Document:

[~ description of type ~] Letter of Intent

Letter of Intent

July17, 2008

Bill Kaufman

Solar Masters

10935 Hillside Road

Alta Loma, CA 91737

Re: Asset Acquisition of Solar Masters

Dear Mr. Kaufman:

1.  Purpose of Letter 

 The purpose of this Letter of Intent is to evidence a legally non-binding agreement between Probe Manufacturing, Inc. (“Buyer”) and Solar Master (“Seller”) regarding the acquisition of the assets of Solar Masters ("Business"), this agreement shall be enforceable in accordance with its terms as set forth below.

2.  Terms of Transaction 

 The following numbered paragraphs reflect our understanding and agreement on the material terms and conditions of the proposed transaction. The parties have agreed to use their best efforts to negotiate a more complete and definitive agreement which will supersede this Letter.

3. Assets To Be Purchased 

Buyer will purchase all the assets of the Business as set forth in the Seller's balance sheet for the Business dated June 30, 2008, adjusted for transactions conducted in the ordinary course of business from the date of the balance sheet to the date of closing, including among other things, the name(s) of the Business, the Business organization, all property, rights, contracts of any nature, inventories (including inventory currently at the port of Long Beach), rights under domestic and foreign copyrights, patents, trademarks and licensing agreements, know-how and know-how agreements, subscription and circulation lists and goodwill related to the Business, including Seller’s name and website, except Seller’s current account receivables.  Seller would take no action which materially reduces or increases the amount of cash during the period from the date of this communication to the closing date, other than in the ordinary course of business. The purchase will be on the terms and subject to the conditions set forth in a legally written agreement to be negotiated and entered into by Seller and Buyer (“Definitive Agreement”).

4. Liabilities To Be Assumed 

Buyer will assume none of Seller's liabilities.  Specifically Buyer will not be responsible for Seller's tort liabilities, unfunded pension liabilities, any taxes that Seller becomes obligated to pay as a result of the sale, any liabilities resulting from pending litigation, or any undisclosed liabilities.

5. Purchase Price 

Probe gets:

1.

All inventory including the container currently in the Port of Long Beach.

2.

Company name, website, domain name, customer list and any and all Intellectual Property.  This includes the new IP for the low cost barricade light that will bring the cost down to $10.00 USD FOB Factory.

3.

A sourcing connection by Solar Masters/Bill Kaufman to assist with the delivery of the barricade lights to Probe at a cost $10.00 per unit FOB Factory for additional considerations listed in items 3 and 4 below. 

Solar Masters gets:

1.

$80,000 for the container currently in the Port of Long Beach. And Probe agrees to order the next container upon sale of the product in the current container.  The deposit on the next container is to be $40,000.

2.

250,000 shares of Probe common stock and a royalty on gross revenue of 5% for the balance of 2008.

3.

Additional royalty payments of 7% for 2009, 6% for 2010 and 5% for 2011, provided that Probe has gross revenue of a minimum of $1 million, and product cost of $10 USD or less for the “barricade light”.  If these conditions are not met, the royalty shall decrease to 5%.

4.

Additional shares of Probe common stock of 100,000 in 2009; 100,000 in 2010; and 50,000 in 2011 provided that Probe has gross revenue of a minimum of $1 million, and product cost of $10 USD or less for the “barricade light”.  If the gross revenue number is not met, then the stock that was to be issued will become an option to purchase the shares that would have been issuable if the gross revenue target had been met.  The exercise price of the options will be $0.40.

5.

The “barricade light” pricing is to be $10.00 USD and may adjust periodically based on standard industry pricing variations.  This will apply in all sections of this Agreement that refer to the $10.00 USD cost for the barricade light.

6. Representations, Warranties, Covenants, and Conditions 

The Definitive Agreement to be negotiated and entered into by Seller and Buyer will contain the usual and customary representations, warranties, covenants, and conditions, including but not limited to: satisfactory results of the parties due diligence investigations, obtaining the appropriate financing or commitment, approval of all necessary and related documents and agreements, and approvals of the shareholders and boards of directors if required by law. Such approvals may be withheld in the sole discretion of the relevant party.

7. Closing

The Closing shall be subject to the usual and customary conditions and requirements and shall take place no longer than 60 days from the date of this Letter.

8. Noncompetition Agreement 

 The sale will be contingent on Buyer being able to enter into a noncompetition agreement with Seller.

9.  Alternative: Certain Covenants and Restrictions 

In addition to the terms of the proposed transaction described above, and in consideration of the significant expenses that we both will incur in pursuing the sale to you of our business assets and the mutual undertakings described, we agree that the following lettered paragraphs shall also constitute legally binding and enforceable agreements between us.

A. Good Faith Negotiations 

Buyer and Seller shall negotiate in good faith and make their best efforts to arrive at an agreement for the sale of Seller's assets to Buyer at the earliest practicable time.

B. Exclusive Dealing 

While the parties are negotiating an agreement for the sale of Seller's assets to Buyer (and for a period of 30 days after termination of this Letter), Seller shall not directly or indirectly, through an owner, employee, or agent, offer to sell its assets to anyone other than Buyer, encourage inquiries or offers from anyone but Buyer for the sale of its assets.

C. Access to Information 

On or before 5 days after the execution of this Letter of Intent, and for a period of 21 days thereafter, Seller shall permit Buyer, its investors and other sources of financing, and their accountants, counsel, and other representatives and agents to have reasonable access to the properties and the books, records, contracts, and other documents and information concerning the businesses, finances, and assets of Seller. They shall also have reasonable access during normal business hours and upon reasonable notice to legal, financial, accounting, and other representatives of Seller with knowledge of the businesses, finances, and assets of Seller. However, they shall not contact any employees or customers of Seller without Seller's approval, which it shall not unreasonably withhold or delay. Seller shall have the right to have a representative present at any meeting with employees and customers. Seller shall not be required to grant access that is prohibited by law.

D. Prohibition on Disclosure of Confidential Information 

Neither Buyer nor any of its representatives or agents shall disclose to any third party any confidential or proprietary information about the business activities or assets of Seller or any of the transactions contemplated by this Agreement, except as required by applicable law. Buyer may disclose such confidential or proprietary information as necessary for it to obtain financing for this acquisition, but only if the person receiving the information executes an agreement legally enforceable by Seller to keep such information confidential. If Seller and Buyer are unable to agree on the sale of Seller's assets to Buyer, Buyer shall return all records, contracts, and other information about Seller that it obtained during their negotiations 

Seller and Buyer agree that any breach of the prohibition against the disclosure of confidential or proprietary information will cause irreparable injury and that any remedy at law for the breach will be inadequate. Therefore, the parties agree that in the event of any breach by Buyer of this provision, Seller shall be entitled to obtain preliminary and permanent injunctive relief without having to prove that actual damages resulted from the breach. This injunctive relief is in addition to all other legal and equitable remedies to which Seller may be entitled.

E. Expenses 

Buyer and Seller each shall be solely responsible for expenses that it incurs in connection with the negotiations for the sale of Seller's assets and the consummation of the sale and other transactions contemplated by their agreement.

F. Public Disclosures 

Seller and Buyer shall consult with each other and must agree as to the timing, content, and form before issuing any press release or other public disclosure related to this Letter or any transaction contemplated by this Letter. However, this does not prohibit either of them from making a public disclosure regarding this Letter and the transactions contemplated by this Letter if, in the opinion of its legal counsel, such a disclosure is required by law.

G. Termination 

Seller and Buyer each has the right to terminate this Letter of Intent if no agreement to sell Seller's assets to Buyer is reached within 21 days from the date of this Letter. Following termination, neither party shall have any obligations under this Letter of Intent, except as stated in Paragraphs B, D, E, F, G, H, and J of the Binding Provisions, which will survive such termination.

H. No Conflicting Agreement 

Each party hereto represents and warrants that such party is not a party to any contract, agreement or understanding with any other party which would prevent such party from entering into this Letter of Intent.

I. Counterparts 

This Letter of Intent may be executed in counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

J. Definitive Agreements 

Upon execution of this Letter of Intent, the parties will then attempt to negotiate and execute a Definitive Agreement. Neither party has an obligation to negotiate or conclude the business arrangement in this Letter. Each party acknowledges that it will not take any action or refrain from taking action in reliance on this Letter, and any such reliance will be at its own risk.

K.  Non-binding Effect 

 As indicated above, this Letter of Intent is intended to be a legally non-binding agreement, enforceable in accordance with its terms as set forth in this Letter except as otherwise indicated in this Letter.

Please sign and date this Letter of Intent and return a copy to us to confirm our mutual understandings and agreement. 

Very truly yours, 

Probe Manufacturing, Inc.

By: /s/ Reza Zarif

       Reza Zarif, CEO

AGREED TO AND ACCEPTED: 

Solar Masters

By:/s/ William Kaufman

Name: William Kaufman

Title: Managing Director

Date: 7/24/08

1

25242 Arctic Circle Drive, Lake Forest, California   92630, T (949) 206-6868, F (949) 206-6869 www.probemi.comnicorincsalarydefplan.htm

    Nicor Inc.
Form 8-K

      Exhibit
10.1

      

        
 

         

        

         

        

         

        

         

        

         

        Nicor
Inc.

        Salary Deferral
Plan

        (As
Amended and Restated for Post-2004 Benefits, Effective January 1,
2008)

         

         

         

         

         

         

         

         

         

         

         

         

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        TABLE OF CONTENTS

        Page

        

                                                                              

        
          	
                  SECTION

                	  1
       General	
                   1

                

        

         

        
          	
                   
      

                	
                  1.1
      Purpose

                	 1

        

         

        
          	
                   
      

                	
                  1.2 Effective
      Date, Grandfathering

                	 1

        

         

        
          	
                   
      

                	
                  1.3
      Affiliates and Employers

                	 1

        

         

        
          	
                   
      

                	
                  1.4 Plan
      Administration, Source of Benefit Payments

                	 1

        

         

        
          	
                   
      

                	
                  1.5 Plan
      Year

                	 2

        

         

        
          	
                   
      

                	
                  1.6
      Applicable Laws

                	 2

        

         

        
          	
                   
      

                	
                  1.7 Gender
      and Number

                	 2

        

         

        
          	
                   
      

                	
                  1.8
      Notices

                	 2

        

         

        
          	
                   
      

                	
                  1.9 Form and
      Time of Elections

                	 2

        

         

        
          	
                   
      

                	
                  1.10
      Evidence

                	 2

        

         

        
          	
                   
      

                	
                  1.11 Action
      by Employers

                	 2

        

         

        
          	
                   
      

                	
                  1.12 Defined
      Terms

                	 2

        

                                                                                   

        
          
            	
                    SECTION

                  	  2 
      Participant Elections	
                     2

                  

          

           

        

        
          	
                   
      

                	
                  2.1 Eligible
      Participants

                	 2

        

         

        
          	
                   
      

                	
                  2.2 Deferral
      Elections

                	 3

        

         

        
          	
                   
      

                	
                  2.3
      Distribution Elections

                	 3

        

         

        
          	
                   
      

                	
                  2.4 Prior
      Plan Elections

                	 4

        

         

        
          	
                   
      

                	
                  2.5
      Salary

                	 4

        

         

        
          	
                   
      

                	
                  2.6
      Bonus

                	 4

        

         

        
          	
                   
      

                	
                  2.7 Plan Not
      Contract of Employment

                	 5

        

                                                                       

          
            	
                    SECTION

                  	  3 
      Plan Accounting	
                     5

                  

          

        

         

        
          	
                   
      

                	
                  3.1
      Accounts

                	 5

        

         

        
          	
                   
      

                	
                  3.2 Limit on
      Crediting of Interest

                	 6

        

         

        
          	
                   
      

                	
                  3.3 Interest
      Yield

                	 6

        

         

        
          	
                   
      

                	
                  3.4 Crediting
      Under Deferral Election

                	 6

        

         

        
          	
                   
      

                	
                  3.5 Limit on
      Distributions

                	 6

        

                                                                       

          
            	
                    SECTION

                  	  4  Termination
      Date	
                     6

                  

          

                                                                         

            
              	
                      SECTION

                    	  5 
      Distribution of Benefits	
                       7

                    

            

             

          

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	
                   
      

                	
                  5.1 Normal or
      Early Retirement Benefit

                	 7

        

         

        
          	
                   
      

                	
                  5.2
      Disability Benefit

                	 7

        

         

        
          	
                   
      

                	
                  5.3 Death
      Benefit

                	 7

        

         

        
          	
                   
      

                	
                  5.4
      Resignation or Dismissal Benefit

                	 7

        

         

        
          	
                   
      

                	
                  5.5
      Pre-Termination Hardship Distribution

                	 8

        

         

        
          	
                   
      

                	
                  5.6
      Distribution on Change in Control

                	 8

        

         

        
          	
                   
      

                	
                  5.7 Form of
      Retirement Benefit Payment

                	 10

        

         

        
          	
                   
      

                	
                  5.8 Form of
      Disability Benefit Payment

                	 11

        

         

        
          	
                   
      

                	
                  5.9
      Beneficiaries

                	 11

        

         

        
          	
                   
      

                	
                  5.10
      Distributions to Persons Under Disability

                	 12

        

         

        
          	
                   
      

                	
                  5.11 Benefit
      May Not be Assigned or Alienated

                	 12

        

         

        
          	
                   
      

                	
                  5.12
      Offset

                	 12

        

         

        
          	
                   
      

                	
                  5.13 Payment
      Delays

                	 12

        

                                                          

          
            	
                    SECTION

                  	  6  Claim For Benefit
      Procedure	
                    12

                  

          

           

        

        
          	
                   
      

                	
                  6.1 Claim for
      Benefits

                	 12

        

                                                          

          
            	
                    SECTION

                  	  7  Committee	
                    13

                  

          

           

        

        
          	
                   
      

                	
                  7.1
      Membership

                	 13

        

         

        
          	
                   
      

                	
                  7.2 Powers of
      Committee

                	 13

        

         

        
          	
                   
      

                	
                  7.3
      Delegation by Committee

                	 14

        

         

        
          	
                   
      

                	
                  7.4
      Information to be Furnished to Committee

                	 14

        

         

        
          	
                   
      

                	
                  7.5
      Committee’s Decision Final

                	 14

        

         

        
          	
                   
      

                	
                  7.6 Liability
      and Indemnification of the Committee

                	 14

        

                                                          

          
            	
                    SECTION

                  	
                      8  Amendment
      and Termination

                  	
                    14

                  

          

        

         

        
          	
                   
      

                	
                  8.1 Amend or
      Terminate

                	 14

        

         

        
          	
                   
      

                	
                  8.2 Special
      Distribution

                	 15

        

         

        
          	
                   

                	
                  8.3 Code
      Section 409A

                	 15

        

                                                    

        
          
            	
                    APPENDIX
      A

                  	  	
                     16

                  

          

           

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        Nicor
Inc.

        Salary Deferral
Plan

        (As
Amended and Restated for Post-2004 Benefits, Effective January 1,
2008)

         

        SECTION 1

         

        General

         

        1.1 Purpose.  Nicor
Inc. Salary Deferral Plan (the “Plan”) has been established by Nicor Inc. (the
“Company”) so that it, and each of its Affiliates which, with the consent of the
Company, adopts the Plan may provide its eligible key management employees with
an opportunity to build additional financial security, thereby aiding such
companies in attracting and retaining employees of exceptional
ability.

         

        1.2 Effective Date,
Grandfathering.  The
“Effective Date” of the amended and restated Plan is January 1, 2008, but the
terms of this amended and restated Plan shall apply only to amounts deferred
under this Plan after December 31, 2004 (and the interest earned thereon) and
amounts earned but not vested as of December 31,
2004.  Notwithstanding any provisions of the Plan to the contrary, the
provisions of the Plan in effect on October 3, 2004 and not the provisions of
this amended and restated Plan shall apply to those amounts that were earned and
vested under the Plan within the meaning of Treas. Reg. §§1.409A-6(a) as of
December 31, 2004, as well as the interest earned thereon (“Grandfathered
Benefits”).  The terms applicable to the Grandfathered Benefits have
not been materially modified within the meaning of Treas. Reg. §§1.409A-6(a)(1)
and (4) on or after October 3, 2004.  

         

        1.3 Affiliates and
Employers.  The
term “Affiliate” means any corporation, trade or business during any period
during which it is, along with the Company (or, before the Company was
established, Northern Illinois Gas Company now doing business as Nicor Gas
(“Nicor Gas”)), a member of a controlled group of corporations or a controlled
group of trades or businesses, as described in Section 414(b) and 414(c) of the
Internal Revenue Code of 1986, as amended (the “Code”).  The Company
and each Affiliate that adopts the Plan for the benefit of its eligible
employees are referred to below collectively as the “Employers” and individually
as an “Employer”.

         

        1.4 Plan Administration, Source
of Benefit Payments.  The
authority to control and manage the operation and administration of the Plan
shall be vested in the compensation committee (the “Committee”) of the Board of
Directors of the Company (the “Board”).  In controlling and managing
the operation and administration of the Plan, the Committee shall have the
rights, powers and duties set forth in Section 7.  The amount of any
benefit payable under the Plan shall be paid from the general assets of the
Employer with respect to whose employee or former employee the benefit is
payable.  Subject to the provisions of the Plan, the liability of an
Employer (the “Original Employer”) with respect to a Participant on account of
reduction in the Participant’s cash remuneration from the Original Employer
pursuant to a Deferral Election shall not be affected by the Participant’s
leaving the employ of such Original Employer to become an employee of another
Employer or an Affiliate (the “New Employer”); provided, however, that, with the
consent of the Original Employer and the New Employer, but without the consent
of the Participant, the liability of the Original Employer may be transferred to
the New Employer.  In 

         

        
          
            1

          

          
            
            

            
              

            

          

          
            
            
the event
of such transfer (a) the Original Employer shall thereafter have no obligation
to the Participant under the Plan, and (b) the New Employer’s rights and
obligations with respect to the Participant shall be governed by the terms of
the Plan, with the New Employer substituted for the Original Employer under the
Plan.  Neither the Participant nor any other person shall acquire by
reason of the Plan any right in or title to any assets, funds or property of the
Employers whatsoever, including, without limiting the generality of the
foregoing, any specific funds, assets, or other property which the Employers, in
their sole discretion, may set aside in anticipation of a liability under the
Plan.  The Participant shall have only a contractual right to the
amounts, if any, payable under the Plan, unsecured by any assets of the
Employers.  Nothing contained in the Plan shall constitute a guarantee
by any of the Employers that the assets of the Employers shall be sufficient to
pay any benefits to any person.

        

         

        1.5 Plan Year.  The
term “Plan Year” means the twelve-consecutive-month period beginning on each
January 1.

         

        1.6 Applicable
Laws.  The
Plan shall be construed and administered in accordance with the laws of the
State of Illinois to the extent that such laws are not preempted by the laws of
the United States of America.

         

        1.7 Gender and
Number.  Where
the context admits, words in any gender shall include any other gender, words in
the singular shall include the plural and the plural shall include the
singular.

         

        1.8 Notices.  Any
notice or document required to be filed with the Committee under the Plan will
be properly filed if delivered or mailed by registered mail, postage prepaid, to
the Committee, in care of the Company, at its principal executive
offices.  Any notice required under the Plan may be waived by the
person entitled to notice.

         

        1.9 Form and Time of
Elections.  Unless
otherwise specified herein, each election permitted to be made by any
Participant or other person entitled to benefits under the Plan, and any
permitted modification or revocation thereof, shall be in writing filed with the
Committee at such times and in such form as the Committee shall
require.

         

        1.10 Evidence.  Evidence
required of anyone under the Plan may be by certificate, affidavit, document or
other information which the person acting on it considers pertinent and
reliable, and signed, made or presented by the proper party or
parties.

         

        1.11 Action by
Employers.  Any
action required or permitted to be taken by any Employer shall be by resolution
of its Board of Directors, or by a duly authorized officer of the
Employer.

         

        1.12 Defined
Terms.  Terms
used frequently with the same meaning are indicated by initial capital letters,
and are defined throughout the Plan.  Appendix A contains an
alphabetical listing of all such terms and the subsections in which they are
defined.

         

        SECTION 2

         

        Participant
Elections

         

        2.1 Eligible
Participants.  Employees
of any Employer who shall be eligible to participate in the Plan shall be
determined by the compensation committee of that
Employer.  Notwithstanding the foregoing provisions of this subsection
2.1, participation in the Plan shall be 

         

        
          
            2

          

          
            
            

            
              

            

          

          
            
            
limited
to a select group of management or highly compensated employees within the
meaning of Sections 201, 301 and 401 of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), as determined by the
Committee.  

        

         

        2.2 Deferral
Elections.  An
individual’s participation in the Plan shall be subject to the
following:

         

        
          	
                  (a)  

                	
                  An
      employee of an Employer who, prior to the beginning of any Plan Year, has
      been designated by the compensation committee of such Employer as eligible
      to participate in the Plan for the Plan Year shall become a Participant
      for that year by filing an election (“Deferral Election”) before the first
      day of that year.

                

        

         

        
          	
                  (b)  

                	
                  The
      Participant shall elect, by his Deferral Election, to have the amount of
      Salary that would otherwise be payable to him from the Employer during
      each pay period during the Plan Year for which the Deferral Election is in
      effect reduced by an amount that is not less than 2 percent nor more than
      10 percent (in multiples of 1 percent) of his Salary for each such pay
      period.  If a Participant’s rate of Salary changes from pay
      period to pay period, there shall be a corresponding change in the amount
      of the reduction in his cash remuneration pursuant to his Deferral
      Election, so that the percentage of Salary subject to such election
      remains constant.

                

        

         

        
          	
                  (c)  

                	
                  The
      Participant shall elect, by his Deferral Election, to have the amount of
      Bonus that would otherwise be payable to him from the Employer after the
      end of the Plan Year for which the Deferral Election is in effect reduced
      by an amount that is not less than 10 percent nor more than 20 percent (in
      multiples of 1 percent) of his Bonus for such Plan
  Year.

                

        

         

        
          	
                  (d)  

                	
                  In
      the event that a Participant ceases to be a member of the group of
      employees to which the Plan is then extended, then Salary and Bonus
      reductions as previously elected will continue for the remainder of the
      Plan Year; however, the former Participant will not be permitted to file a
      Deferral Election for subsequent years unless he again becomes a member of
      the group of employees to which the Plan is
  extended.

                

        

         

        
          	
                  (e)  

                	
                  Notwithstanding
      any provision of the Plan to the contrary, a Deferral Election shall be
      automatically cancelled on the Participant’s Termination Date (as defined
      in Section 4) and shall be without effect
  thereafter.

                

        

         

        
          	
                  (f)  

                	
                  No
      new Deferral Election shall be accepted after a Change in
      Control.

                

        

         

        
          	
                  (g)  

                	
                  A
      Participant’s Deferral Election for any Plan Year shall be applicable to
      Salary paid in that Plan Year and to Bonus for that Plan Year, but such
      Bonus is paid after the end of the Plan Year.  Except as
      otherwise provided in subsection 5.5, a Participant’s Deferral Election
      shall be irrevocable as of the day immediately before the Plan Year to
      which it applies.

                

        

         

        2.3 Distribution
Elections.  Distribution
of a Participant’s Account under the Plan shall be subject to the
following:

         

        
          
            3

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	
                  (a)  

                	
                  Each
      Participant shall file a Distribution Election prior to the first day of
      each Plan Year in which deferrals are made on his behalf under the Plan
      (or under the transition rules of Code Section 409A, prior to January 1,
      2009).  Such Distribution Election shall apply for the deferrals
      made on his behalf under the Plan with respect to such Plan Year, and
      shall be irrevocable as of the day immediately preceding such Plan
      Year.

                

        

         

        
          	
                  (b)  

                	
                  A
      Participant may change his Distribution Election after it has become
      irrevocable for a Plan Year by submitting a modified Distribution Election
      to the Committee under the rules of the Plan, and in accordance with the
      following criteria:

                

        

         

        
          	 	
                  (i)  

                	
                  The
      election of the new form of payment or payment schedule shall have no
      effect until at least 12 months after the date on which the election is
      made;

                

        

         

        
          	 	
                  (ii)  

                	
                  The
      initial payment date under the modified Distribution Election must be the
      first day of a calendar year that is no sooner than five (5) years after
      the previously designated initial payment date (unless the modified
      election is with respect to benefits payable upon death, in accordance
      with subsection 4(d)); and

                

        

         

        
          	 	
                  (iii)  

                	
                  The
      election must be made at least 12 months
      prior to the Participant's previously designated initial payment
      date.

                

        

         

        A
Participant’s modified Distribution Election shall not be considered to be made
until the date on which the election becomes irrevocable.  Such an
election shall become irrevocable no later than the date that is 12 months prior
to the Participant’s previously designated initial payment date.  Any
such modified Distribution Election must comply with the requirements of
subsections 5.7 and 5.8, including, without limitation, with respect to the
period of time during which benefits may be payable.  Installment
payments shall be treated as a single payment for purposes of Code Section
409A.

         

        2.4 Prior Plan
Elections.  Participant
elections with respect to Grandfathered Benefits shall be governed by the terms
of the Plan as in effect on October 3, 2004.

         

        2.5 Salary.  For
purposes of the Plan, a Participant’s “Salary” from any Employer means the
regular basic cash remuneration paid to him for such period by reason of his
employment with that Employer as a Participant, excluding bonuses, overtime pay,
and all other kind of remuneration of any kind including, but not limited to
pre-paid salary increase advances and lump sum raise payments, and including
vacation pay, reductions in cash remuneration under this Plan, reductions to
reflect contributions under a plan described in Section 125 of the Code and
contributions under a cash or deferred arrangement described in Section 401(k)
of the Code.

         

        2.6 Bonus.  For
purposes of the Plan, a Participant’s “Bonus” from any Employer means the gross
annual bonus amount(s) payable to a Participant from the Employer’s annual
incentive plan(s), if any, in effect for the Employer’s fiscal year coinciding
with the Plan Year (but payable 

         

        
          
            4

          

          
            
            

            
              

            

          

          
            
            
after the
end of the Plan Year) otherwise payable in cash, and considered “wages” for FICA
and federal income tax withholding; provided, however, that a participant’s
bonus shall be determined without regard to any reduction to reflect
contributions under a plan described in Section 125 of the Code or contributions
under a cash or deferred arrangement described in Section 401(k) of the Code, or
any amount deferred under an unfunded, nonqualified plan maintained by the
Employer.

        

         

        2.7 Plan Not Contract of
Employment.  The
Plan does not constitute a contract of employment, and participation in the Plan
will not give any employee or Participant the right to be retained in the employ
of any Employer nor any right or claim to any benefit under the Plan, unless
such right or claim has specifically accrued under the terms of the
Plan.

         

        SECTION 3

         

        Plan
Accounting

         

        3.1 Accounts.  For
each Participant who has filed a Deferral Election, the Committee shall
establish an Account.  A Participant’s Account balance as of any date
shall be equal to the amount determined in accordance with the following
provisions of this subsection 3.1 based on the Interest Yield then applicable to
such Account balance:

         

        
          	
                  (a)  

                	
                  first,
      credit to the Account balance the applicable Interest Yield based on the
      average Account balance for the previous
day;

                

        

         

        
          	
                  (b)  

                	
                  then,
      charge to the Account balance the amount of any distributions under the
      Plan with respect to that Account balance as of that date;
    and

                

        

         

        
          	
                  (c)  

                	
                  then,
      credit to the Account balance the amount to be credited as of that date in
      accordance with subsection 3.4.

                

        

         

        The
foregoing provisions shall apply so long as a Participant has an account balance
under the Plan, even if the Participant is no longer eligible to file a Deferral
Election pursuant to subsections 2.2 or 5.5.

         

        The
Committee may establish lump sum and installment distribution subaccounts under
a Participant’s Account to reflect those amounts pursuant to which the
Participant has made an election to receive lump sum or installment
distributions as provided in subsections 5.7 and 5.8 pursuant to an applicable
Distribution Election.

         

        A
distribution to a Participant pursuant to the provisions of subsection 5.5 shall
not affect the Interest Yield used to determine the Participant’s Account
balance as of any subsequent date.  Accordingly, if any amounts are
distributed to or on behalf of a Participant under the Plan at a time when the
Account balance is to be determined in accordance with the Termination Interest
Yield, then the Participant’s Account balance shall be recomputed using the
Termination Interest Yield from the date each such deferral was first
made.  If any amounts are distributed to or on behalf of a participant
under the Plan at a time when the Account balance is to be determined in
accordance with the Retirement Interest Yield, the Participant’s Account balance
shall be recomputed from the date such deferrals were first made, using the
Retirement Interest Yield.

         

        
          
            5

          

          
            
            

            
              

            

          

          
            
            

          

        

        3.2 Limit on Crediting of
Interest.  Notwithstanding
the foregoing provisions of this Section 3, a Participant’s Account balance
shall not be credited with interest in accordance with the provisions of
paragraph 3.1(a) with respect to the amount of any payment or distribution for
the period occurring after the date as of which such amount is to be paid in
accordance with the provisions of the Plan (such payment date calculated to
include any delay due to regulatory requirements), regardless of the date on
which payment is actually made.

         

        3.3 Interest
Yield.  The
applicable “Interest Yield” for any date in any calendar quarter shall be equal
to:

         

        
          	
                  (a)  

                	
                  for
      any portion of the Account balance to be determined on the basis of the
      Termination Interest Yield, the applicable Interest Yield shall be 100% of
      the Bond Rate for the next preceding calendar quarter (or other time
      period deemed appropriate by the Committee);
and

                

        

         

        
          	
                  (b)  

                	
                  for
      any portion of the Account balance to be determined on the basis of the
      Retirement Interest Yield, the applicable Interest Yield shall be 130% of
      the Bond Rate for the next preceding calendar quarter (or other time
      period deemed appropriate by the
Committee).

                

        

         

        The “Bond
Rate” for any calendar quarter (or other time period deemed appropriate by the
Committee) shall be the composite average yield of industrial and public utility
bonds, rated Aaa through Baa for that period, as determined from Mergent Bond
Record published monthly by Mergent FIS, Inc. (or any successor thereto) or, if
such yield is no longer available, a substantially similar average selected by
the Committee.

         

        3.4 Crediting Under Deferral
Election.  A
Participant’s Account balance shall be credited, in accordance with the
provisions of paragraph 3.1(c), with the amount by which his Salary and/or Bonus
from his Employer is reduced pursuant to a Deferral Election, as of the date on
which such Salary and/or Bonus would otherwise have been paid to the Participant
by the Employer were it not for the reduction made pursuant to the Deferral
Election.

         

        3.5 Limit on
Distributions.  In
no event shall the amount distributed under the Plan with respect to any
Participant as of any date exceed the amount of his Account balance as of that
date.

         

        SECTION 4

         

        Termination
Date

         

        A
Participant’s “Termination Date” is the first to occur of the following
dates:

         

        
          	
                  (a)  

                	
                  Normal
      Retirement.  The date of the Participant’s Separation
      from Service after the Participant has attained age 65.  For
      purposes of the Plan, a Participant’s “Separation from Service” is the
      date of termination of the Participant’s services to the Company and all
      Affiliates, whether voluntarily or involuntarily, other than by reason of
      death, as determined in accordance with Treas. Reg.
      §1.409A-1(h).  

                

        

         

        
          	
                  (b)  

                	
                  Early
      Retirement.  The date of the Participant’s Separation
      from Service before the Participant has attained age 65, and after he has
      attained age 55 and has 

                

        

         

        
          
            6

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	
                   

                	
                  completed
      at least ten Years of Service.  For purposes of the Plan, a
      Participant’s “Years of Service” as of any date shall equal the total
      number of years, computed to fractional portions thereof, during which he
      was employed by any entity that either (i) was an Employer or Affiliate at
      the time of such employment, or (ii) becomes an Employer or Affiliate
      after the time of such employment but prior to his Separation from
      Service.

                

        

         

        
          	
                  (c)  

                	
                  Disability.  The
      date of the Participant’s Separation from Service by reason of his
      becoming Disabled.  A Participant will be considered to be
      “Disabled” if he is unable to perform satisfactorily the essential duties
      of his position with his employer, and such inability is reasonably likely
      to continue for a period of at least twelve months, all as determined by
      the Committee.

                

        

         

        
          	
                  (d)  

                	
                  Death.  The
      date the Participant’s employment with the Employers and Affiliates
      terminates because of his death.

                

        

         

        
          	
                  (e)  

                	
                  Resignation or
      Dismissal.  The date of the Participant’s Separation from
      Service prior to his Normal Retirement or Early Retirement for reasons
      other than death or Disability.

                

        

         

        SECTION 5

         

        Distribution of
Benefits

         

        5.1 Normal or Early Retirement
Benefit.  If
a Participant’s Termination Date occurs in accordance with paragraph 4(a) or
paragraph 4(b) (relating to Normal Retirement or Early Retirement), his Account
balance not attributable to Grandfathered Benefits shall be determined based on
the Retirement Interest Yield and shall be distributed in accordance with
subsection 5.7.

         

        5.2 Disability
Benefit.  If
a Participant’s Termination Date occurs in accordance with paragraph 4(c)
(relating to Disability), his Account balance not attributable to Grandfathered
Benefits shall be determined based on the Retirement Interest Yield and shall be
distributed in accordance with subsection 5.8.

         

        5.3 Death
Benefit.  If
a Participant’s Termination Date occurs in accordance with paragraph 4(d)
(relating to death), his Account balance not attributable to Grandfathered
Benefits shall be determined based on the Retirement Interest Yield, and shall
be distributed in a lump sum on the 60th day
after the date of his death.

         

        5.4 Resignation or Dismissal
Benefit.  If
a Participant’s Termination Date occurs in accordance with paragraph 4(e)
(relating to resignation or dismissal), his Account balance not attributable to
Grandfathered Benefits shall be determined as follows: (a) if the Participant
has accrued at least three (3) continuous years of service with the Employers
and/or Affiliates, elapsed from the date that his first Deferral Election under
the Plan became irrevocable until his Termination Date, then he shall have the
Retirement Interest Yield applied, and (b) if the Participant has accrued fewer
than three (3) continuous years of service with the Employers and/or Affiliates,
elapsed from the date that his first Deferral Election under the Plan became
irrevocable until his Termination Date, then he shall have the Termination
Interest Yield applied.

         

        
          
            7

          

          
            
            

            
              

            

          

          
            
            
Such
Account balance shall be distributed in a lump sum on the first business day of
the seventh month following such Termination Date.

        

         

        5.5 Pre-Termination Hardship
Distribution.  With
the consent of the compensation committee of the Participant’s Employer (or, if
the Participant is then employed by an Affiliate, the compensation committee of
the Company), a Participant who is employed by an Employer or Affiliate may,
upon the occurrence of an Unforeseeable Emergency (as defined below), elect to
have paid to him from his Account balance not attributable to Grandfathered
Benefits as of any date an amount that does not exceed the lesser of (a) the
amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary
to pay Federal, state, or local income taxes or penalties reasonably anticipated
as a result of the distribution, or (b) the amount that would be distributable
to him under the Plan if the date as of which such payment is to be made were
his Termination Date and his Plan benefit were paid in a lump sum.  A
Participant shall not be eligible to receive a payout from the Plan to the
extent that the Unforeseeable Emergency is or may be relieved (A) through
reimbursement or compensation from insurance or otherwise, (B) by liquidation of
the Participant’s assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship or (C) by cessation of deferrals under
this Plan.  If the appropriate committee, in its sole discretion,
approves a Participant’s petition for payout from the Plan, the Participant’s
payout shall be determined as of the date on which such committee approval
occurs and shall be distributed to the Participant in a lump sum no later than
60 days after such determination date.  In addition, in the event of
such approval the Participant’s Deferral Election shall be cancelled for the
remainder of the Plan Year.

         

        “Unforeseeable
Emergency” shall mean a severe financial hardship of the Participant resulting
from (a) an illness or accident of the Participant, the Participant’s spouse,
the Participant’s Beneficiary or the Participant’s dependent (as defined in Code
Section 152 without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof),
(b) a loss of the Participant’s property due to casualty, (c) imminent
foreclosure on or eviction from the Participant’s primary residence, (d) the
need to pay for medical expenses, including non-refundable deductibles and the
costs of prescription drug medications, (e) the need to pay for the funeral
expenses of the Participant’s spouse, Beneficiary, or dependent (as defined
above), or (f) such other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, all as
determined by the appropriate compensation committee in accordance with Treas.
Reg. Sec. 1.409A-3(i)(3).

         

        5.6 Distribution on Change in
Control.  Upon
the occurrence of a Change in Control (as defined below), the Account balance of
each Participant who was employed by an Employer or an Affiliate on the date of
such Change in Control shall be determined as of the date of the Change in
Control based on the Retirement Interest Yield.  The Account balance
not attributable to Grandfathered Benefits of each Plan Participant (regardless
of any elections that may otherwise be applicable to him under the Plan) shall
be distributed in a lump sum as soon as practicable after the date of such
Change in Control, but in no event later than 15 days after the occurrence of
such Change in Control.  Payments under this subsection 5.6 shall be
in lieu of any amounts that would otherwise be payable after the date as of
which the Participant’s Account balance is determined for purposes of payment
under this subsection.  For purposes of the Plan, “Change in Control”
means the occurrence of a “change in the ownership,” a “change in the effective
control” or a “change in the ownership of a substantial portion of the assets”
of an entity, as determined in accordance with this subsection
5.6.  In determining whether an event 

         

        
          
            8

          

          
            
            

            
              

            

          

          
            
            
shall be
considered a “change in the ownership,” a “change in the effective control” or a
“change in the ownership of a substantial portion of the assets” of an entity,
the following provisions shall apply:

        

         

        
          	
                  (a)  

                	
                  A
      “change in the ownership” of the Company shall occur on the date on which
      any one person, or more than one person acting as a group (within the
      meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
      1934, as amended (a “Person”)), acquires ownership of the equity
      securities of the Company that, together with the equity securities held
      by such Person, constitutes more than 50% of the total fair market value
      or total voting power of the Company, as determined in accordance with
      Treas. Reg. §1.409A-3(i)(5)(v).  If a Person is considered
      either to own more than 50% of the total fair market value or total voting
      power of the equity securities of the Company, or to have effective
      control of the Company within the meaning of subsection 5.6(b), and such
      Person acquires additional equity securities of the Company, the
      acquisition of additional equity securities by such Person shall not be
      considered to cause a “change in the ownership” of the
      Company.

                

        

         

        
          	
                  (b)  

                	
                  A
      “change in the effective control” of the Company shall occur on either of
      the following dates:

                

        

         

        
          	 	
                  (i)  

                	
                  The
      date on which any Person, acquires (or has acquired during the 12-month
      period ending on the date of the most recent acquisition by such Person)
      ownership of stock of the Company possessing 30% or more of the total
      voting power of the Company’s equity securities, as determined in
      accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  If a Person is
      considered to possess 30% or more of the total voting power of the
      Company’s equity securities, and such Person acquires additional stock of
      the Company, the acquisition of additional stock by such Person shall not
      be considered to cause a “change in the effective control” of the Company;
      or

                

        

         

        
          	 	
                  (ii)  

                	
                  The
      date on which a majority of the members of the Board is replaced during
      any 12-month period by directors whose appointment or election is not
      endorsed by a majority of the members of the Board before the date of the
      appointment or election, as determined in accordance with Treas. Reg.
      §1.409A-3(i)(5)(vi).

                

        

         

        
          	
                  (c)  

                	
                  A
      “change in the ownership of a substantial portion of the assets” of the
      Company shall occur on the date on which any one Person acquires (or has
      acquired during the 12-month period ending on the date of the most recent
      acquisition by such Person) assets from the Company that have a total
      gross fair market value equal to or more than 40% of the total gross fair
      market value of all of the assets of the Company immediately before such
      acquisition or acquisitions, as determined in accordance with Treas. Reg.
      §1.409A-3(i)(5)(vii).  A transfer of assets shall not be treated
      as a “change in the ownership of a substantial portion of the assets” when
      such transfer is made to an entity that is controlled by the holders of
      the 

                

        

         

        
          
            9

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	
                   

                	
                  Company’s
      equity securities, as determined in accordance with Treas. Reg.
      §1.409A-3(i)(5)(vii)(B).

                

        

         

        
          	
                  (d)  

                	
                  Notwithstanding
      the foregoing, the following acquisitions shall not constitute a Change in
      Control: (i) an acquisition by the Company or entity controlled by the
      Company, or (ii) an acquisition by an employee benefit plan (or related
      trust) sponsored or maintained by the Company or any entity controlled by
      the Company.

                

        

         

        
          	
                  (e)  

                	
                  For
      purposes of this subsection 5.6, (i) the term “Company” shall mean Nicor
      Inc. and shall include any Successor to Nicor Inc.; and (ii) the term
      “Successor to Nicor Inc.” shall mean any corporation, partnership, joint
      venture or other entity that succeeds to the interests of Nicor Inc. by
      means of a merger, consolidation, or other restructuring that does not
      constitute a Change in Control.

                

        

         

        5.7 Form of Retirement Benefit
Payment.  Benefits
payable in accordance with the provisions of subsection 5.1 (relating to Normal
Retirement and Early Retirement benefits) shall be distributed in accordance
with the following provisions of this subsection 5.7 and the Participant’s
Distribution Elections.  

         

        
          	
                  (a)  

                	
                  Benefits
      shall be paid in either a single lump sum or as annual installments, as
      elected by the Participant in the Distribution Election.  The
      amount of each installment payment shall be a fixed amount calculated to
      amortize the unpaid installment distribution subaccount balance in annual
      installments of principal and interest, and shall be based on the
      Retirement Interest Yield in effect at the time payments
      commence.  The Committee may, in its discretion, recompute the
      amount of the installment every three (3) years to reflect actual or
      projected changes in the Retirement Interest Yield.

                   

                  In any situation in which the Committee is
      unable to determine the method of payment because of an incomplete,
      unclear or uncertain Distribution Election or if no Distribution Election
      is on file with regard to a Plan Year, then the applicable amounts
      in the Participant's Account not attributable to Grandfathered
      Benefifs will be paid in installments in accordance with subsection
      5.7(b).  Payment of Grandfathered Benefits will be determined under
      the terms of the Plan as in effect on October 3,
  2004.

                

        

         

        
          	
                  (b)  

                	
                  The
      payments with respect to a Participant under this subsection 5.7 shall be
      made in accordance with the
following:

                

        

         

        
          	 	
                  (i)  

                	
                  Subject
      to the following provisions of this paragraph (b), the first such payment
      under this subsection 5.7 shall be made for the calendar year following
      the calendar year in which occurs the later of (A) the Participant’s 65th
      birthday, or (B) the Participant’s Termination Date; provided, however,
      that the Participant may elect in the Distribution Election to have this
      paragraph (b)(i) apply to him with respect to all benefits payable under
      the Plan without regard to the provisions of clause (b)(i)(A) next
      above.

                

        

         

        
          
            10

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	 	
                  (ii)  

                	
                  Except
      in the case where benefits under this subsection 5.7 are payable in the
      form of a lump sum, an installment payment shall be made under this
      subsection 5.7 for each calendar year following the year in which the
      first installment payment is made; provided that the last installment
      shall be made for the calendar year in which occurs the 80th anniversary
      of the Participant’s birth.  In a Distribution Election
      modification made in accordance with subsection 2.3(b), the Participant
      may elect a shorter annual installment period, provided that the last
      installment shall be made no later than the calendar year in which occurs
      the Participant’s 80th
      birthday.

                

        

         

        
          	 	
                  (iii)  

                	
                  The
      payment with respect to a Participant under this subsection 5.7 for any
      calendar year shall be made as of the January 1st
      of that year.  Notwithstanding the foregoing, the first payment
      under this subsection 5.7 shall not be made prior to the earlier of (A)
      the first business day of the seventh month after the Participant’s
      Termination Date or (B) the date of the Participant’s
    death.

                

        

         

        5.8 Form of Disability Benefit
Payment.  Benefits
payable in accordance with the provisions of subsection 5.2 (relating to
disability benefits) shall be distributed in accordance with the following
provisions of this subsection 5.8:

         

        
          	
                  (a)  

                	
                  Benefits
      shall be paid as sixteen (16) annual installments, beginning after the
      Participant’s Termination Date as provided under subsection
      5.8(b).  The amount of each installment payment shall be a fixed
      amount calculated to amortize the unpaid balance of the installment
      distribution subaccount in annual installments of principal and interest,
      and shall be based on the Retirement Interest Yield in effect at the time
      payments commence.  The Committee may, in its discretion,
      recompute the amount of the installment every three (3) years to reflect
      actual or projected changes in the Retirement Interest
      Yield.  Payment of Grandfathered Benefits will be determined
      under the terms of the Plan as in effect on October 3,
    2004.

                

        

         

        
          	
                  (b)  

                	
                  The
      first payment with respect to a Participant under this subsection 5.8
      shall be made on the first business day of the seventh month after the
      Participant’s Termination Date.  Each other installment payment
      made with respect to a Participant under this subsection 5.8 for any
      calendar year shall be made as of the January 1st
      of that year.  No payment under this subsection 5.8 shall begin
      prior to the earlier of (i) the first business day of the seventh month
      after the Participant’s Termination Date or (ii) the date of the
      Participant’s death.

                

        

         

        5.9 Beneficiaries.  Each
Participant from time to time, by signing a form furnished by the Committee, may
designate any legal or natural person or persons (who may be designated
contingently or successively) to whom his benefits under the Plan are to be paid
if he dies before he receives all of his benefits (“Beneficiary”).  A
beneficiary designation form will be effective only when the signed form is
filed with the Committee while the Participant is alive and will cancel all
beneficiary designation forms filed earlier.  If more than one
Beneficiary has been designated, the balance in the Participant’s Account shall
be distributed to each such Beneficiary 

         

        
          
            11

          

          
            
            

            
              

            

          

          
            
            
per
capita.  Except as otherwise specifically provided in this subsection
5.9, if a deceased Participant failed to designate a Beneficiary as provided
above, or if no designated Beneficiary survives the Participant or dies before
complete payment of the Participant’s benefits, then his benefits shall be paid
to the legal representative or representatives of the estate of the last to die
of the Participant and any designated Beneficiary.

        

         

        If the
Participant dies before the payment of all of the benefits to which he is
entitled under subsections 5.7 and 5.8, payment of his Account balance shall
continue to be made, in accordance with the applicable subsection, to his
Beneficiary.

         

        5.10 Distributions to Persons
Under Disability.  Notwithstanding
the provisions of this Section 5, if, in the Committee’s opinion, a Participant
or Beneficiary is under a legal disability or is in any way incapacitated so as
to be unable to manage his financial affairs, the Committee may direct that
payment be made to a relative or friend of such person for his benefit until
claim is made by a conservator or other person legally charged with the care of
his person or his estate, and such payment shall be in lieu of any such payment
to such Participant or Beneficiary.  Thereafter, any benefits under
the Plan to which such Participant or Beneficiary is entitled shall be paid to
such conservator or other person legally charged with the care of his person or
his estate.

         

        5.11 Benefit May Not be Assigned
or Alienated.  Neither
the Participant nor any other person shall have any voluntary or involuntary
right to commute, sell, assign, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part hereof, which are expressly
declared to be unassignable and non-transferable.  No part of the
amounts payable shall be, prior to actual payment, subject to seizure or
sequestration for payment of any debts, judgements, alimony or separate
maintenance owned by the Participant or any other person, or be transferred by
operation of law in the event of the Participant’s or any other person’s
bankruptcy or insolvency.

         

        5.12 Offset.  If,
at the time payments are to be made under the Plan, the Participant or
Beneficiary or both are indebted or obligated to any Employer or Affiliate, then
the payments remaining to be made to the Participant or the Beneficiary or both
may, at the discretion of the Committee, be reduced by the amount of such
indebtedness, or obligation, provided, however, that an election by the
Committee not to reduce any such payment shall not constitute a waiver of the
claim for such indebtedness or obligation.

         

        5.13 Payment
Delays.  If
due to administrative reasons the Participant’s Account or portion of the
Participant’s Account cannot be distributed on the date otherwise payable under
this Section 5, then such Account balance shall be distributed as soon as
practicable thereafter, but no later than December 31st of the
calendar year in which such distribution is otherwise payable (or the 15th day
of the third calendar month following the date otherwise payable, if
later).

         

        SECTION 6

         

        Claim For Benefit
Procedure

         

        6.1 Claim for
Benefits.  Any
claim for benefits under the Plan shall be governed by and submitted pursuant to
the rules established under the Nicor Claims Procedures for Nonqualified Plans,
as such are in effect from time to time.  The decision of the
Committee shall be 

         

        
          
            12

          

          
            
            

            
              

            

          

          
            
            
conclusive,
final and binding in all respects on both the Company and the
claimant.  Benefits shall be paid only if the Committee determines
that the claimant is entitled to them.

        

         

        SECTION 7

         

        Committee

         

        7.1 Membership.  The
authority to manage and control the operation and administration of the Plan
shall be vested in the Compensation Committee of the Company’s Board of
Directors (the “Committee”).  Except as otherwise specifically
provided in this Section 7, in controlling and managing the operation and
administration of the Plan, the Committee shall act by the concurrence of a
majority of its then members by meeting or by writing without a
meeting.  The Committee, by unanimous written consent, may authorize
any one of its members to execute any document, instrument or direction on its
behalf.

         

        7.2 Powers of
Committee.  Subject
to the conditions and limitations of the Plan, the Committee shall have the sole
and complete authority and discretion to:

         

        
          	
                  (a)  

                	
                  Conclusively
      interpret and construe the provisions of the Plan and to remedy
      ambiguities, inconsistencies and omissions of whatever kind or
      nature;

                

        

         

        
          	
                  (b)  

                	
                  Adopt,
      and apply in a uniform and nondiscriminatory manner to all persons
      similarly situated, such rules of procedure and regulations as, in its
      opinion, may be necessary for the proper and efficient administration of
      the Plan, and as are consistent with the provisions of the
      Plan;

                

        

         

        
          	
                  (c)  

                	
                  Conclusively
      determine all questions arising under the Plan, including the power to
      determine rights or eligibility of employees or former employees, and the
      respective benefits of Participants and others entitled
      thereto;

                

        

         

        
          	
                  (d)  

                	
                  Maintain
      and keep adequate records concerning the Plan and concerning its
      proceedings and acts in such form and detail as the Committee may
      decide;

                

        

         

        
          	
                  (e)  

                	
                  Direct
      all benefit payments under the
Plan;

                

        

         

        
          	
                  (f)  

                	
                  Furnish
      the Company and its subsidiaries with such information with respect to the
      Plan as may be required by them for tax or other
  purposes;

                

        

         

        
          	
                  (g)  

                	
                  By
      unanimous action of the members then acting, employ agents and counsel
      (who also may be employed by the Company and its subsidiaries or a
      trustee) and to delegate to them, in writing, such powers as the Committee
      considers desirable;

                

        

         

        
          	
                  (h)  

                	
                  Correct
      any defect or omission and to reconcile any inconsistency in the Plan, and
      to remedy any error in any payment made hereunder;
  and

                

        

         

        
          	
                  (i)  

                	
                  make
      all other determinations and take all other actions necessary or advisable
      for the implementation and administration of the
  Plan.

                

        

         

        
          
            13

          

          
            
            

            
              

            

          

          
            
            

          

        

        Except as
otherwise specifically provided by the Plan, any determinations to be made by
the Committee under the Plan shall be decided by the Committee in its sole
discretion.  Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is conclusive, final and binding on all
persons.

         

        7.3 Delegation by
Committee.  The
Committee may allocate all or any part of its responsibilities and powers to any
one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by
it.  Any such allocation or delegation may be revoked at any
time.

         

        7.4 Information to be Furnished
to Committee.  The
Company and participating subsidiaries shall furnish the Committee such data and
information as it may require.  The records of the Company and
participating subsidiaries as to an employee’s or Participant’s period of
employment, termination of employment and the reason therefor, leave of absence,
reemployment and compensation amounts shall be conclusive on all persons unless
determined to be incorrect.  Participants and other persons entitled
to benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the
Plan.

         

        7.5 Committee’s Decision
Final.  To
the extent permitted by law, any interpretation of the Plan and any decision on
any matter within the discretion of the Committee made by the Committee in good
faith is binding on all persons.  A misstatement or other mistake of
fact shall be corrected when it becomes known, and the Committee shall make such
adjustment on account thereof as it considers equitable and
practicable.  Notwithstanding any other provision of the Plan to the
contrary, benefits under the Plan will be paid only if the Committee, in its
discretion, determines that the applicant is entitled to them.

         

        7.6 Liability and
Indemnification of the Committee.  No
member of the Committee shall be liable to any person for any action taken or
omitted in connection with the administration of the Plan unless attributable to
his own fraud or willful misconduct; nor shall the Company or participating
subsidiaries be liable to any person for any such action unless attributable to
fraud or willful misconduct on the part of a director or employee of the Company
or participating subsidiaries.  The Committee and the individual
members thereof shall be indemnified by the Company or participating subsidiary
against any and all liabilities, losses, costs and expenses (including legal
fees and expenses) of whatsoever kind and nature which may be imposed on,
incurred by or asserted against the Committee or its members by reason of the
performance of a Committee function under the terms of this Plan unless such
liability, loss, cost or expense arises due to his own fraud or willful
misconduct.  This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance.  For
purposes of this subsection 7.6, the term “Committee” includes both the
Committee and members of the compensation committee of the Participant’s
employer.

         

        SECTION 8

         

        Amendment and
Termination

         

        8.1 Amend or
Terminate.  While
the Committee expects and intends the Company to continue the Plan, the
Committee reserves the right, at any time and in any way, to amend, suspend or
terminate the Plan; provided, however, that subject to the provisions of the
following 

         

        
          
            14

          

          
            
            

            
              

            

          

          
            
            
sentence,
neither an amendment nor a termination shall adversely affect the rights of any
Participant or Beneficiary under the Plan.  The Committee, by Plan
amendment or termination, may prospectively modify or eliminate the right to
have Contributions credited to the Account of any Participant. Notwithstanding
the foregoing provisions of this subsection 8.1, the Committee may amend or
terminate the Plan at any time, to take effect retroactively or otherwise, as
deemed necessary or advisable for purposes of conforming the Plan to any present
or future law, regulations or rulings relating to plans of this or a similar
nature.  In addition, the Committee may revoke the Deferral Election
of any and all Participants prior to the January 1 of the Plan Year to which the
Deferral Election applies.

        

         

        Notwithstanding
the foregoing provisions of this subsection 8.1, if the Committee, in its sole
discretion, determines that the economics of the Plan, as applied to either the
Employers or the Participants, have been materially adversely affected by one or
more changes in the tax laws, other government action, a material change in the
Employers’ cost of capital, or any event that is not reasonably within the
control of the Employers or the Participants, except in the case of
circumstances leading to a material adverse effect on the economics of the Plan
as applied to the Participants but not the Employers, the Committee may reduce
the Interest Yield to any reasonable rate (including zero) that the Committee
determines to be appropriate in view of the circumstances leading to the adverse
effect on the economics of the Plan for periods after the date on which such
reduction is adopted.

         

        In the
event of a Plan termination, the Committee shall distribute Accounts (not
including Grandfathered Benefits) in accordance with the requirements of Treas.
Reg. §1.409A-3(j)(ix).

         

        8.2 Special
Distribution.  Any
other provision of the Plan to the contrary notwithstanding, in the event that
the IRS prevails in its claims that amounts contributed to the Plan, and/or
earnings thereon, constitute taxable income to the Participant or his
Beneficiary for any taxable year of his, prior to the taxable year in which such
contributions and/or earnings are distributed to the Participant or Beneficiary,
or in the event that legal counsel satisfactory to the Company, the trustee and
the applicable Participant or Beneficiary renders an opinion that the IRS would
likely prevail in such a claim, the amount subject to such income tax shall be
immediately distributed to the Participant or Beneficiary.

         

        8.3 Code Section
409A.  To
the extent applicable, this Plan shall be interpreted in accordance with
Internal Revenue Code Section 409A and Department of Treasury regulations and
other interpretive guidance issued thereunder.  If the Company
determines that any compensation or benefits payable under this Plan do not
comply with Code Section 409A and related Department of Treasury guidance, the
Company shall amend the Plan or take such other actions as the Company deems
necessary or appropriate to comply with the requirements of Code Section 409A
while preserving the economic agreement of the parties.

         

        
          
            15

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
        

         

        
          	 	
                  APPENDIX A

                	 
	 	 Account	
                   3.1

                	 
	 	 Affiliate	
                   1.3

                	 
	 	 Beneficiary	
                   5.9

                	 
	 	 Board	
                   1.4

                	 
	 	 Bond
      Rate	
                   3.3

                	 
	 	 Bonus	
                   2.6

                	 
	 	 Change in
      Control	
                   5.6

                	 
	 	 Code	
                   1.3

                	 
	 	 Committee	
                   1.4

                	 
	 	 Company	
                   1.1

                	 
	 	 Deferral
      Election	
                   2.2

                	 
	 	 Distribution
      Election	
                   2.3

                	 
	 	 Disabled	
                   4(c)

                	 
	 	 Effective
      Date	
                   1.2

                	 
	 	 Employer	
                   1.3

                	 
	 	 ERISA	
                   2.1

                	 
	 	 Early
      Retirement	
                   4(b)

                	 
	 	 Grandfathered
      Benefits	
                   1.2

                	 
	 	 Interest
      Yield	
                   3.3

                	 
	 	 Nicor
      Gas	
                   1.3

                	 
	 	 Normal
      Retirement	
                   4(a)

                	 
	 	 Person	
                   5.6(a)

                	 
	 	 Plan	
                   1.1

                	 
	 	 Plan
      Year	
                   1.5

                	 
	 	 Salary	
                   2.5

                	 
	 	 Separation
      from Service	
                   4(a)

                	 
	 	 Termination
      Date	
                   4

                	 
	 	 Unforeseeable
      Emergency	
                   5.5

                	 
	 	 Years of
      Service	
                   4(b)

                	 

        

         

        
          
            16

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