AGL RESOURCES INC. NONQUALIFIED SAVINGS PLAN

Table of Contents

Effective as of the 1st day of January, 2009, AGL Resources Inc., a corporation duly organized and existing under the laws of the State of Georgia (the “Controlling Company”), hereby amends and restates the AGL Resources Inc. Nonqualified Savings Plan (the “Plan”).

The Plan was originally established as of July 1, 1995, and was previously amended and restated effective as of January 1, 2001, and January 1, 2007.

A.           The primary purpose of the Plan is to recognize the contributions made to the Controlling Company and its participating affiliates by certain employees and to reward those contributions by providing eligible employees with an opportunity to accumulate savings for their future security.

B.           The Plan is intended to be an unfunded nonqualified deferred compensation plan maintained by the Controlling Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees (within the meaning of §§201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended), and shall be construed in all respects in accordance with such intended purposes.

C.           Any trust fund established to maintain and invest the amounts contributed to the Plan shall be established under a trust agreement that meets the requirements of a “rabbi trust,” pursuant to guidelines issued by the Internal Revenue Service (the “IRS”).

D.           Regardless of the establishment of a trust fund, all assets of the Plan shall remain assets of the Controlling Company and shall be subject to the general creditors of the Controlling Company.  Participants and Beneficiaries shall have only the rights of unsecured creditors with respect to any assets of the Plan.

In order to amend and restate the Plan with the purposes and goals as hereinabove described, the Controlling Company hereby sets forth the terms and provisions of the amended and restated Plan as follows:

1.1   1934 Act

 shall mean the Securities Exchange Act of 1934, as amended.

1.2   Account

 shall mean, with respect to a Participant or Beneficiary, the amount of money or other property as is evidenced by the last balance posted in accordance with the terms of the Plan to the account record established for such Participant or Beneficiary.  The Administrative Committee may establish and maintain separate subaccounts for each Participant and Beneficiary, provided allocations are made to such subaccounts in the manner described in Article IV of the Plan.  “Account” shall refer to the aggregate of all separate subaccounts or to individual, separate subaccounts, as may be appropriate in context.

1.3   Active Participant

 shall mean, for any Plan Year (or any portion thereof), any Covered Employee who has been admitted to, and not removed from, active participation since the last date his employment commenced or recommenced.

1.4   Administrative Committee

 shall mean the committee designated by the Board which shall act on behalf of the Controlling Company to administer the Plan; provided, the Controlling Company may act in lieu of the Administrative Committee as it deems appropriate or desirable.

1.5   Affiliate

 shall mean any corporation or other entity that is required to be aggregated with the Controlling Company under Code §§414(b) or (c).  Notwithstanding the foregoing, for purposes of determining whether a Separation from Service has occurred, the term “Affiliate” shall include the Controlling Company and all entities that would be treated as a single employer with the Controlling Company under Code §§414(b) or (c), but substituting “at least 50 percent” instead of “at least 80 percent” each place it appears in applying such rules.

1.6   Aggregated Arrangements

 shall mean the Plan and any other plan that that would be considered as a single plan with the Plan under Code §409A and applicable guidance issued thereunder.

1.7   Before-Tax Account

 shall mean the separate subaccount(s) established and maintained on behalf of a Participant or his Beneficiary to reflect his interest in the Plan attributable to his Before-Tax Contributions.

1.8   Before-Tax Contributions

 shall mean the amounts deferred under the Plan at the election of Participants, all pursuant to the terms of Section 3.1(a).

1.9   Beneficiary

 shall mean the person(s) designated in accordance with Section 7.4 to receive any death benefits that may be payable under the Plan upon the death of a Participant.

1.10   Board

 shall mean the board of directors of the Controlling Company.  A reference to the board of directors of any other Participating Company shall specify it as such.

1.11   Bonus

 shall mean an annual bonus payable under the terms of the AGL Resources Inc. Annual Incentive Plan (or its successor plan) or any other annual bonus plan sponsored by a Participating Company, as well as any other cash bonus paid by a Participating Company on a regular, periodic basis, such as a quarterly, monthly or semi-annual bonus.  For clarity, the term “Bonus” shall not include retention bonuses, even if they are paid on a periodic basis.

1.12   Bonus Compensation

 shall mean that portion of a Participant’s Compensation that is attributable to a Bonus.

1.13   Bonus Deferral Election

 shall mean a written, electronic or other form of election permitted by the Administrative Committee, made by an Active Participant directing the Participating Company of which he is an Employee to withhold a percentage of his Bonus earned during a Plan Year and to contribute such withheld amount to the Plan as a Before-Tax Contribution, all as provided in Section 3.1.

1.14   Break in Service

 shall mean, with respect to an Employee, any year during which such Employee fails to complete more than 500 Hours of Service; provided, a Break in Service shall not be deemed to have occurred during any period for which he is granted a Leave of Absence if he returns to the service of an Affiliate within the time permitted as set forth in the Plan.  A Break in Service shall be deemed to have commenced on the first day of the year in which it occurs.

For purposes of determining whether or not an Employee has incurred a Break in Service, an Employee absent from work due to a Maternity or Paternity Leave shall be credited with (i) the number of Hours of Service with which he normally would have been credited but for the Maternity or Paternity Leave, or (ii) if the Administrative Committee is unable to determine the hours described in (i), 8 Hours of Service for each day of absence included in the Maternity or Paternity Leave; provided, the maximum number of Hours of Service credited for purposes of this Section shall not exceed 501 hours.  Hours of Service so credited shall be applied only to the year in which the Maternity or Paternity Leave begins, unless such Hours of Service are not required to prevent the Employee from incurring a Break in Service, in which event such Hours of Service shall be credited to the Employee in the immediately following year.  No Hour of Service shall be credited due to Maternity or Paternity Leave as described in this Section unless the Employee furnishes proof satisfactory to the Administrative Committee (A) that his absence from work was due to a Maternity or Paternity Leave and (B) of the number of days he was absent due to the Maternity or Paternity Leave.  The Administrative Committee shall prescribe uniform and nondiscriminatory procedures by which to make the above determinations.

As used in this Section, the term “year” shall mean the same 12-month period as forms the basis for determining a Year of Vesting Service.

1.15   Change in Control

 shall mean the earliest of the following to occur:

(a)           The date any one person, or more that one person acting as a group (as determined under Treasury Regulations §1.409A-3(i)(5)(v)(B), a “Group”), acquires ownership of stock of the Controlling Company that, together with stock held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Controlling Company.  If any one person or Group is considered to own more than 50% of the total fair market value or total voting power of the Controlling Company, the acquisition of additional control of the Controlling Company by the same person or Group is not considered to cause a Change in Control of the Controlling Company;

(b)           The date any one person or Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Controlling Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Controlling Company;

(c)           The date a majority of the members of the Board is replaced during any twelve (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 their appointment or election; or

(d)           The date that any one person or Group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Controlling Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all assets of the Controlling Company immediately before such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the Controlling Company, or the assets being disposed of, determined without regard to any liabilities associated with such assets.

It is intended that there will be a Change in Control under this Plan only to the extent such event or transaction would constitute a “change in control event” as such term is defined in Treasury Regulations §1.409A-3(i)(5) and thus the provisions of the definition of Change in Control shall be applied and interpreted consistent with the provisions of such Treasury Regulation, as amended from time to time; recognizing however, that the definition of Change in Control in this Plan may be more restrictive in certain respects than the definition contained in Treasury Regulations §1.409A-3(i)(5).

1.16   Code

 shall mean the Internal Revenue Code of 1986, as amended, and any succeeding federal tax provisions.

1.17   Company Stock

 shall mean the common stock of the Controlling Company.  As of the Effective Date, the term “Company Stock” shall mean the $5.00 par value common stock of AGL Resources Inc.

1.18   Compensation

 shall mean, for any Plan Year:

(a)           Such Participant’s base salary (not including overtime or other premiums); plus

(b)           Such Participant’s commissions and Bonuses.

Compensation payable after the last day of the Plan Year for services performed during the final payroll period described in Code §3401(b) containing the last day of the Plan Year shall be treated as Compensation for services performed in the Plan Year during which such payroll period ends.

1.19   Contributions

 shall mean, individually or collectively, the Before-Tax and Matching Contributions permitted under the Plan.

1.20   Controlling Company

 shall mean AGL Resources Inc., a Georgia corporation, with its principal office in Atlanta, Georgia, and its successors.

1.21   Covered Employee

 shall mean any Employee of a Participating Company who (i) as of his initial Entry Date or as of the December 1 immediately preceding a subsequent Plan Year, had an annual base salary in an amount equal to or in excess of the compensation limit designated by the IRS for determining “highly compensated employee” under Code §414(q)(l)(C) plus $10,000 (for example, the 2009 IRS limit for eligibility for the 2009 Plan Year is $110,000 plus $10,000 = $120,000); and (ii) is not a “leased employee” as defined in Code §414(n).

1.22   Deferral Election

 shall mean a written, electronic or other form of election permitted by the Administrative Committee and made by an Active Participant directing the Participating Company of which he is an Employee to withhold a percentage of his Compensation, except for his Bonus, from his paychecks and to contribute such withheld amount to the Plan as a Before-Tax Contribution, all as provided in Section 3.1.

1.23   Disabled

 shall mean that a Participant is (i) wholly prevented from engaging in any substantially gainful activity by reason of a medically-determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration, and (ii) either determined eligible to receive long-term disability benefits from a Participating Company’s long-term disability plan, or, if no such plan exists, determined by the Administrative Committee in its sole discretion to meet the definition of “disabled” under the Controlling Company’s long-term disability plan.

1.24   Effective Date

 shall mean January 1, 2009, the date that this amendment and restatement of the Plan shall be effective; provided, any effective date specified herein for any provision, if different from the “Effective Date,” shall control.  The Plan was initially adopted effective as of July 1, 1995.

1.25   Employee

 shall mean any individual who is employed by a Participating Company (including officers, but excluding directors who are not officers or otherwise employees) and shall include leased employees of a Participating Company within the meaning of Code §4l4(n).  Notwithstanding the foregoing, if leased employees constitute 20% or less of a Participating Company’s non-highly compensated work force within the meaning of Code §4l4(n)(5)(C)(ii), the term “Employee” shall not include those leased employees covered by a plan described in Code §4l4(n)(5)(B).

1.26   Entry Date

           shall mean each business day during which the Plan remains in effect

1.27   Hour of Service

 shall mean the increments of time described in subsection (a) hereof, as modified by subsections (b), (c) and (d) hereof:

(a)           (1)           Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliate during the applicable computation period;

(2)   Each hour for which an Employee is paid, or entitled to payment, by an Affiliate on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or Leave of Absence; provided:

(A)   No more than 501 Hours of Service shall be credited under this subsection (2) to an Employee for any single continuous period during which he performs no duties as an employee of an Affiliate (whether or not such period occurs in a single computation period);

(B)   An hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which he performs no duties as an employee of an Affiliate shall not be credited as an Hour of Service if such payment is made or due under a plan maintained solely to comply with applicable workers’ compensation, unemployment compensation or disability insurance laws; and

(C)   Hours of Service shall not be credited to an Employee for a payment which solely reimburses such Employee for medical or medically related expenses incurred by him.

For purposes of this subsection (2), a payment shall be deemed to be made by or due from an Affiliate regardless of whether such payment is made by or due from an Affiliate directly, or indirectly through, among others, a trust fund or insurer, to which the Affiliate contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular employees or are on behalf of a group of employees in the aggregate; and

(3)   Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliate; provided, the same Hours of Service shall not be credited both under subsection (1) or subsection (2), as the case may be, and under this subsection (3); and, provided further, crediting of Hours of Service for back pay awarded or agreed to with respect to periods described in subsection (2) shall be subject to the limitations set forth in that subsection.

(b)           Each Employee for whom an Affiliate does not keep records of actual Hours of Service and each Employee for whom the Administrative Committee elects to apply this provision shall be credited, in accordance with this Section and applicable regulations promulgated by the Department of Labor, with 45 Hours of Service for each week for which such Employee would be required to be credited with at least 1 Hour of Service.

(c)           The rate or manner used for crediting Hours of Service may be changed at the direction of the Administrative Committee from time to time so as to facilitate administration and to equitably reflect the purposes of the Plan; provided, no change shall be effective as to any Plan Year for which allocations have been made pursuant to Article IV at the time such change is made; and, provided further, Hours of Service shall be credited and determined in compliance with Department of Labor Regulation §2530.200b-2(b) and (c); 29 CFR Part 2530, as may be amended from time to time; or such other federal regulations as may from time to time be applicable.

(d)           For purposes of this Section, a “computation period” shall mean the 12-month period that forms the basis for determining an Employee’s Years of Vesting Service.

1.28   Investment Committee

 shall mean the committee which is appointed by and acts on behalf of the Controlling Company with respect to making and effecting investment decisions, all as provided in Article V.  The Controlling Company may act in lieu of the Investment Committee as it deems appropriate or desirable.

1.29   Investment Fund or Funds

 shall generally mean the investment fund or funds established for investment of Accounts under the Plan, as described in Section 5.2(d).

1.30   Key Employee

 shall mean a Participant who meets the requirements to be considered a “specified employee” as defined in Code §409A as of: (i) for a Participant who Separates from Service on or after the first day of a calendar year and before April 1 of such calendar year, the December 31 of the second calendar year preceding the calendar year in which such Participant Separates from Service; or (ii) for any other Participant, the preceding December 31.  Generally, a “specified employee” is an employee of any Affiliate who, at the time specified above, is one of the 50 highest paid officers having an annual compensation greater than $130,000, a 5% owner or a 1% owner having annual compensation greater than $150,000.  For purposes of identifying Key Employees, the Participant’s compensation shall mean all of the items listed in Treasury Regulations §1.415(c)-2(b) (which are described in subsection (a) below), excluding all of the items listed in Treasury Regulations §1.415(c)-2(c) (which are described in subsection (b) below):

(a)   Included Compensation Items for Determining Key Employees

.

(1)   Wages, salaries, fees for professional services and other amounts received (cash or non-cash) for personal services, to the extent that the amounts are includible in gross income, plus 401(k), cafeteria plan or qualified transportation contributions.  These amounts include, but are not limited to, commissions paid to salespersons, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or other expense allowances;

(2)   Medical benefits includible in the Employee’s gross income;

(3)   Amounts paid or reimbursed by an Affiliate for moving expenses that are not deductible;

(4)   The value of a nonqualified stock option that is includible in the gross income of the Employee when granted;

(5)   The amount included in an Employee’s income upon making an election under Code §83(b);

(6)   Amounts includible in the Employee’s income under Code §409A; and

(7)   Amounts includible in the Employee’s income because they are constructively received by the Employee.

(b)   Excluded Compensation Items for Determining Key Employees

.

(1)   Contributions to a deferred compensation plan that are not includible in gross income (other than 401(k) elective deferrals);

(2)   Distributions from a deferred compensation plan;

(3)   Amounts realized from the exercise of a nonstatutory stock option;

(4)   Amounts includible in income when restricted stock or other property vests;

(5)   Amounts realized from the sale, exchange or other disposition of stock acquired under a statutory stock option;

(6)   Other amounts that receive special tax benefits, such as premiums for group term life insurance; and

(7)   Other items similar to the above.

1.31   Leave of Absence

 shall mean an excused leave of absence granted to an Employee by an Affiliate in accordance with applicable federal or state law or the Affiliate’s personnel policy.  Among other things, a Leave of Absence shall be granted to an Employee:

(a)           who leaves the service of an Affiliate, voluntarily or involuntarily, to enter the Armed Forces of the United States; provided, (i) the Employee is legally entitled to reemployment under the veteran’s reemployment rights provisions as codified at 38 U.S.C. §2021, et seq. , its predecessors and successors; and (ii) the Employee applies for and reenters service with an Affiliate within the time, in the manner and under the conditions prescribed by law;

(b)           for any time such Employee is drawing workers’ compensation benefits or is sick, disabled or incapacitated, if he is thereby precluded from properly performing his assigned duties for a temporary period of time; and

(c)           under such other circumstances as the Administrative Committee shall determine are fair, reasonable and equitable as applied uniformly among Employees under similar circumstances.

1.32   Matching Account

 shall mean the separate subaccount(s) established and maintained on behalf of a Participant or his Beneficiary to reflect his interest in the Plan attributable to Matching Contributions.

1.33   Matching Contributions

 shall mean the amounts paid by each Participating Company as a match to Participants’ Before-Tax Contributions, all pursuant to the terms of Section 3.2.

1.34   Maternity or Paternity Leave

 shall mean any period during which an Employee is absent from work as an employee of an Affiliate (i) because of the pregnancy of such Employee; (ii) because of the birth of a child of such Employee; (iii) because of the placement of a child with such Employee in connection with the adoption of such child by such Employee; or (iv) for purposes of such Employee caring for a child immediately after the birth or placement of such child.

1.35   Normal Retirement Age

 shall mean age 65.

1.36   Participant

 shall mean any person who has an Account under the Plan.

1.37   Participating Company

 shall mean the Controlling Company and all Affiliates which have adopted or hereafter may adopt the Plan for the benefit of their employees and which continue to participate in the Plan, all as provided in Section 10.3.

1.38   Performance-Based Bonus

 shall mean any bonus or award the amount of which, or the entitlement to which, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months.  For a Bonus to be performance-based with respect to a Participant’s Bonus Deferral Election, the following requirements must be met:

(a)           The performance criteria must be established in writing no later than 90 days after the beginning of the applicable “performance period”;

(b)           The outcome of the performance criteria must be substantially uncertain when the criteria are established;

(c)           No portion of the Bonus that will be paid either regardless of performance, or based upon a level of performance that is substantially certain to be met at the time the criteria are established, shall be considered a Performance-Based Bonus;

(d)           A Performance-Based Bonus shall not include payments based upon subjective performance criteria unless:

(1)   the subjective performance criteria are bona fide and relate to the Participant’s performance, the performance of a group of employees that includes the Participant, or the performance of a business unit for which the Participant provides services (which may include all Affiliates); and

(2)   the determination that any subjective performance criteria have been met is not made by the Participant or a family member of the Participant (as defined in Code §267(c)(4), applied as if the family of an individual includes the spouse of any member of the family), or a person under the effective control of the Participant or such a family member, and no amount of the compensation of the person making such determination is effectively controlled in whole or in part by the Participant or such a family member.

A Performance-Based Bonus that otherwise meets the above criteria may provide for payment regardless of satisfaction of the performance criteria upon the Participant’s death, disability (defined as a medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months), or a change in control event (as defined in Treasury Regulations §1.409A-3(i)(5)(i)).  Any amount that actually becomes payable upon such events without regard to the satisfaction of the performance criteria will not be considered a Performance-Based Bonus to which an election under Section 3.1(b)(1)(C) may apply.

1.39   Plan

 shall mean the AGL Resources Inc. Nonqualified Savings Plan as contained herein and all amendments thereto.  The Plan is intended to be an unfunded nonqualified deferred compensation plan for the benefit of a select group of management or highly compensated employees.

1.40   Plan Year

 shall mean each 12-month period beginning on January 1 and ending on December 31.

1.41   Retirement Savings Plus Plan or RSP

 shall mean the AGL Resources Inc. Retirement Savings Plus Plan, as it may be amended from time to time.

1.42   Separate from Service or Separation from Service

 shall mean that a Participant separates from service with the Controlling Company and its Affiliates as defined in Code §409A and guidance issued thereunder.  Generally, a Participant Separates from Service if the Participant dies, retires or otherwise has a termination of employment with all Affiliates, determined in accordance with the following:

(a)   Leaves of Absence

.  The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed 6 months, or, if longer, so long as the Participant retains a right to reemployment with an Affiliate under an applicable statute or by contract.  A leave of absence constitutes a bona fide leave of absence only while there is a reasonable expectation that the Participant will return to perform services for an Affiliate.  If the period of leave exceeds 6 months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such 6-month period.  Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29-month period of absence shall be substituted for such 6-month period.

(b)   Status Change

.  Generally, if a Participant performs services both as an employee and an independent contractor, such Participant must Separate from Service both as an employee, and as an independent contractor pursuant to standards set forth in Treasury Regulations, to be treated as having a Separation from Service.  However, if a Participant provides services to Affiliates as an employee and as a member of the Board of Directors, the services provided as a director are not taken into account in determining whether the Participant has a Separation from Service as an employee for purposes of this Plan.

(c)   Termination of Employment

.  Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Affiliates and the Participant reasonably anticipate that (i) no further services will be performed after a certain date, or (ii) the level of bona fide services the Participant will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to all Affiliates if the Participant has been providing services to all Affiliates less than 36 months).  Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Participant continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the Participant is permitted, and realistically available, to perform services for other service recipients in the same line of business.  For periods during which a Participant is on a paid bona fide leave of absence and has not otherwise terminated employment as described in subsection (a) above, for purposes of this subsection the Participant is treated as providing bona fide services at a level equal to the level of services that the Participant would have been required to perform to receive the compensation paid with respect to such leave of absence.  Periods during which a Participant is on an unpaid bona fide leave of absence and has not otherwise terminated employment are disregarded for purposes of this subsection (including for purposes of determining the applicable 36-month (or shorter) period).

1.43   Spouse or Surviving Spouse

 shall mean, with respect to a Participant, the person who is treated as married to such Participant under the laws of the state in which the Participant resides.  The determination of a Participant’s Spouse or Surviving Spouse shall be made as of the earlier of the date as of which benefit payments from the Plan to such Participant are made or commence (as applicable) or the date of such Participant’s death.

1.44   Trust or Trust Agreement

 shall mean a separate agreement between the Controlling Company and the Trustee governing the creation of the Trust Fund, and all amendments thereto.

1.45   Trustee

 shall mean the party or parties so designated from time to time pursuant to the Trust Agreement.

1.46   Trust Fund

 shall mean the total amount of cash and other property held by the Trustee (or any nominee thereof) at any time under the Trust Agreement.

1.47   Valuation Date

 shall mean each business day on which the fair market value of the accounts under the Plan are determined.

1.48   Year of Vesting Service

 shall mean a Plan Year during which an Employee completes no less than 1,000 Hours of Service; provided:

(a)           Years of Vesting Service completed prior to a period in which the Participant incurred 5 or more consecutive Breaks in Service shall be disregarded under the Plan if the Participant had no vested interest in his Account at the time the first such Break in Service commenced and the number of such consecutive Breaks in Service equals or exceeds the number of his prior Years of Vesting Service;

(b)           Years of Vesting Service completed after a period in which the Participant had at least 5 consecutive Breaks in Service shall be disregarded for the purpose of determining his vested interest in that portion of his Account which accrued before such Breaks in Service; and

(c)           For purposes of this Section, employment with an Affiliate shall be considered employment with the Controlling Company, and in the case of a leased employee (within the meaning of Code §414(n)) of any Affiliate, such leased employee shall be considered as being a leased employee of the Controlling Company.

2.1   Initial Eligibility Requirements

.

(a)   General Rule

.  Except as provided in subsection (b) and Section 2.3(a) hereof, each Covered Employee shall first become eligible to make contributions under the Plan as of the Entry Date coincident with or next following the date of (i) such Covered Employee’s attainment of age 21, and (ii) completion of thirty (30) days of employment as a Covered Employee, provided he is a Covered Employee on such date.

(b)   New Participating Companies

.  Each Covered Employee employed by a Participating Company on the date such Participating Company first becomes a Participating Company shall first become eligible to make contributions under the Plan as of the business day coincident with or next following the later of such Participating Company’s commencement of participation in the Plan, or such Covered Employee’s attainment of age 21 and completion of thirty (30) days of employment with such Participating Company, subject to Section 2.3(a).

2.2   Subsequent Eligibility Requirements

.

Each Covered Employee shall be eligible to make contributions under the Plan for each Plan Year following the Plan Year in which the Covered Employee first became eligible to make contributions under the Plan, if such Covered Employee satisfies the compensation requirements for Covered Employees as of the December 1 immediately preceding the first day of such subsequent Plan Year.

2.3   Treatment of Interruptions of Service

.

(a)   Leave of Absence

.  If a Covered Employee satisfies the eligibility requirements set forth in Section 2.1 but is on a Leave of Absence on the Entry Date on which he otherwise would have become an Active Participant, he shall become an Active Participant as of the date he subsequently resumes the performance of duties as a Covered Employee in accordance with the terms of his Leave of Absence.

(b)   Reparticipation Upon Reemployment

.  If an Active Participant Separates from Service with a Participating Company (and all other Participating Companies), his active participation in the Plan shall cease as provided in Section 3.1(b)(2), and he again shall become an Active Participant as of the day he is reemployed as a Covered Employee, regardless of whether he has received a distribution of his Account balance under the Plan at the time of his reemployment.  Upon return to service with a Participating Company, such Active Participant’s deferrals shall be governed by the provisions of Section 3.1(b) regarding election timing rules and reinstatement of elections if the Participant is rehired during the same Plan Year in which he Separated from Service.  However, regardless of whether he again becomes an Active Participant, he shall continue to be a Participant until he no longer has an Account under the Plan.

2.4   Change in Status

.

If an Active Participant does not meet the compensation requirements for Covered Employees as of the December 1 immediately preceding the first day of any Plan Year, he shall continue to be a Participant until he no longer has an Account under the Plan and may again become an Active Participant in the Plan if, as of the December 1 immediately preceding the first day of a Plan Year, he meets the compensation requirements for Covered Employees.

3.1   Before-Tax Contributions

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(a)   Before-Tax Contributions

.  Each Participating Company shall contribute to the Plan, on behalf of each Active Participant employed by such Participating Company and for (i) each payroll period for which such Active Participant has a Deferral Election in effect with such Participating Company, and (ii) each payment of a Bonus for which such Active Participant has a Bonus Deferral Election in effect with such Participating Company, a Before-Tax Contribution in an amount equal to the amount by which such Active Participant’s Compensation has been reduced for such period pursuant to his Deferral Election or Bonus Deferral Election, as applicable.  The amount of the Before-Tax Contribution shall be determined in percentage increments of such Active Participant’s Compensation for each payroll period or Bonus payment.

(b)   Deferral Elections

.  Each Active Participant who desires that his Participating Company make a Before-Tax Contribution on his behalf shall complete and deliver to the Participating Company (or its designee) a Deferral Election.  Such Deferral Election shall provide for the reduction of his Compensation other than Bonuses earned in each Plan Year for which the Deferral Election is applicable, up to a maximum of 75% of his Compensation excluding Bonuses.  In addition, an Active Participant may make a Bonus Deferral Election providing for the reduction of the Participant’s Bonus Compensation earned during the Plan Year, up to a maximum of 100% of his Bonus Compensation.  Any percentage election shall be applied to the Participant’s gross Bonus without reduction for any FICA Tax or pre-tax RSP deferrals subject to the contribution restrictions under Code §402(g) applicable to the Bonus, but the deferral amount shall be deducted after any FICA Tax applicable to the Bonus and other tax withholding related to the amount of such FICA Taxes as permitted under Code §409A, and after any pre-tax RSP deferrals subject to the contribution restrictions under Code §402(g) deducted from the Bonus, and shall not exceed the remaining amount of the Bonus after reduction for FICA Taxes, such related tax withholding and such RSP deferrals.  The Administrative Committee, in its sole discretion, shall prescribe the form of all Deferral Elections and Bonus Deferral Elections and may prescribe such nondiscriminatory terms and conditions governing the use of the Deferral Elections and Bonus Deferral Elections as it deems appropriate.  The following terms shall apply to Deferral Elections and Bonus Deferral Elections:

(1)   Effective Date

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(A)   General

.  Except as provided in subsections (B) and (C) below, a Participant’s Deferral Election and Bonus Deferral Election with respect to Compensation payable for services performed during a Plan Year must be made on or before December 31 of the preceding calendar year.  If an Active Participant fails to submit an initial Deferral Election and/or Bonus Deferral Election in a timely manner, he shall be deemed to have elected a deferral of zero percent with respect to such election.

(B)   Deferrals for New Participants

.  In the case of a Participant who is newly hired during a Plan Year and becomes eligible during such Plan Year to participate in the Plan, such Active Participant’s initial Deferral Election with a Participating Company must be made within 30 days after the date the Participant first becomes eligible to participate in the Plan.

(i)   Any such Deferral Election shall be effective for the first payroll period which begins after the Deferral Election is made.

(ii)   For clarity, the first Bonus Deferral Election may be made beginning January 1 following commencement of eligibility to participate in the Plan.

(iii)   For purposes of eligibility for the 30-day election period in this subsection, participation in any Aggregated Arrangement shall be considered participation in the Plan.

(C)   Bonus Deferrals

.  To the extent that the Administrative Committee has determined that the Bonus for a Plan Year qualifies as a Performance-Based Bonus, and permits an election under this subsection, a Participant’s Bonus Deferral Election must be made no later than the date that is 6 months before the end of the period over which the Bonus is earned ( i.e. , June 30 of such Plan Year).  In order to be eligible for the election deadline in this subsection, the Participant must perform services continuously from the later of the date the performance criteria for the Bonus are established or the first day of the performance period ( i.e. , January 1 for a calendar year bonus) until the date the Participant makes such Bonus Deferral Election.  Furthermore, if all or a portion of the Performance-Based Bonus is “readily ascertainable” on the date the Participant makes a Bonus Deferral Election under this subsection, the Participant’s Bonus Deferral Election under this subsection shall apply only to the portion of such bonus or award that is not then “readily ascertainable,” if any.  The determination of when an amount of compensation is considered to be “readily ascertainable” shall be made pursuant to guidance issued under Code §409A, which generally provides that compensation is “readily ascertainable” when the amount is first both calculable and substantially certain to be paid.

(2)   Terms, Modification and Revocation

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