NICOR GAS SUPPLEMENTARY RETIREMENT PLAN
                            (As Amended and Restated
                        Effective as of January 1, 1999)




























                              Mayer, Brown & Platt
                                     Chicago


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                                TABLE OF CONTENTS


                                                                            Page


SECTION 1   General..........................................................1
            1.1.  History, Purpose and Effective Date........................1
            1.2.  Definitions................................................1
            1.3.  Plan Administration; Source of Benefit Payments............1
            1.4.  Applicable Laws............................................2
            1.5.  Gender and Number..........................................2
            1.6.  Notices....................................................2
            1.7.  Action by Employers........................................2
            1.8.  Limitations on Provisions..................................2
            1.9.  Claims and Review Procedures...............................2
            1.10. Benefits Under Plan as in Effect Prior to January 1, 1995..2

SECTION 2   Participation....................................................3
            2.1.  Participation..............................................3
            2.2.  Beneficiary................................................3
            2.3.  Restricted Membership......................................3
            2.4.  Plan Not Contract of Employment............................3

SECTION 3   Amount and Payment of Plan Benefit...............................3
            3.1.  Amount of Supplemental Retirement Benefit..................3
            3.2.  Benefits for Beneficiaries.................................4
            3.3.  Payment of Benefits........................................4
            3.4.  Distributions To Persons Under Disability..................5
            3.5.  Benefits May Not Be Assigned or Alienated..................5
            3.6   Benefits for Limited Participants..........................5

SECTION 4   Amendment and Termination........................................5
            4.1.  Amendment and Termination..................................5
            4.2.  Successors.................................................6



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                     NICOR GAS SUPPLEMENTARY RETIREMENT PLAN
                       (As Amended and Restated Effective
                             as of January 1, 1999)




                                    SECTION 1

                                     General


      1.1.  History,  Purpose and Effective Date.  Northern Illinois Gas Company
(doing business as Nicor Gas Company, the "Company") previously  established the
Nicor Gas Retirement Plan (previously  known as the NI-Gas  Retirement Plan, the
"Retirement  Plan") to provide  retirement and other benefits to or on behalf of
its eligible  employees and those of its affiliates  which,  with the consent of
the Company,  adopt the Retirement Plan.  Contrary to the desire of the Company,
the amount of the  benefit  payable to or on  account of an  employee  under the
Retirement  Plan  may be  limited  by  reason  of  the  application  of  certain
provisions  of the  Internal  Revenue  Code of 1986,  as amended  (the  "Code").
Therefore,   the  Company  previously   established  the  NI-Gas   Supplementary
Retirement  Plan (the  "Plan"),  effective as of January 9, 1980, to assure that
affected  individuals  would receive total  retirement  and other benefits in an
amount equal to the amount that they would have  received  under the  Retirement
Plan if certain  limitations  of the Code were not  applicable to the Retirement
Plan. The following  provisions  constitute an amendment and  restatement of the
Plan,  effective as of January 1, 1999 (the  "Effective  Date"),  in the form of
"Nicor Gas Supplementary  Retirement Plan". The Company and any affiliate of the
Company  which  adopts the Plan for the benefit of its  eligible  employees  are
referred to below,  collectively,  as the  "Employers"  and  individually  as an
"Employer".

      1.2. Definitions. Unless the context clearly requires otherwise, any word,
term or phrase used in the Plan shall have the same meaning as is assigned to it
under the terms of the Retirement Plan. Any reference in the Plan to a provision
of the  Retirement  Plan shall be deemed to include  reference to any comparable
provision of any amendment of that plan.

      1.3. Plan  Administration;  Source of Benefit  Payments.  The authority to
control and manage the operation and  administration of the Plan shall be vested
in the committee appointed by the Board of Directors of the Company to act under
the Retirement Plan (the "Committee"). In controlling and managing the operation
and administration of the Plan, the Committee shall have the same rights, powers
and duties as those delegated to it under the Retirement Plan. The amount of any
benefit  payable  under the Plan shall be paid from the general  revenues of the
Employer with respect to whose former employee the benefit is payable; provided,
however,  that if a Participant (as defined in subsection 2.1) has been employed
by more than one Employer,  the portion of his Plan benefits payable by any such
Employer  shall be in proportion to the benefit he accrued under the  Retirement
Plan for his period of service  with that  Employer.  An  Employer's  obligation
under the Plan shall be reduced to the  extent  that any  amounts  due under the
Plan are paid from one or more  trusts,  the assets of which are  subject to the
claims of general creditors of the Employer or any affiliate thereof;  provided,
however,  that nothing in the Plan shall  require the Company or any Employer to
establish any trust to provide benefits under the Plan.

      1.4.  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.

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

      1.6.  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.

      1.7.  Action by  Employers.  Any action  required or permitted to be taken
under the Plan by any Employer which is a corporation  shall be by resolution of
its Board of  Directors,  or by a person or persons  authorized  by its Board of
Directors. Any action required or permitted to be taken by any Employer which is
a partnership  shall be by a general  partner of such  partnership  or by a duly
authorized officer thereof.

      1.8.  Limitations  on  Provisions.  The  provisions  of the  Plan  and the
benefits provided  hereunder shall be limited as described  herein.  Any benefit
payable under the  Retirement  Plan shall be paid solely in accordance  with the
terms and  conditions  of the  Retirement  Plan and  nothing  in this plan shall
operate or be  construed  in any way to modify,  amend,  or affect the terms and
provisions of the Retirement Plan.

      1.9.  Claims and Review  Procedures.  The claims  procedure  applicable to
claims and appeals of denied claims under the Retirement Plan shall apply to any
claims for benefits under the Plan and appeals of any such denied claims.

1.10.  Benefits  Under Plan as in Effect  Prior to  January  1, 1995.  Except as
otherwise  specifically  provided in the Plan, the provisions of the Plan as set
forth  herein  shall apply only to persons who become  Participants  or commence
payment of their benefits  under the Retirement  Plan on or after the January 1,
1995. Except as otherwise  specifically provided in the Plan, if a person became
a Participant or commenced  payment of his benefits  under the  Retirement  Plan
prior to January 1, 1995, his right to benefits, if any, and the amount thereof,
will be determined in accordance with the provisions of the Plan as in effect on
the date he became a Participant.


                                    SECTION 2

                                  Participation

      2.1.  Participation.  Each  person  who was a  "Participant"  of the  Plan
immediately  prior  to  the  Effective  Date  shall  continue  as a  Participant
hereunder for periods on and after the Effective Date,  subject to the terms and
conditions of the Plan.  Subject to the terms and  conditions of the Plan,  each
other  employee  of an  Employer  who  retires  after  the  Effective  Date on a
retirement date under the Retirement  Plan shall become a  "Participant"  in the
Plan if, at the time he commences  payment of his retirement  benefits under the
Retirement  Plan, the amount of his  retirement  benefit is limited by reason of
the  application  of  sections  415 of the Code or,  after  December  31,  1994,
401(a)(17)  of the  Code  (and,  in  each  case,  the  regulations  and  rulings
thereunder). Each Participant (or, to the extent applicable, his Beneficiary (as
defined in  subsection  2.2))  shall be  entitled  to receive  the  Supplemental
Retirement  Benefit,  if any,  determined in  accordance  with Section 3 hereof.
Subject to the terms and  conditions of the Plan,  an individual  who is granted
benefits under an individual  agreement with the Company or, with the consent of
the Company, an Employer, which individual agreement provides for the payment of
retirement benefits or other deferred compensation, including benefits which are
in addition to the benefits to which the individual  would otherwise be entitled
under the terms of the  Retirement  Plan,  will be a  "Participant"  in the Plan
solely  for  purposes  of the  benefits  to be  provided  under  the  individual
agreement  and such  individuals  are  sometimes  referred to herein as "Limited
Participants".

      2.2.  Beneficiary.  Each individual who becomes entitled to benefits under
the  Retirement  Plan  on  account  of the  death  of a  Participant  after  his
retirement  shall be referred to as a  "Beneficiary"  under the Plan and, in the
event of the Participant's  death,  shall be entitled to receive the benefits in
accordance with subsection 3.3.

      2.3. Restricted Participation.  Notwithstanding any other provision of the
Plan to the contrary,  if the Committee  determines that participation by one or
more  Participants (or payment of benefits to any  Beneficiary)  shall cause the
Plan as  applied to any  Employer  to be subject to Part 2, 3 or 4 of Title I of
the Employee  Retirement  Income  Security Act of 1974,  as amended,  the entire
interest  of such  Participant  or  Beneficiary  under the Plan shall be, in the
discretion  of  the  Committee,   immediately   paid  to  such  Participant  (or
Beneficiary,  if applicable) by the applicable  Employer or Employers,  or shall
otherwise  be   segregated   from  the  Plan,   and  such   Participant(s)   (or
Beneficiary(ies)) shall cease to have any interest under the Plan.

      2.4.  Plan Not  Contract of  Employment.  The Plan does not  constitute  a
contract of employment, and participation in the Plan will not give any employee
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

                       Amount and Payment of Plan Benefit

      3.1. Amount of Supplemental  Retirement Benefit.  Subject to the terms and
conditions of the Plan, the benefit payable under the Plan to a Participant (the
"Supplemental Retirement Benefit") as of any date shall be an amount equal to:

      (a)   the amount of the benefit  (expressed in the form of the benefit the
            Participant  actually  receives under the Retirement  Plan) that the
            Participant  would  have been  entitled  to  receive as of that date
            under  the  Retirement  Plan,   determined  without  regard  to  the
            limitations  imposed  by either  section  415 of the Code or,  after
            December 31, 1994, section 401(a)(17) of the Code, or both;

            REDUCED BY

      (b)   the amount of the actual benefit  payment under the Retirement  Plan
            to the Participant as of that date.

To  the  extent  applicable,   the  Supplemental  Retirement  Benefit  shall  be
determined at all times in a manner consistent with the then current  provisions
of sections 415 of the Code and,  after  December 31,  1994,  401(a)(17)  of the
Code, to the extent applicable.  Limited Participants shall not be entitled to a
Supplemental Retirement Benefit under this subsection 3.1.

      3.2.  Benefits for  Beneficiaries.  Upon the death of a Participant,  such
Participant's Beneficiary shall be entitled to receive a Supplemental Retirement
Benefit,  if any, in an amount  determined in accordance  with subsection 3.1 by
substituting the Beneficiary for the Participant.

      3.3. Payment of Benefits. Subject to the terms and conditions of the Plan,
for benefits  commencing  on or after January 1, 1995,  Supplemental  Retirement
Benefits shall be paid in accordance with the following:

      (a)   The  Supplemental  Retirement  Benefit  to  which a  Participant  or
            Beneficiary,  as applicable, is entitled shall be paid at such time,
            in the same form and subject to substantially the same conditions as
            is  the  benefit  paid  to  such  Participant  or  Beneficiary,   as
            applicable, under the Retirement Plan.

      (b)   Notwithstanding the provisions of paragraph (a), a Participant or
            Beneficiary, as applicable, may elect payment of his Supplemental
            Retirement Benefit in a form other than the form of benefit
            payment under the Retirement Plan (but only in one of the other
            optional forms of payment otherwise available to the Participant
            or Beneficiary, as applicable, under the Retirement Plan);
            provided, however, that any such election shall be effective only
            to the extent that it is made at least one year prior to the date
            as of which payment of the Supplemental Retirement Benefit would
            otherwise commence.

      (c)   Notwithstanding the provisions of paragraphs (a) and (b), a
            Participant or Beneficiary, as applicable, may request, by
            writing filed with the Committee, to have payment of his
            Supplemental Retirement Benefit in a form other than the form of
            payment under the Retirement Plan (but only in one of the other
            optional forms of payment otherwise available to the Participant
            or Beneficiary, as applicable, under the Retirement Plan).  After
            receiving such a request, the Committee shall consider the
            request and the circumstances on which it is based and shall, in
            its sole and exclusive discretion, approve or disapprove the
            request and inform the requesting Participant or Beneficiary of
            its decision.

      (d)   Notwithstanding the foregoing provisions of this subsection 3.4,
            if the value of the Supplement Retirement Benefit does not exceed
            $5,000 ($3,500 prior to January 1, 1998), determined as of the
            Participant's retirement date, or with respect to a Beneficiary,
            the date of the Participant's death, and determined using the
            actuarial assumptions set forth in the Retirement Plan for
            purposes of determining the actuarial value of lump sum payments,
            the Supplemental Retirement Benefit shall be paid to the
            Participant or Beneficiary, as applicable, in a lump sum as soon
            as practicable after the Participant's retirement date or death,
            as applicable.

Any  optional  form  of  benefit  shall  be  the  actuarial  equivalent  of  the
Supplemental   Retirement  Benefit  otherwise  payable  to  the  Participant  or
Beneficiary, as applicable, determined by applying the appropriate interest rate
and other  actuarial  assumptions  then set forth in the  Retirement  Plan.  The
Company  may,  but  shall  not be  obligated  to  purchase  an  annuity  for any
Participant  or  Beneficiary  for all or any  portion of such  Participant's  or
Beneficiary's  Supplemental Retirement Benefit,  notwithstanding the purchase of
an annuity with respect to any other  Participant or Beneficiary or the purchase
of an  annuity  with  respect to the  benefit  payable  to such  Participant  or
Beneficiary under the Retirement Plan.

      3.4. Distributions To Persons Under Disability. In the event a Participant
or Beneficiary is declared incompetent and a conservator or other person legally
charged with the care of his person or of his estate is appointed,  any benefits
to which such  Participant  or  Beneficiary  is entitled under the Plan shall be
paid to such  conservator or other person  legally  charged with the care of his
person or of his estate.

      3.5.  Benefits May Not Be Assigned or Alienated.  The benefits  payable to
any  Participant  or  Beneficiary  under  the  Plan  may not be  voluntarily  or
involuntarily assigned or alienated.

      3.6.  Benefits for Limited  Participants.  Benefits payable to any Limited
Participant  under  an  individual  agreement  shall  be  determined  solely  in
accordance  with,  and  shall  be,  in all  respects,  subject  to and  paid  in
accordance with, the provisions of the individual agreement.


                                    SECTION 4

                            Amendment and Termination

      4.1.  Amendment and  Termination.  The Company may, at any time,  amend or
terminate the Plan; provided, however, that, after December 31, 1994, neither an
amendment or  termination  of the Plan shall  reduce or impair the  interests of
Participants  or  Beneficiaries  in benefits being paid under the Plan as at the
date of any such  amendment  or  termination  or in benefits  that would be paid
under the Plan as of the date of the  amendment or  termination  if all eligible
persons retired on a retirement date under the Retirement Plan as of the date of
the amendment or termination and commenced payment of benefits under the Plan as
of that date. Notwithstanding the preceding sentence, after December 31, 1994:

      (a)   the Company 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; and

      (b)   in the event the Retirement Plan is terminated or curtailed with the
            result that pension payments to Members or Beneficiaries  thereunder
            are discontinued or reduced,  the Supplemental  Retirement  Benefits
            then being paid or in the future payable  pursuant to the Plan shall
            similarly be  discontinued  or reduced in the same ratio as payments
            under the Retirement Plan are discontinued or reduced.

      4.2.  Successors.  The obligations of the Company and each Employer
under the Plan shall be binding on any assignee or successor in interest
thereto.