Other energy ventures
    218.4       239.0       230.3  
Corporate and eliminations
    (58.0 )     (80.3 )     (85.8 )
Total operating revenues
    2,709.8       2,652.1       3,776.6  
                         
Operating expenses
                       
Gas distribution
                       
Cost of gas
    1,364.1       1,345.7       2,427.8  
Operating and maintenance
    300.0       300.4       294.6  
Depreciation
    183.6       177.4       170.9  
Taxes, other than income taxes
    164.6       167.6       189.4  
Other
    (2.6 )     -       (.2 )
Shipping
    330.6       323.4       385.9  
Other energy ventures
    184.0       193.5       205.0  
Other corporate expenses and eliminations
    (50.2 )     (76.2 )     (81.8 )
Total operating expenses
    2,474.1       2,431.8       3,591.6  
                         
Operating income
    235.7       220.3       185.0  
Interest expense, net of amounts capitalized
    38.1       38.7       40.1  
Equity investment income, net
    8.2       15.8       9.4  
Interest income
    1.1       2.3       8.8  
Other income, net
    1.2       .9       .7  
                         
Income before income taxes
    208.1       200.6       163.8  
Income tax expense, net of benefits
    69.7       65.1       44.3  
                         
Net income
  $ 138.4     $ 135.5     $ 119.5  
                         
Average shares of common stock outstanding
                       
Basic
    45.7       45.4       45.3  
Diluted
    45.7       45.5       45.4  
                         
Earnings per average share of common stock
                       
Basic
  $ 3.02     $ 2.99     $ 2.64  
Diluted
    3.02       2.98       2.63  
                         
The accompanying notes are an integral part of these statements.
                       

 
 

 

Nicor Inc.
                 
Consolidated Statements of Cash Flows
                 
(millions)
                 
   
Year ended December 31
 
   
2010
   
2009
   
2008
 
                   
Operating activities
                 
Net income
  $ 138.4     $ 135.5     $ 119.5  
Adjustments to reconcile net income to net cash flow provided from
  (used for) operating activities:
                       
Depreciation
    202.7       195.8       189.8  
Deferred income tax expense (benefit)
    3.7       4.9       (3.4 )
Gain on sale of equity investment
    -       (10.1 )     -  
Changes in assets and liabilities:
                       
Receivables, less allowances
    19.7       198.3       (47.3 )
Gas in storage
    (26.7 )     71.3       (54.5 )
Deferred/accrued gas costs
    21.4       24.7       (104.1 )
Derivative instruments
    (12.2 )     (85.2 )     133.3  
Margin accounts - derivative instruments
    .9       103.7       (134.9 )
Pension benefits
    (15.1 )     (21.5 )     179.1  
Regulatory postretirement asset
    1.6       39.6       (186.3 )
Other assets
    18.1       16.0       (64.3 )
Accounts payable
    (22.5 )     (57.4 )     (16.9 )
Customer credit balances and deposits
    (31.1 )     (45.6 )     (47.2 )
Health care and other postretirement benefits
    31.3       3.5       12.2  
Other liabilities
    23.9       (9.1 )     (.9 )
Other items
    .7       6.4       (1.5 )
Net cash flow provided from (used for) operating activities
    354.8       570.8       (27.4 )
                         
Investing activities
                       
Additions to property, plant and equipment
    (226.8 )     (220.3 )     (249.9 )
Net (increase) decrease in other short-term investments
    7.0       (11.4 )     (20.4 )
Proceeds from sale of equity investment
    .9       13.0       -  
Other investing activities
    (10.3 )     7.2       5.0  
Net cash flow used for investing activities
    (229.2 )     (211.5 )     (265.3 )
                         
Financing activities
                       
Proceeds from issuing long-term debt
    -       50.0       75.0  
Disbursements to retire long-term obligations
    -       (50.5 )     (75.0 )
Net issuances (repayments) of commercial paper
    (69.0 )     (245.9 )     370.9  
Dividends paid
    (85.1 )     (84.8 )     (84.4 )
Other financing activities
    4.3       1.6       (10.6 )
Net cash flow provided from (used for) financing activities
    (149.8 )     (329.6 )     275.9  
                         
Net increase (decrease) in cash and cash equivalents
    (24.2 )     29.7       (16.8 )
                         
Cash and cash equivalents, beginning of year
    55.7       26.0       42.8  
                         
Cash and cash equivalents, end of year
  $ 31.5     $ 55.7     $ 26.0  
                         
Supplemental information
                       
Income taxes paid, net
  $ 56.1     $ 46.8     $ 71.2  
Interest paid, net of amounts capitalized
    30.1       30.8       50.2  
                         
The accompanying notes are an integral part of these statements.
                       

 
 
 

 
Nicor Inc.
           
Consolidated Balance Sheets
           
(millions)
           
             
ASSETS
           
   
December 31
 
   
2010
   
2009
 
             
Current assets
           
Cash and cash equivalents
  $ 31.5     $ 55.7  
Short-term investments
    70.6       78.0  
Receivables, less allowances of $27.6 and $33.0, respectively
    472.4       492.1  
Gas in storage
    163.9       137.2  
Derivative instruments
    49.1       30.9  
Margin accounts - derivative instruments
    50.9       46.1  
Other
    115.2       163.3  
Total current assets
    953.6       1,003.3  
                 
Property, plant and equipment, at cost
               
Gas distribution
    4,733.6       4,598.2  
Shipping
    333.6       330.0  
Other
    60.5       32.8  
Property, plant and equipment, at cost
    5,127.7       4,961.0  
Less accumulated depreciation
    2,104.9       2,021.9  
Total property, plant and equipment, net
    3,022.8       2,939.1  
                 
Long-term investments
    134.2       128.8  
Other assets
    385.9       364.5  
                 
Total assets
  $ 4,496.5     $ 4,435.7  
                 
The accompanying notes are an integral part of these statements.
               

 
 

 
 
Nicor Inc.
           
Consolidated Balance Sheets
           
(millions, except share data)
           
             
LIABILITIES AND CAPITALIZATION
           
             
   
December 31
 
   
2010
   
2009
 
             
Current liabilities
           
Short-term debt
  $ 425.0     $ 494.0  
Accounts payable
    335.5       353.9  
Customer credit balances and deposits
    110.6       141.7  
Derivative instruments
    82.9       72.3  
Other
    120.3       106.2  
Total current liabilities
    1,074.3       1,168.1  
                 
Deferred credits and other liabilities
               
Regulatory asset retirement liability
    843.9       796.8  
Deferred income taxes
    423.4       409.9  
Health care and other postretirement benefits
    229.7       199.7  
Asset retirement obligation
    190.9       191.6  
Other
    132.0       133.6  
Total deferred credits and other liabilities
    1,819.9       1,731.6  
                 
Commitments and contingencies
               
                 
Capitalization
               
Long-term obligations
    498.4       498.3  
Common equity
               
Common stock, $2.50 par value per share, (45,546,759 and 45,245,409 shares
         
outstanding, respectively)
    113.9       113.1  
Paid-in capital
    69.1       54.6  
Retained earnings
    934.1       881.0  
Accumulated other comprehensive loss
    (13.2 )     (11.0 )
Total common equity
    1,103.9       1,037.7  
                 
Total capitalization
    1,602.3       1,536.0  
                 
Total liabilities and capitalization
  $ 4,496.5     $ 4,435.7  
                 
The accompanying notes are an integral part of these statements.
               


 
 

 
 
Nicor Inc.
                 
Consolidated Statements of Common Equity
                 
(millions, except per share data)
                 
   
Year ended December 31
 
   
2010
   
2009
   
2008
 
Common stock
                 
Balance at beginning of year
  $ 113.1     $ 113.0     $ 112.8  
Issued and converted stock, net of cancellations
    .8       .1       .2  
Balance at end of year
    113.9       113.1       113.0  
                         
Paid-in capital
                       
Balance at beginning of year
    54.6       49.5       44.8  
Issued and converted stock
    15.2       5.3       5.0  
Reacquired and cancelled stock
    (.7 )     (.2 )     (.3 )
Balance at end of year
    69.1       54.6       49.5  
                         
Retained earnings
                       
Balance at beginning of year
    881.0       830.3       795.5  
Net income
    138.4       135.5       119.5  
Dividends on common stock ($1.86 per share for 2010 to 2008)
    (85.3 )     (84.8 )     (84.5 )
Other
    -       -       (.2 )
Balance at end of year
    934.1       881.0       830.3  
                         
Accumulated other comprehensive loss
                       
Balance at beginning of year
    (11.0 )     (19.7 )     (7.9 )
Other comprehensive income (loss)
    (2.2 )     8.7       (11.8 )
Balance at end of year
    (13.2 )     (11.0 )     (19.7 )
                         
Total common equity
  $ 1,103.9     $ 1,037.7     $ 973.1  
                         

Consolidated Statements of Comprehensive Income
                 
(millions)
                 
   
Year ended December 31
 
   
2010
   
2009
   
2008
 
                   
Net income
  $ 138.4     $ 135.5     $ 119.5  
Other comprehensive income (loss)
                       
Loss on cash flow hedges (net of income tax of $(2.8), $(2.8) and $(2.4),
     respectively)
    (4.5 )     (4.3 )     (3.6 )
Reclassifications of hedge (gains) losses to net income (net of income
     tax of $1.7, $7.9 and $(1.4), respectively)
    2.6       12.0       (2.1 )
Postretirement gains (losses) (net of income tax of $0.1, $0.9 and $(3.9),
     respectively)
    -       1.2       (6.0 )
Foreign currency translation adjustment
    (.3 )     (.2 )     (.1 )
Other comprehensive income (loss), net of tax
    (2.2 )     8.7       (11.8 )
                         
Comprehensive income
  $ 136.2     $ 144.2     $ 107.7  
                         
The accompanying notes are an integral part of these statements.
                       

 
 
 

 

Notes to the Consolidated Financial Statements

Certain terms used herein are defined in the glossary on pages ii and iii.

1.
PROPOSED MERGER WITH AGL RESOURCES

In December 2010, Nicor entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AGL Resources, a copy of which was filed with the SEC.  In accordance with the Merger Agreement, each share of Nicor stock, other than shares to be cancelled and Dissenting Shares (as defined in the Merger Agreement), outstanding at the Effective Time (as defined in the Merger Agreement) will be converted into the right to receive consideration consisting of (i) $21.20 in cash and (ii) 0.8382 shares of AGL Resources common stock, subject to adjustments in certain circumstances.

Completion of the proposed merger is conditioned upon, among other things, shareholder approval by both companies, the SEC’s clearance of a registration statement registering AGL Resources common stock, expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvement Act and regulatory approval by the ICC.

The Merger Agreement provides certain termination rights for both Nicor and AGL Resources, and provides for the payment of fees and expenses upon the termination of the Merger Agreement under certain circumstances. Nicor currently anticipates the merger will be completed in the second half of 2011.  Although the company believes that Nicor and AGL Resources will receive the required authorizations, approvals and consents to complete the proposed merger, there can be no assurance as to the timing of these authorizations, approvals and consents or as to the ultimate ability to obtain such authorizations, consents or approvals (or any additional authorizations, approvals or consents which may otherwise become necessary) or that such authorizations, approvals or consents will be obtained on terms and subject to conditions satisfactory to Nicor and AGL Resources.

For additional information concerning the proposed merger, please see Nicor’s Form 8-K filed with the SEC on December 7, 2010 and the Form S-4 registration statement filed with the SEC by AGL Resources on February 4, 2011.

For the year ended December 31, 2010, the company has incurred and expensed $4.6 million of merger-related costs.  No other adjustments have been made to the financial statements as a result of the proposed merger.

2.
ACCOUNTING POLICIES

Consolidation.  The consolidated financial statements include the accounts of Nicor and all majority-owned subsidiaries.  Nicor’s key subsidiaries are described in Note 14 – Business Segment and Geographic Information.  All significant intercompany balances and transactions have been eliminated.

Use of estimates.  The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect reported amounts.  Actual results could differ from those estimates and such differences could be material.  Accounting estimates requiring significant management judgment involve accrued unbilled revenues, derivative instruments, regulatory assets and liabilities, pension and other postretirement benefits, potential asset impairments, asset retirement obligations, loss contingencies including environmental contingencies, credit risk and income taxes.

Subsequent events.  The company’s management evaluated subsequent events for potential recognition and disclosure through the date the financial statements were issued.

 
 

 
Cash and cash equivalents.  Cash equivalents are comprised of highly liquid investments of domestic subsidiaries with an initial maturity of three months or less.  The carrying value of these investments approximates fair value.

Regulatory assets and liabilities.  Nicor Gas is regulated by the ICC, which establishes the rules and regulations governing utility rates and services in Illinois.  As a rate-regulated company, Nicor Gas is required to recognize the economic effects of rate regulation and, accordingly, has recorded regulatory assets and liabilities.  Regulatory assets represent probable future revenue associated with certain costs that are expected to be recovered from customers through rate riders or base rates, upon approval by the ICC.  Regulatory liabilities represent probable future reductions in revenues collected from ratepayers through a rate rider or base rates, or probable future expenditures.  If Nicor Gas’ operations become no longer subject to rate regulation, a write-off of net regulatory liabilities would be required.

The company had regulatory assets and liabilities at December 31 as follows (in millions):

   
2010
        2009  
Regulatory assets - current
             
   Regulatory postretirement asset $ 21.1
 
  $  20.6  
   Deferred gas costs
    6.5       24.9  
   Other
    7.4       5.4  
Regulatory assets - noncurrent
               
   Regulatory postretirement asset
    193.3       195.4  
   Deferred gas costs
    1.4       4.4  
   Deferred environmental costs
    25.0       18.1  
   Unamortized losses on reacquired debt
    13.1       14.2  
   Other
    9.6       8.9  
    $ 277.4     $ 291.9  
                 
Regulatory liabilities - current
               
   Regulatory asset retirement liability
  $ 17.2     $ 14.5  
   Bad debt rider
    16.4       -  
   Other
    7.7       2.7  
Regulatory liabilities - noncurrent
               
   Regulatory asset retirement liability
    843.9       796.8  
   Regulatory income tax liability
    18.2       39.1  
   Bad debt rider
    11.7       -  
   Other
    .9       .8  
    $ 916.0     $ 853.9  

All items listed above are classified in Other on the Consolidated Balance Sheets, with the exception of the noncurrent portion of the Regulatory asset retirement liability, which is stated separately.

The ICC does not presently allow Nicor Gas the opportunity to earn a return on its regulatory postretirement asset.  The regulatory postretirement asset is expected to be recovered from ratepayers over a period of approximately 9 to 12 years.  The regulatory assets related to debt are not included in rate base, but are recovered over the term of the debt through the rate of return authorized by the ICC.  Nicor Gas is allowed to recover and is required to pay, using short-term interest rates, the carrying costs related to temporary under or overcollections of natural gas costs, certain environmental costs and energy efficiency costs charged to its customers.  However, there is no interest associated with the under or overcollections of bad debt expense.

Investments.  The company’s investments in marketable securities are categorized at the date of acquisition as trading, held-to-maturity, or available-for-sale.  Trading securities, which include money market funds, are carried at fair value and are classified as current assets unless held to satisfy a long-term obligation.  The company classifies money market funds held by its non-U.S. subsidiaries as short-term investments and all others are classified as cash equivalents.  Debt securities are categorized as held-to-maturity when the company has the positive intent and ability to hold the securities to maturity.  Held-to-maturity securities are included in either short-term or long-term investments based upon their contractual maturity date.  The company carries held-to-maturity securities at amortized cost, which approximates fair value.  Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported in common equity as a component of accumulated other comprehensive income.  Available-for-sale securities are classified as noncurrent assets unless the intent is to sell the security within 12 months.  The specific identification method is used to determine realized gains or losses on the sale of marketable securities.

Investments in equity securities that do not have a readily determinable fair value and do not qualify for the equity method are carried at cost.

 
 

 
Equity method investments.  The company invests in partnerships and limited liability companies that are accounted for under the equity method.  Related investment balances classified as long-term investments at December 31, 2010 and 2009 were $93.8 million and $99.6 million, respectively, and include $76.0 million and $84.8 million, respectively, related to Triton.

Goodwill and other intangible assets.  Goodwill is the excess cost of an acquired business over the fair value of assets acquired and liabilities assumed in a business combination.  Tropical Shipping had goodwill of $22.5 million and $20.9 million at December 31, 2010 and 2009, respectively.  The increase in goodwill from 2009 to 2010 is due primarily to the acquisition of the assets of V.I. Cargo Services, Inc., a provider of less-than-container load and full container load consolidation services from the United States to the island of St. Croix (in the U.S. Virgin Islands).  Nicor Services had goodwill of $4.0 million at both December 31, 2010 and 2009.  Goodwill is tested for impairment annually.  Intangible assets other than goodwill with definite lives are amortized over their useful lives and totaled $5.1 million and $2.6 million, net of accumulated amortization, at December 31, 2010 and 2009, respectively.  These intangible assets consisted primarily of customer and agency relationships at Tropical Shipping.  At December 31, 2010, intangible assets also included rights that were obtained by Central Valley related to the storage facility development.  Goodwill and other intangible assets are classified in noncurrent other assets on the Consolidated Balance Sheets.

Asset retirement obligations.  The company records legal obligations associated with the retirement of long-lived assets in the period in which the obligation is incurred, if sufficient information exists to reasonably estimate the fair value of the obligation.  When an asset retirement obligation is recorded as a liability, a corresponding amount is recorded as an asset retirement cost (an additional cost of the long-lived asset).  Subsequently, the asset retirement obligation is accreted to the expected settlement amount and the asset retirement cost is depreciated over the life of the asset on a straight-line basis.

Subject to rate regulation, Nicor Gas continues to accrue all future asset retirement costs through depreciation over the lives of its assets even when a legal retirement obligation does not exist or insufficient information exists to determine the fair value of the obligation.  Amounts charged to depreciation by Nicor Gas for future retirement costs, in excess of the normal depreciation and accretion described above, are classified as a regulatory asset retirement liability.

Derivative instruments. Cash flows from derivative instruments are recognized in the Consolidated Statements of Cash Flows, and gains and losses are recognized in the Consolidated Statements of Income, in the same categories as the underlying transactions.

Cash flow hedge accounting may be elected only for highly effective hedges, based upon an assessment, performed at least quarterly, of the historical and probable future correlation of cash flows from the derivative instrument to changes in the expected future cash flows of the hedged item.  To the extent cash flow hedge accounting is applied, the effective portion of any changes in the fair value of the derivative
instruments is reported as a component of accumulated other comprehensive income.  Ineffectiveness, if any, is immediately recognized in operating income.  The amount in accumulated other comprehensive income is reclassified to earnings when the forecasted transaction is recognized in the Consolidated Statements of Income, even if the derivative instrument is sold, extinguished or terminated prior to the transaction occurring.  If the forecasted transaction is no longer expected to occur, the amount in accumulated other comprehensive income is immediately reclassified to operating income.

 
 

 
Nicor Gas.  Derivative instruments, such as futures contracts, options and swap agreements, are utilized primarily in the purchase of natural gas for customers.  These derivative instruments are reflected at fair value and are not designated as hedges.  Realized gains or losses on such instruments are included in the cost of gas delivered and are passed directly through to customers, subject to ICC review, and therefore have no direct impact on earnings.  Unrealized changes in the fair value of these derivative instruments are deferred as regulatory assets or liabilities.

Nicor Gas enters into swap agreements to reduce the earnings volatility of certain forecasted operating costs arising from fluctuations in natural gas prices, such as the purchase of natural gas for use in company operations.  These derivative instruments are carried at fair value.  To the extent hedge accounting is not elected, changes in such fair values are immediately recorded in the current period as operating and maintenance expense.

Nicor Enerchange.  Derivative instruments, such as futures contracts, options, forward contracts, swap agreements and other energy-related contracts are held by Nicor’s wholesale natural gas marketing business, Nicor Enerchange, for trading purposes.  Certain of these derivative instruments are used to economically hedge price risk associated with inventories of natural gas, fixed-price purchase and sale agreements and other future natural gas commitments.  Nicor Enerchange records such derivative instruments at fair value and generally cannot elect hedge accounting.  As a result, changes in derivative fair values may have a material impact on Nicor’s financial statements.

Other derivative instruments are used by Nicor Enerchange to hedge price risks related to the activities of affiliates.  Derivatives are held related to certain utility-bill management products sold to retail customers.  These derivative instruments are carried at fair value and cash flow hedge accounting may or may not be elected.  Other derivative instruments are held for the purpose of hedging the commodity price risk associated with the forecasted purchase of base gas that will be injected as part of the development of the natural gas storage facility by Central Valley.  Such derivative instruments are carried at fair value and cash flow hedge accounting has been elected on a consolidated basis.  The base gas is a component of the storage facility’s construction costs.  Therefore, amounts recorded in accumulated other comprehensive income related to these derivative instruments will not be reclassified to earnings until the storage facility is retired and the base gas is sold.

Nicor. Forward-starting interest rate swaps are utilized to hedge the interest payments associated with long-term debt.  These derivative instruments are carried at fair value and cash flow hedge accounting is elected.  The effective portion of any changes in the fair value of the derivatives is deferred in accumulated other comprehensive income.  Upon settlement, the deferred amount is amortized to interest expense over the life of the debt.

Credit risk and concentrations.  Nicor’s major subsidiaries have diversified customer bases and the company believes that it maintains prudent credit policies which mitigate customer receivable, supplier performance and derivative counterparty credit risk.  The company is exposed to credit risk in the event a customer or supplier defaults on a contract to pay for or deliver product at agreed-upon terms and conditions, or a counterparty to a derivative instrument defaults on a settlement or otherwise fails to perform under contractual terms.  To manage this risk, the company has established procedures to determine and monitor the creditworthiness of counterparties, to seek guarantees or collateral back-up in the form of cash or letters of credit, to acquire credit insurance in certain instances, and to limit its exposure to any one counterparty.  Nicor also, in some instances, enters into netting arrangements to
mitigate counterparty credit risk.  Fair value measurements consider credit risk.  For assets and liabilities not carried at fair value, credit losses are accrued when probable and reasonably estimable.

 
 

 
On February 2, 2010, the ICC approved a bad debt rider that was filed for in 2009 by Nicor Gas.  The bad debt rider provides for the recovery from (or refund to) customers of the difference between Nicor Gas’ actual bad debt experience on an annual basis and the benchmark bad debt expense included in its rates for the respective year.

Revenue recognition.  Gas distribution revenues are recognized when natural gas is delivered to customers.  In accordance with ICC regulations and subject to its review, the cost of gas delivered is charged to customers without markup, although the timing of cost recovery can vary.  Temporary under and overcollections of gas costs are deferred or accrued as a regulatory asset or liability with a corresponding decrease or increase to cost of gas, respectively.

Nicor Gas accrues revenues for estimated deliveries to customers from the date of their last bill until the balance sheet date.  Receivables include accrued unbilled revenues of $144.8 million and $141.0 million at December 31, 2010 and 2009, respectively, related primarily to gas distribution operations.

Nicor Gas classifies revenue taxes billed to customers as operating revenues and related taxes incurred as operating expenses.  Revenue taxes included in operating expense for 2010, 2009 and 2008 were $145.9 million, $148.1 million and $171.1 million, respectively.

In the shipping business, revenues and related delivery costs are recognized at the time vessels depart from port.  While alternative methods of recognizing shipping revenue and related costs exist, the difference between those methods and the company’s policy does not have a material impact on operating results.

Nicor Enerchange presents revenue from natural gas sales, cost of sales, and related derivative instruments, which are entered into for trading purposes, on a net basis.  For Nicor Solutions and Nicor Advanced Energy, revenue is recognized on their 12-month utility-bill management contracts as the lesser of cumulative earned or cumulative billed amounts.  Nicor Services recognizes revenue for warranty and repair contracts on a straight-line basis over the contract term.  Revenue for maintenance services is recognized at the time such services are performed.

Repair and maintenance expense.  Nicor records expense for repair and maintenance costs as incurred.  The shipping business uses the direct expensing method for planned major maintenance related to dry-docking and major repairs of its owned vessels.

Legal defense costs.  The company accrues estimated legal defense costs associated with loss contingencies in the period in which it determines that such costs are probable of being incurred and are reasonably estimable.

Depreciation.  Property, plant and equipment are depreciated over estimated useful lives on a straight-line basis.  The gas distribution business composite depreciation rate is 4.1 percent, which includes all estimated future retirement costs.  Upon the retirement of these assets, no gain or loss is recognized.  In the shipping business, the estimated useful lives of vessels range from 20 to 25 years.

Income taxes.  Deferred income taxes are provided at the current statutory income tax rate for temporary differences between the tax basis (adjusted for related unrecognized tax benefits, if any) of an asset or liability and its reported amount in the financial statements.  In the gas distribution business, investment tax credits and regulatory income tax liabilities for deferred taxes in excess of the current statutory rate are amortized to income as the temporary difference reverses.

 
 

 
A deferred income tax liability is not recorded on undistributed foreign earnings that are expected in management’s judgment to be indefinitely reinvested offshore.  Management considers, among other factors, actual cash investments offshore as well as projected cash requirements in making this determination.  Changes in management’s investment or repatriation plans or circumstances could result in a different deferred income tax liability.

The company records unrecognized tax benefits based on a recognition threshold and valuation method to recognize and measure an income tax position taken, or expected to be taken, in a tax return.  The evaluation is based on a two-step approach.  The first step requires the company to evaluate whether the tax position would “more likely than not,” based upon its technical merits, be sustained upon examination by the appropriate taxing authority.  The second step requires the tax position to be measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement.  The company recognizes accrued interest related to unrecognized tax benefits in interest expense and interest income.  Penalties, if any, are recorded in operating expense.

3.
INVESTMENTS

The company’s investments in debt and equity securities at December 31 are as follows (in millions):

   
2010
   
2009
 
             
Money market funds
  $ 82.9     $ 121.1  
Corporate bonds
    6.8       1.3  
Other investments
    8.5       4.8  
    $ 98.2     $ 127.2  

Investments in debt and equity securities are classified on the Consolidated Balance Sheets at December 31 as follows (in millions):

   
2010
   
2009
 
             
Cash equivalents
  $ 12.6     $ 43.8  
Short-term investments
    70.6       78.0  
Long-term investments
    15.0       5.4  
    $ 98.2     $ 127.2  

Investments categorized as trading (including money market funds) totaled $85.0 million and $122.7 million at December 31, 2010 and 2009, respectively.  Corporate bonds and certain other investments are categorized as held-to-maturity.  The contractual maturities of the held-to-maturity investments at December 31, 2010 are as follows (in millions):
 
        Years to maturity
Less
than 1 year
   
1-5
Years
   
5-10
Years
   
Total
 
                     
$ .2     $ 7.7     $ .9     $ 8.8  

Nicor’s investments also include certain restricted investments, including certificates of deposit and bank accounts, maintained to fulfill statutory or contractual requirements.  These investments totaled $2.0 million and $3.1 million at December 31, 2010 and 2009, respectively.  In addition, the company holds a $2.4 million investment in a port facility development venture carried at cost.

Gains or losses included in earnings resulting from the sale of investments were not significant.

 
 

 

4.
ASSET RETIREMENT OBLIGATIONS

Nicor records AROs associated with services, mains and other components of the distribution system and the buildings in its gas distribution business and with certain equipment in its shipping business.  Nicor has not recognized an ARO associated with gathering lines and storage wells in its gas distribution business because there is insufficient company or industry retirement history to reasonably estimate the fair value of the obligation.

The following table presents a reconciliation of the beginning and ending ARO for the years ended December 31 (in millions):

   
2010
   
2009
 
             
Beginning of period
  $ 192.2     $ 187.2  
Liabilities incurred during the period
    2.1       2.1  
Liabilities settled during the period
    (4.1 )     (6.3 )
Accretion
    11.0       10.8  
Revision in estimated cash flows
    (9.8 )     (1.6 )
End of period
  $ 191.4     $ 192.2  

Substantially all of the ARO is classified as a noncurrent liability.

5.
GAS IN STORAGE

Gas in storage at December 31 included natural gas inventory of the following subsidiaries (in millions):

   
2010
   
2009
 
             
Nicor Gas
  $ 119.2     $ 104.7  
Nicor Enerchange
    44.7       32.5  
    $ 163.9     $ 137.2  

Nicor Gas’ inventory is carried at cost on a LIFO basis.  Nicor Enerchange’s inventory is carried at the lower of weighted-average cost or market.

Based on the average cost of gas purchased in December 2010 and 2009, the estimated replacement cost of Nicor Gas’ inventory at December 31, 2010 and 2009 exceeded the LIFO cost by $226.8 million and $288.5 million, respectively.

During 2009, Nicor Gas liquidated 8.8 Bcf of its LIFO-based inventory at an average cost per Mcf of $7.83.  For gas purchased in 2009, the company’s average cost per Mcf was $3.89 lower than the average LIFO liquidation rate.  Applying LIFO cost in valuing the liquidation, as opposed to using the average gas purchase cost, had the effect of increasing the cost of gas in 2009 by $34.3 million.

There was no liquidation of LIFO layers during 2010 or 2008.

Since the cost of gas, including inventory costs, is charged to customers without markup, subject to ICC review, the LIFO liquidation in 2009 had no impact on net income.

Nicor Enerchange recorded charges of $7.4 million, $2.8 million and $8.3 million in 2010, 2009 and 2008, respectively, resulting from lower of cost or market valuations.
 
 

 

6.
SHORT-TERM AND LONG-TERM DEBT

The following table presents the long-term debt of Nicor Gas at December 31, which is classified as long-term obligations on the Consolidated Balance Sheets (in millions):

   
2010
   
2009
 
First Mortgage Bonds
           
6.625% Series due 2011
  $ 75.0     $ 75.0  
7.20% Series due 2016
    50.0       50.0  
4.70% Series due 2019
    50.0       50.0  
5.80% Series due 2023
    50.0       50.0  
6.58% Series due 2028
    50.0       50.0  
5.90% Series due 2032
    50.0       50.0  
5.90% Series due 2033
    50.0       50.0  
5.85% Series due 2036
    50.0       50.0  
6.25% Series due 2038
    75.0       75.0  
      500.0       500.0  
Less:  Unamortized debt discount, net of premium
    1.6       1.8  
Total long-term debt
  $ 498.4     $ 498.2  

In February 2011, Nicor Gas issued $75 million First Mortgage Bonds at 2.86 percent, due in 2016 through a private placement and utilized the proceeds to retire the $75 million 6.625 percent First Mortgage Bond series which matured in February 2011.

In February 2009, the $50 million 5.37 percent First Mortgage Bond series matured and was retired.  In July 2009, Nicor Gas issued $50 million First Mortgage Bonds at 4.70 percent, due in 2019 through a private placement.

In determining that the bonds issued in 2011 and 2009 qualified for exemption from registration under Section 4(2) of the Securities Act of 1933, Nicor Gas relied on the facts that the bonds were offered only to a limited number of large institutional investors and each institutional investor that purchased the bonds represented that it was purchasing the bonds for its own account and not with a view to distribute them. 

Substantially all gas distribution properties are subject to the lien of the indenture securing Nicor Gas’ First Mortgage Bonds.

In April 2010, Nicor Gas established a $400 million, 364-day revolving credit facility, expiring April 2011 to replace the $550 million, 364-day revolving credit facility, which was set to expire in May 2010 and Nicor and Nicor Gas established a $600 million, three-year revolving credit facility, expiring April 2013 to replace the $600 million, five-year revolving credit facility, which was set to expire in September 2010.  These facilities were established with major domestic and foreign banks and serve as backup for the issuance of commercial paper.  The company had $425 million and $494 million of commercial paper outstanding with a weighted-average interest rate of 0.2 percent and 0.1 percent at December 31, 2010 and 2009, respectively.

In 2010, Nicor entered into forward-starting interest rate swaps with a notional totaling $90 million.  The swaps hedge the risk associated with the interest payments attributable to the probable issuance of long-term fixed-rate debt in 2012 intended to finance the development of a natural gas storage facility.  Under the terms of the swaps, Nicor agrees to pay a fixed swap rate and receive a floating rate based on LIBOR.

The company believes it is in compliance with all debt covenants.

 
 

 

The company incurred total interest expense of $38.2 million, $38.8 million and $40.3 million in 2010, 2009 and 2008, respectively.  Interest expense is reported net of amounts capitalized.  Interest expense capitalized for the years ended December 31, 2010, 2009 and 2008 was immaterial.

Nicor Gas may not extend cash advances to an affiliate if Nicor Gas has any outstanding short-term borrowings.  Nicor Gas’ practice also provides that the balance of cash deposits or advances from Nicor Gas to an affiliate at any time shall not exceed the unused balance of funds actually available to that affiliate under its existing bank credit agreements or its commercial paper facilities with unaffiliated third parties.  Similarly, the balance of cash advances to Nicor Gas from an affiliate may not exceed the unused balance of funds actually available to Nicor Gas under its existing credit agreements or commercial paper facilities with unaffiliated third parties.  Nicor Gas’ positive cash deposits, if any, may be applied by Nicor to offset negative balances of other Nicor subsidiaries and vice versa.

7.
FAIR VALUE MEASUREMENTS

The fair value of assets and liabilities that are measured on a recurring basis are categorized in the table below (in millions) into three broad levels (with Level 1 considered the most reliable) based upon the valuation inputs.

   
Quoted prices in active markets
   
Significant observable inputs
   
Significant unobservable inputs
       
   
(Level 1)
   
(Level 2)
   
(Level 3)
   
Total
 
December 31, 2010
                       
Assets
                       
   Money market funds
  $ 82.9     $ -     $ -     $ 82.9  
   Commodity derivatives
    21.3       35.7       9.3       66.3  
   Interest rate derivative
    -       1.0       -       1.0  
    $ 104.2     $ 36.7     $ 9.3     $ 150.2  
Liabilities
                               
   Commodity derivatives
  $ 55.4     $ 31.3     $ 12.3     $ 99.0  
   Interest rate derivative
    -       3.2       -       3.2  
    $ 55.4     $ 34.5     $ 12.3     $ 102.2  
                                 
December 31, 2009
 
Assets
 
   Money market funds
  $ 121.1     $ -     $ -     $ 121.1  
   Commodity derivatives
    14.6       16.8       8.8       40.2  
    $ 135.7     $ 16.8     $ 8.8     $ 161.3  
Liabilities
 
   Commodity derivatives
  $ 54.2     $ 29.3     $ 3.8     $ 87.3  

When available and appropriate, the company uses quoted market prices in active markets to determine fair value and classifies such items within Level 1.  For derivatives, Level 1 values include only those derivative instruments traded on the NYMEX.  The company enters into over-the-counter instruments with values that are similar to, and correlate with, quoted prices for exchange-traded instruments in active markets; the fair values of these over-the-counter items consider credit risk and are classified within Level 2.  In certain instances, the company may be required to determine a fair value using significant unobservable inputs such as indicative broker prices; the resulting valuation is classified as Level 3.

A description of the company’s objectives and strategies for using derivative instruments, and related accounting policies, is included in Note 2 – Accounting Policies – Derivative instruments and Credit risk and concentrations.

 
 

 

The following table presents a reconciliation of the Level 3 beginning and ending net derivative asset (liability) balances for the periods ended December 31 (in millions):

   
2010
   
2009
 
             
Beginning of period
  $ 5.0     $ 1.6  
Net realized/unrealized gains (losses)
               
Included in regulatory assets and liabilities
    (.6 )     (3.5 )
Included in net income
    (1.5 )     15.2  
Settlements, net of purchases and issuances
    5.7       (2.0 )
Transfers into Level 3
    (9.8 )     5.4  
Transfers out of Level 3
    (1.8 )     (11.7 )
End of period
  $ (3.0 )   $ 5.0  
                 
Net unrealized gains (losses) included in net income above relating to derivatives still held at December 31
  $ (2.3 )   $ 5.0  

Net realized/unrealized gains (losses) included in net income are attributable to Nicor Enerchange and are classified as operating revenues.

Transfers into and out of Level 3 reflect the liquidity at the relevant natural gas trading locations and dates which affects the significance of unobservable inputs used in the valuation.  In 2010, in accordance with new accounting guidance, the company elected to determine both transfers into and out of Level 3 using values at the end of the interim period in which the transfer occurred.  In 2009, transfers into Level 3 were determined using beginning of period values and transfers out of Level 3 were determined using end of period values.

Nicor maintains margin accounts related to financial derivative transactions.  The company’s policy is not to offset the fair value of assets and liabilities recognized for derivative instruments or any related margin account.  The following table represents the balance sheet classification of margin accounts related to derivative instruments at December 31 (in millions):

   
2010
   
2009