| ·   | Restricted      stock units give the employee the right to receive shares of stock at a      designated time or event in the future.  The participant holding      restricted stock units will have the right to receive dividend equivalent      rights, which are equal to the amount of dividends that would be paid on      the restricted shares, as if such shares were  outstanding. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Restricted      stock units will vest and the shares of Nicor stock will be delivered on      the fourth anniversary of date ofgrant. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Each      performance unit equals $1.00 and total units are a percentage of base      salary at the time of the award. |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | Performance      units pay out based on total shareholder return over a three-year      performance period. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | Performance      units will pay out in cash, unless a participant in the Stock Deferral      Plan elects to defer up to 50% of their payout into that      plan.  Deferral elections must meet the guidelines and timing of      the Stock Deferral Plan to beeffective. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | All      performance units pay out at the end of a three-year performance      period.  Payouts generally will be made as soon as practicable      following the end of the performance period, but not later than      December 31 of the calendar year following the end of the performance      period. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      payout is based on a measure of relative total shareholder return      (TSR).  Nicor’s TSR will be measured as the change in share      price over the three-year period plus dividends granted over |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | that      period.  For the measurement of Nicor share price, rather than      focusing on a single-day’s price, the average of the closing share prices      over a 20-day period will be used for the base and ending      TSRs. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      performance measure and multiplier (described below) is based on the Nicor      TSR over the performance period, as compared to the performance of the      companies in a utility industry peer group (S&P MidCap 400 Utility      group). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      following schedule shall be used to determine the Performance      Multiplier: |
|--------------------|-----------------------------------------------------------------------------------------|

| Performance Unit      Multiplier Schedule |
|-------------------------------------------|
|                                      |   |
| Nicor TSR      Ranking*                   | Payout      Multiple |
| 90th      Percentile or higher            | 200% |
| 50th      Percentile                      | 100% |
| 25th      Percentile                      | 25% |
| Below      25th      Percentile           | 0% |

| ·   | Option      exercise price set at the fair market value on date of    grant. |
|--------------------|------------------------------------------------------------------------------|

| ·   | Options      vest after one year and are generally exercisable at the end of three      years. |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | Options      expire ten years from date ofgrant. |
|--------------------|--------------------------------------------------|

| ·   | Options      will be non-qualified stockoptions. |
|--------------------|--------------------------------------------------|

| ·   | Restricted      Stock – actual shares of common stock, which are subject to restrictions      on receipt and transfer and are forfeitable in the event the employee      leaves the Company prior to vesting.  The participant holding      restricted stock shall have all of the rights of a common shareholder,      including the right to vote the shares and receive all dividends paid on      such shares. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Restricted      stock and deferred restricted stock will vest at the end of four years of      employment from the date of grant. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Unvested      performance units held for more than one year (as of the date of death,      disability or retirement) will be eligible for payout at the end of the      performance period based on the normal per-unit performance/pay out      guidelines.  The award will not be  prorated. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Unvested      restricted stock units held for more than one year (as of the date of      death, disability or retirement) will vest and the stock will be paid on      the earlier of separation from service or the fourth anniversary of grant      date. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | All      stock options held for more than one year (as of the date of death,      disability or retirement) will be immediately      exercisable.  Stock options held less than one year will be      forfeited. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Stock      options will remain exercisable for ten years after the date of      grant. |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | Unvested      restricted stock held for more than one year from date of grant will vest      upon death or disability, but notretirement. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Unvested      restricted stock at retirement will be forfeited, unless the Committee      chooses to exercise discretion and accelerate vesting for all or part of      the unvested award. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ·   | Unvested      restricted stock units held for less than four years are immediately      forfeited. |
|--------------------------------------------------------|----------------------------------------------------------------------------------------------------|

|            ·   | Performance      units held less than three years are immediately  forfeited. |
|--------------------------------------------------------|-------------------------------------------------------------------------------|

|            ·   | Stock      options held less than one year are immediately  forfeited. |
|--------------------------------------------------------|------------------------------------------------------------------------|

|            ·   | Stock      options held for one year or longer will be exercisable, with the      remaining term limited to three months after the date of      termination.  After this date, all unexercised options will      expire and be immediatelycancelled. |
|--------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ·   | Restricted      stock held for less than four years are immediately    forfeited. |
|--------------------------------------------------------|-----------------------------------------------------------------------------------|

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