1.1 Purpose, History and Effective Date . Nicor Inc. (the “Company”) maintains the 2008 Long-Term Incentive Program and 2007 Long-Term Incentive Program under the Nicor Inc. 2006 Long-Term Incentive Plan (the “2006 Plan”), which provides certain benefits to key executives and managerial employees of the Company and its subsidiaries. The Company and its subsidiaries, as applicable, also maintain the 2006 Long-Term Incentive Program and 2005 Long-Term Incentive Program under the Nicor Inc. 1997 Long-Term Incentive Plan (the “1997 Plan”), the Nicor Inc. 1989 Long-Term Incentive Plan (the “1989 Plan”) and anticipate maintaining in the future additional incentive compensation plans and programs, which provide cash payments of specified dollar amounts to eligible key executives and managerial employees of the Company and its subsidiaries upon the achievement of specified performance goals during a performance period of at least three years (collectively such plans being “Long-Term Plans”) or a calendar year (“Annual Plans”) (such Long-Term Plans and Annual Plans being referred to below collectively as the “Incentive Plans” and individually as an “Incentive Plan”). In order to further identify the interests of key executives and managerial employees with those of the Company’s shareholders by increasing such employees’ ownership of Company common stock, par value $2.50 per share (“Stock”), the Company established this Nicor Inc. Stock Deferral Plan (the “Plan”), effective May 1, 1996, to permit key executives and managerial employees who are eligible for a cash payment under a Long-Term Plan or an Annual Plan to elect to receive a portion of such payment in Stock, in lieu of cash, and to defer receipt of such Stock.

The effective date of this amended and restated Plan is January 1, 2008 (“Effective Date”), but the terms of this amended and restated Plan shall apply only to amounts deferred under this Plan after December 31, 2004, and the earnings, including Dividend Equivalents, thereon (“Non-Grandfathered Benefits”). 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 deferred under the Plan that were earned and vested within the meaning of Treas. Reg. §§1.409A-6(a) as of December 31, 2004, and the earnings, including Dividend Equivalents, 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.

1.2 Gender, Number and Defined Terms . 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. Appendix A contains an alphabetical listing of all defined terms and the subsection of the Plan in which each is defined.

1.3 Additional Terms and Conditions of the Plan . Stock awards under the Plan shall be deemed to be made pursuant to the Performance Units or Performance Awards provisions of the 1989 Plan, the 1997 Plan or the 2006 Plan, or any successor plans thereto, as applicable (the “Stock Plans”), and shall be subject to the terms, conditions and limitations of the Incentive Plans.

1.4 Employment and Shareholder Status . The Plan will not give any person the right to remain in the employ of the Company or any of its subsidiaries, or any right or claim to any

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benefits under the Plan unless such right or claim has specifically accrued under the terms of the Plan. Participation in the Plan shall not create any rights in an employee (or any other person) as a shareholder of the Company until shares of Stock are registered in the name of the employee (or such other person).

1.5 Source of Payments . Except for Stock actually delivered pursuant to the Plan, the Plan constitutes only an unfunded, unsecured promise of the Company to deliver Stock in the future in accordance with the terms of the Plan. Stock delivered pursuant to the Plan shall be authorized and issued pursuant to the Stock Plans.

1.6 Nonassignment . Neither a Participant’s (as described in subsection 2.1 below) nor any other person’s rights to payments or awards under the Plan are subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the Participant or such other person.

1.7 Elections . Any notice, election or document required to be filed with the Committee (as defined in Section 5) under the Plan will be effective only if it is filed in such form and at such time as the Committee may require, and shall be considered properly filed if delivered or mailed by registered mail, postage prepaid, to the Committee, in care of the Company, at the Company’s principal executive offices. The Committee may, by advance written notice to affected persons, revise such notice procedure from time to time. Any notice required under the Plan may be waived by the person entitled thereto.

1.8 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 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 2

Participant Elections

2.1 Participation . Key executives and managerial employees of the Company and its participating subsidiaries who are subject to the Nicor Inc. Stock Ownership Guidelines are eligible to become “Participants” in the Plan by filing a Deferral Election (as described in subsection 2.2).

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

(a)

Subject to the terms and conditions of the Plan, each employee who is eligible to participate in the Plan for a calendar year under an Annual Plan shall become a Participant for that calendar year by filing a written election with the Committee (“Deferral Election”) before the first day of the calendar year. A Deferral Election with respect to an Annual Plan shall be irrevocable as of the day immediately preceding the calendar year of the performance period.

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(b)

Subject to the terms and conditions of the Plan, each employee who is eligible to participate in the Plan for a performance period under a Long-Term Plan shall become a Participant for that period by filing a Deferral Election no later than (i) the last day of the calendar year immediately preceding the final calendar year of the performance period applicable under the Long-Term Plan with respect to Eligible Cash Awards that are performance-based or (ii) before the first day of the calendar year prior to the performance period for Eligible Cash Awards which are not performance-based. A Deferral Election with respect to a Long Term Plan shall be irrevocable as of (i) the last day of the calendar year immediately preceding the final calendar year of the performance period applicable under the Long-Term Plan with respect to Eligible Cash Awards that are performance-based or (ii) before the first day of the calendar year prior to the performance period for Eligible Cash Awards which are not performance-based.

A Deferral Election may be filed pursuant to this subsection 2.2(b) only if the Participant has continuously performed services for the Company or a subsidiary from the later of the date of the beginning of the performance period or the establishment of the performance criteria, through the date that the Deferral Election is filed. In addition, the Deferral Election may be made only with respect to that portion of an Eligible Cash Award (as defined in subsection 2.2(c) below) that is not readily ascertainable within the meaning of Treas. Reg. 1.409A-2(a)(8) as of the date that the Deferral Election is filed.

(c)

The Participant shall elect, by his Deferral Election, to forgo receipt of a portion of the Eligible Cash Awards to which he is entitled under the Incentive Plan and to receive in lieu thereof shares of Stock under the Plan at the time set forth in the Deferral Election, and in the manner set forth in his “Distribution Election” (filed in accordance with subsection 2.3) with respect to such amounts. The Deferral Election shall specify the dollar amount or percentage of the Eligible Cash Award to be deferred. The Deferral Election shall also specify the Payment Date with respect to the Stock Units attributable to such Eligible Cash Award (and to any dividend equivalents thereon), in accordance with subsection 4.1.

In no event shall the portion of the Eligible Cash Award to be converted to Stock Units and credited to the Participant's Account exceed the lesser of (i) the amount specified by the Participant in his Deferral Election, or (ii) 50 percent of the amount of the Eligible Cash Award.

For purposes of the Plan, the term “Eligible Cash Award” means the dollar amount payable under an Incentive Plan at the end of the applicable performance period under such plan, which amount would, but for a Participant’s election hereunder, be payable to the Participant in cash. In addition, to qualify as a performance-based Eligible Cash Award, the dollar amount payable under a Long-Term Plan must be contingent upon the satisfaction of individual performance criteria established in writing by the earlier of: (i) the date ninety (90) days after the commencement of the performance period to which the criteria relates; or (ii) the date that the outcome of the performance criteria is no longer

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substantially uncertain. Such Long-Term Plan may provide that the award shall become payable, regardless of satisfaction of the performance criteria, due to death, disability or a Change in Control (each within the meaning of Treas. Reg. 1.409A-1(e)(1)), but if any such award under the Long-Term Plan becomes payable other than due to satisfaction of the performance criteria, then the payment shall no longer qualify as a performance-based Eligible Cash Award.

(d)

A Participant’s Deferral Election for any calendar year under an Annual Plan or performance period under a Long-Term Plan shall be applicable to Eligible Cash Awards paid with respect to the relevant period. Notwithstanding any provision of the Plan to the contrary, a Deferral Election shall be automatically cancelled on the Participant’s Termination Date (as defined below) and shall be without effect thereafter.

For purposes of the Plan, a Participant’s “Termination Date” is the earlier of the date of the Participant’s death or his Separation from Service. A Participant’s “Separation from Service” is the date of termination of the Participant’s services to the Company (and any corporation, trade or business during any period during which it is, along with the Company, 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 (the “Code”)), whether voluntarily or involuntarily, other than due to death, as determined in accordance with Treas. Reg. §1.409A-1(h).

2.3 Distribution Elections . Each Participant shall file one Distribution Election with respect to the form of his benefit payment in accordance with subsection 4.2, with respect to all amounts deferred on his behalf under the Plan. Such Distribution Election must be filed at the same time and in the same manner as the Participant’s initial Deferral Election filed pursuant to either subsection 2.2(a) or 2.2(b). A Participant may not change or modify his Distribution Election after it has become irrevocable. If no Distribution Election is filed pursuant to this subsection 2.3, then subsection 4.6 shall apply.

2.4 Initial Elections . Notwithstanding the provisions of subsections 2.2 and 2.3, if an employee first becomes eligible to be a Participant (and does not participate in and has not for 24 months participated in any other nonqualified deferred compensation account balance plan that must be aggregated with the Plan pursuant to Code Section 409A), then the provisions of this subsection 2.4 shall apply. For such Participant to make a Deferral Election with respect to an Eligible Cash Award to be earned after the employee becomes a Participant, the Participant’s initial Deferral Election and Distribution Election must be filed on a date that is not later than 30 days following the date the Participant first becomes eligible to participate in the Plan. The Deferral Election and Distribution Election will become irrevocable on the date 30 days following the date of initial eligibility. Such elections for the initial calendar year of participation shall only be effective for the portion of a Participant’s Eligible Cash Award earned with respect to services performed after the Deferral Election becomes irrevocable, which portion shall be equal to the total amount of the Eligible Cash Award, multiplied by the ratio of the number of days remaining in the performance period after the date that the Deferral Election becomes irrevocable over the total number of days in the performance period. If a Participant

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fails to make a Deferral Election within 30 days of initial eligibility to participate, then such Participant may make an initial Deferral Election and Distribution Election only with respect to Eligible Cash Awards for subsequent performance periods, in accordance with subsections 2.2 and 2.3.

2.5 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.

SECTION 3

Stock Units, Dividend Equivalents and Account

3.1 Stock Units . Subject to the terms and conditions of the Plan, a Participant who has filed a Deferral Election with respect to any Eligible Cash Award shall have credited to his Account (as described in subsection 3.3), at the time set forth in subsection 3.3, the number of “Stock Units” determined in accordance with subsection 3.3(a) based on the amount of the Eligible Cash Award that he has elected to forgo, and shall receive shares of Stock equal to the number of Stock Units so credited to him at the date(s) determined in accordance with Section 4.

3.2 Dividend Equivalents . As of each Stock dividend date, a Participant who is credited with Stock Units under the Plan shall be entitled to receive an amount equal to the amount of the dividen

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