NICOR Inc.
                                                      Form 10-Q
                                                      Exhibit 10.01



                               NICOR Inc.
                           STOCK DEFERRAL PLAN

                       

SECTION 1. . . . . . . . . . . . . . . . . . . . . . . . . . . .1

General. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
     1.1.  Purpose, History and Effective Date . . . . . . . . .1
     1.2.  Gender, Number and Defined Terms. . . . . . . . . . .1
     1.3.  Participation . . . . . . . . . . . . . . . . . . . .1
     1.4.  Administration. . . . . . . . . . . . . . . . . . . .2
     1.5.  Additional Terms and Conditions of the Plan . . . . .2
     1.6.  Employment and Shareholder Status . . . . . . . . . .2
     1.7.  Source of Payments. . . . . . . . . . . . . . . . . .2
     1.8.  Nonassignment . . . . . . . . . . . . . . . . . . . .3
     1.9.  Elections . . . . . . . . . . . . . . . . . . . . . .3

SECTION 2. . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Elections to Receive Stock in Lieu of Eligible Cash Awards . . .3
     2.1.  Election to Receive Stock . . . . . . . . . . . . . .3
     2.2.  Rules for Stock Payment Elections . . . . . . . . . .3
     2.3.  Revocation and Cancellation of Stock Payment 
           Elections . . . . . . . . . . . . . . . . . . . . . .4
     2.4.  Election Period . . . . . . . . . . . . . . . . . . .4

SECTION 3. . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Dividend Equivalents and Deferred Stock Account. . . . . . . . .5
     3.1.  Dividend Equivalents. . . . . . . . . . . . . . . . .5
     3.2.  Crediting and Adjustment of Deferred Stock
           Accounts. . . . . . . . . . . . . . . . . . . . . . .5
     3.3.  Number of Stock Units . . . . . . . . . . . . . . . .6

SECTION 4. . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Distribution and Deferral. . . . . . . . . . . . . . . . . . . .6
     4.1.  Distribution and Deferral Elections . . . . . . . . .6
     4.2.  Changes to a Deferral Election. . . . . . . . . . . .7
     4.3.  Payment of Deferred Stock Account . . . . . . . . . .7
     4.4.  Installment Payments. . . . . . . . . . . . . . . . .7
     4.5.  Payments to Beneficiaries In the Event of Death . . .8
     4.6.  Termination Date. . . . . . . . . . . . . . . . . . 10

SECTION 5. . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Amendment and Termination. . . . . . . . . . . . . . . . . . . 10

APPENDIX A                                                       
EXHIBIT A                            




                                SECTION 1

                                 General

     1.1.  Purpose, History and Effective Date.  NICOR Inc. (the
"Company") maintains NICOR Inc. 1989 Long-Term Incentive Plan
(the "1989 Plan") which provides certain benefits to key
executives and managerial employees of the Company and its
Subsidiaries (as described in subsection 1.2).  The Company and
its Subsidiaries also maintain, and anticipate maintaining in the
future, incentive compensation plans, other than the 1989 Plan,
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 (a "Long-Term Plan") or a calendar year (an "Annual Plan")
(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 Stock, the Company has established NICOR INC. STOCK
DEFERRAL PLAN (the "Plan") as set forth herein 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 Company Stock, in lieu of
cash, and to defer receipt of such stock, all on the terms and
conditions set forth herein.  The Plan shall be effective
immediately upon approval of the Compensation Committee of the
Company's Board of Directors (the "Committee"), and the date on
which the Plan is effective shall be referred to herein as the
"Effective Date."  The Incentive Plans in effect on the Effective
Date are set forth in Exhibit A.

     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.  Except as otherwise specifically provided
herein, or unless the context clearly implies or indicates the
contrary, a word, term or phrase used in the Plan with initial
capital letters shall have the same meaning as when such word,
term or phrase is used in the 1989 Plan.  Appendix A contains an
alphabetical listing of all defined terms and the subsections of
the Plan in which they are defined to the extent that they are
not defined by reference to the 1989 Plan.
     
     1.3.  Participation.  Key executives and managerial
employees of the Company and its Subsidiaries who are eligible to
participate in the 1989 Plan and who are eligible to receive a
cash payment under a Long Term Plan or an Annual Plan, or both,
as such plans may be in effect from time to time on and after the
Effective Date, are eligible to become "Participants" in the Plan
by completing a Stock Payment Election (as described
in subsection 2.1).





     1.4.  Administration.  The authority to manage and control
the operation and administration of the Plan shall be vested in
the Committee.  Subject to the conditions and limitations of the
Plan, the Committee shall have the sole and complete authority
and discretion to:

     (a)  interpret the Plan and to adopt, amend and rescind
          administrative guidelines and other rules and
          regulations relating to the Plan;

     (b)  correct any defect or omission and to reconcile any
          inconsistency in the Plan, and to remedy any error in
          any payment made hereunder; and

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

The Committee's determinations on matters within its control
shall be conclusive and binding on the Company and all other
persons.  Notwithstanding the foregoing, no member of the
Committee shall act with respect to the administration of the
Plan except to the extent consistent with the exempt status of
the Plan and the 1989 Plan under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3").

     1.5.  Additional Terms and Conditions of the Plan.  Stock
awards under the Plan shall be deemed to be made pursuant to the
Performance Unit provisions of the 1989 Plan, and shall be
subject to the terms, conditions and limitations of the 1989
Plan.
     
     1.6.  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 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).

     1.7.  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.

                             -2-


     1.8.  Nonassignment.  Neither a Participant's 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.

     1.9.  Elections.  Any notice, election or document required
to be filed with the Committee 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.


                            SECTION 2

                  Elections to Receive Stock in
                   Lieu of Eligible Cash Awards 

     2.1.  Election to Receive Stock.  Subject to the terms and
conditions of the Plan, each executive who is eligible to
participate in the Plan, by filing a written "Stock Payment
Election" with the Committee during the applicable Election
Period (as described in subsection 2.4), may elect to forego
receipt of a portion of the Eligible Cash Awards (as defined
below) to which he is entitled under any Long Term Plan or Annual
Plan, or both, and to receive in lieu thereof shares of Stock
under the Plan at the time and in the manner set forth below. 
Subject to the terms and conditions of the Plan, a Participant
who has filed a Stock Payment Election with respect to any
Eligible Cash Award shall have credited to his Deferred Stock
Account (as described in subsection 3.2), at the time set forth
in subsection 3.2, the number of "Stock Units" determined in
accordance with subsection 3.3 based on the amount of the
Eligible Cash Award that he has elected to forego, and shall
receive shares of Stock equal to the number of Stock Units so
credited to him at the date determined in accordance with
Section 4.  For purposes of the Plan, the term "Eligible Cash
Award" means the dollar amount payable under a Long Term Plan or
an Annual 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.

     2.2.  Rules for Stock Payment Elections.  A Stock Payment
Election shall specify the Eligible Cash Award and the Incentive
Plan or Incentive Plans to which it applies, and shall be valid
only if it is filed with the Committee on or before the last day

                             -3-



of the Election Period for the Eligible Cash Award to which it
relates.  In no event shall the portion of an Eligible Cash Award
which is to be converted to Stock Units and credited to the
Participant's Deferred Stock Account exceed the lesser of (a) the
amount specified by the Participant in his Stock Payment
Election, or (b) 50 percent of the amount of the Eligible Cash
Award.

     2.3.  Revocation and Cancellation of Stock Payment
Elections.  Except as otherwise specifically provided below in
this subsection 2.3, a Stock Payment Election that is filed with
respect to any Eligible Cash Award shall be irrevocable after the
Election Period for such award expires, and shall remain in
effect with respect to Eligible Cash Awards under succeeding Long
Term Plans or Annual Plans, as the case may be, unless and until
it is revised or revoked.  Any such revision or revocation shall
be in writing, signed by the Participant and filed with the
Committee, and shall specify the Incentive Plan and the Eligible
Cash Award to which it relates.  Any revocation or revision shall
be effective with respect to an Eligible Cash Award only if it
filed with the Committee on or before the last day of the
Election Period for that award.  Notwithstanding any provision of
the Plan to the contrary, a Stock Payment Election shall be
automatically cancelled on the Participant's Termination Date (as
defined in subsection 4.6) and shall be without effect
thereafter, except with respect to Eligible Cash Awards that have
been converted to Stock Units and credited to the Participant's
Deferred Stock Account under the Plan before such Termination
Date.

     2.4.   Election Period.  For purposes of the Plan, the
"Election Period" with respect to an Eligible Cash Award under an
Annual Plan or a Long Term Plan shall be the period beginning on
the date on which the Committee approves such plan (and, to the
extent applicable, the performance targets, the number and
identity of recipients of performance units and any other
material terms and conditions of such plan as are subject to the
approval of the Committee) for a calendar year or longer
performance period designated thereunder, and ending 30 days
after the date of Committee approval or the June 30th immediately
following such approval date, whichever is earlier. 
Notwithstanding the foregoing, the Election Period applicable to
Eligible Cash Awards under each of the following Incentive Plans
shall be the period beginning on the Effective Date and ending on
June 30, 1996:  the 1994 Long Term Incentive Plan, the 1995 Long
Term Incentive Plan consisting of a three-year performance
period, the 1995 Long Term Plan consisting of a five-year
performance period, the 1996 Annual Plan and the 1996 Long Term
Plan.

                             -4-
                            
                            
                            
                            SECTION 3

         Dividend Equivalents and Deferred Stock Account

     3.1.  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
dividends that would have been paid by the Company on the number
of shares of Stock equal to the number of Share Units credited to
the Participant's Deferred Stock Account on the record date for
such dividend ("Dividend Equivalents"), which amount shall be
either (a) paid to the Participant in cash as soon as practicable
after the dividend payment date, or (b) converted to Stock Units
and credited to the Participant's Deferred Stock Account in
accordance with the provisions of subsection 3.2, as elected by
the Participant in writing at the time that he files his Stock
Payment Election.  If no election is made by a Participant,
Dividend Equivalents shall be paid in cash as soon as practicable
after each dividend payment date.  Any additional Stock Units
credited to a Participant's Deferred Stock Account by reason of
an election under this subsection 3.1 shall be distributed at the
same time as the Stock Units to which such additional units are
attributable.

     3.2.  Crediting and Adjustment of Deferred Stock Accounts. 
A bookkeeping account shall be established and maintained by the
Company in the name of each Participant under the Plan (the
"Deferred Stock Account").  A Participant's Deferred Stock
Account shall be adjusted as follows:
     
     (a)  as of the first business day following the end of each
          performance period, the Participant's Deferred Stock
          Account shall be credited with the number of Stock
          Units (and any fractional portion thereof) determined
          in accordance with subsection 3.3 representing the
          portion, if any, of an Eligible Cash Award that is
          subject to a Stock Payment Election;

     (b)  as of the dividend payment date for any dividend paid
          on Stock, the Deferred Stock Account of each
          Participant who has elected to convert his Dividend
          Equivalents into Stock Units shall be credited with
          that number of additional Stock Units which is equal to
          the number obtained by multiplying (i) the number of
          Stock Units credited to the Participant's Deferred
          Stock Account as of the dividend record date, by (ii)
          the amount of the cash dividend or the fair market
          value (as determined by the Committee) of any dividend
          payable in kind on a share of Stock as of that date,
          and by dividing that product by the Fair Market Value
          of a share of Stock on the dividend payment date;


                             -5-


     (c)  as of the date on which shares of Stock are distributed
          to or on behalf of the Participant in accordance with
          Section 4, the Participant's Deferred Stock Account
          shall be charged with an equal number of Stock Units;
          and

     (d)  in the event of any merger, consolidation,
          reorganization, recapitalization, spinoff, stock split,
          reverse stock split, rights offering, exchange or other
          change in the corporate structure or capitalization of
          the Company affecting the Stock, each Participant's
          Deferred Stock Account shall be equitably adjusted in
          such manner as the Committee shall determine in its
          sole judgment.

     3.3.  Number of Stock Units.  With respect to any Eligible
Cash Award, the number of Stock Units (and fractional portions
thereof) to be credited to a Participant's Deferred Stock Account
shall be equal to:

     (a)  the dollar amount of such Eligible Cash Award which is
          subject to a Stock Payment Election, if any, and which
          would have been paid to the Participant in cash but for
          such election;

          DIVIDED BY:

     (b)  the Fair Market Value of a share of Stock on the first
          business day following the end of the performance
          period to which such Eligible Cash Award relates.


                            SECTION 4

                    Distribution and Deferral

     4.1.  Distribution and Deferral Elections.  Subject to the
following provisions of this Section 4, the Stock Units credited
to a Participant's Deferred Stock Account with respect to any
Eligible Cash Award, together with any additional Stock Units
credited with respect to such units by reason of an election
under subsection 3.1 (relating to Dividend Equivalents), shall be
distributed as soon as practicable (but not more than 90 days)
after the last day of the deferral period below applicable to
such award.  Except as otherwise specifically provided in this
Section 4, the last day of the deferral period with respect to an
Eligible Cash Award shall be the date selected by the Participant
in a written "Deferral Election" filed with the Committee during
the Election Period applicable to such award, which date shall
be: 

                             -6-


     (a)  the third (or later) anniversary of the last day of the
          performance period to which the Eligible Cash Award
          relates; provided, however, that if the Participant's
          Termination Date occurs before the date selected by the
          Participant under this paragraph (a), the last day of
          the deferral period shall be his Termination Date; or

     (b)  the Participant's Termination Date. 

     4.2.  Changes to a Deferral Election.  Except as provided
below in this Section 4, a Deferral Election shall be irrevocable
with respect to an Eligible Cash Award after the Election Period
applicable to such award expires, and shall remain in effect with
respect to awards under succeeding Long Term Plans or Annual
Plans, as the case may be, until revoked or revised.  Any such
revocation or revision shall be in writing, signed by the
Participant and filed with the Committee, and shall specify the
Incentive Plan and the Eligible Cash Award to which it relates. 
Any such revocation or revision shall be effective with respect
to an Eligible Cash Award only if it is filed on or before the
last day of the Election Period for such award.  

     4.3.  Payment of Deferred Stock Account.  Except as
otherwise specifically provided below in this Section 4, the
Stock Units to be distributed at any date shall be distributed to
the Participant or, in the event of his death, to his Beneficiary
(as described in subsection 4.5), in whole shares of Stock and
cash in lieu of any fractional share of Stock, determined as
follows:

     (a)  the number of shares of Stock to be distributed shall
          be equal to the number determined by rounding to the
          next lower integer the number of Stock Units to be
          distributed; and

     (b)  any fractional portion of a Stock Unit shall be
          distributed in cash in an amount determined by
          multiplying such fractional portion by the Fair Market
          Value of a share of Stock on the date the shares of
          Stock are registered in the name of the Participant or
          Beneficiary. 

     4.4.  Installment Payments.  A Participant who has a Stock
Deferral Election in effect pursuant to which the distribution of
any Stock Units credited to his Deferred Stock Account is
deferred to his Termination Date may elect to have such Stock
Units distributed to him (or, in the event of his death, to his
Beneficiary) in annual installments (not exceeding 15), in lieu
of a single payment, subject to the following:

                             -7-



     (a)  If a Participant has an installment payment election in
          effect on his Termination Date, the first installment
          shall be distributed as soon as practicable (but not
          more than 90 days) after the Participant's Termination
          Date, followed by succeeding installments to be
          distributed not more than 90 days after the first
          business day in each calendar year following the
          calendar year in which his Termination Date occurs,
          until the remaining installment payments are exhausted.

     (b)  An election under this subsection 4.4 to have Stock
          Units distributed in installments, and any revocation
          of such an election, shall be effective only if it is
          filed with the Committee, in writing, at least 12
          months prior to the Participant's Termination Date, and
          any such election (or revocation of a prior election)
          filed less than 12 months before such termination shall
          be without effect.

     (c)  If a Participant has filed an installment payment
          election in accordance with this subsection 4.4, the
          number of shares of Stock to be distributed in each
          installment shall be the number of shares determined by
          rounding to the next lower integer the product of:

          (i)  the number of Stock Units then credited to the
               Participant's Deferred Stock Account, multiplied
               by

          (ii) a fraction, the numerator of which is one and the
               denominator of which is the number of remaining
               installments (including such payment).

          The value (determined by the Committee based on the
          Fair Market Value of a share of Stock on the date on
          which the last installment payment is made) of any
          fractional Stock Unit remaining after all distributions
          have been made to the Participant shall be distributed
          to or on behalf of the Participant in cash with the
          last installment payment.
  
     4.5.  Payments to Beneficiaries In the Event of Death.  If a
Participant dies before complete payment of his Deferred Stock
Account, the Stock Units credited to his Deferred Stock Account
shall be distributed to his Beneficiary in accordance with the
following: 

     (a)  Subject to the provisions of paragraph (b) next below,
          the Participant may direct that any Stock Units
          credited to his Deferred Stock Account at his death be
          distributed to his Beneficiary either:

                             -8-



          (i)  in a lump sum payment as soon as practicable after
               the Participant's death; or

          (ii) in annual installments (not exceeding 15) in a
               manner comparable to that set forth in subsection
               4.4.

          An election under this paragraph shall be made by the
          Participant in a Beneficiary designation form filed
          with the Committee before the Participant's death.

     (b)  If the Participant dies after installment payments have
          commenced under subsection 4.4, any remaining Stock
          Units shall be distributed to his Beneficiary on or as
          soon as practicable after the date on which such units
          would have been distributed to the Participant in
          accordance with the payment schedule in effect at his
          death.  

     (c)  Notwithstanding the foregoing provisions of this
          subsection 4.5, the Committee, in its sole discretion,
          may accelerate the distribution of Stock Units to any
          Beneficiary. 

     (d)  Pending complete distribution of all amounts to which a
          Participant is entitled under the Plan, the
          Participant's Deferred Stock Account shall continue to
          be adjusted in accordance with subsection 3.2 of the
          Plan, and Dividend Equivalents payable with respect to
          Stock Units credited to the Participant's Deferred
          Stock Account shall be paid in cash to the
          Participant's Beneficiary or credited to the
          Participant's Deferred Stock Account as additional
          Stock Units in accordance with the election, if any,
          made by the Participant and filed with the Committee
          before his death in accordance with subsection 3.1.

For purposes of the Plan, a Participant's "Beneficiary" is any
legal or natural person or persons that the Participant
designates in a form which is provided for that purpose by the
Committee and is filed with the Committee prior to the
Participant's death.  A Beneficiary designation shall be
effective when it is filed with the Committee in accordance with
the preceding sentence, and shall supersede any Beneficiary
designation filed earlier.  If more than one Beneficiary has been
designated, the balance in the Participant's Deferred Stock
Account shall be distributed to each such Beneficiary per capita
(with cash distributed in lieu of any fractional share of Stock). 
If the Participant fails to file a Beneficiary designation or if
no Beneficiary survives the Participant, the Participant's
Beneficiary shall be the Participant's estate.

                             -9-



     4.6.  Termination Date.  A Participant's Termination Date is
the date on which his employment with the Company and all of its
subsidiaries terminates for any reason, including retirement,
death, disability, voluntary resignation or discharge.


                            SECTION 5

                    Amendment and Termination

     While the Company expects and intends to continue the Plan,
the Board of Directors of the Company reserves the right, at any
time and in any way, to amend, suspend or terminate the Plan;
provided, however, that no amendment, suspension or termination
shall:

     (a)  be made without shareholder approval to the extent such
          approval is required by law, agreement or the rules of
          any exchange or automated quotation system upon which
          the Stock is listed or quoted;

     (b)  materially alter or impair the rights of a Participant
          under the Plan without the consent of the Participant
          with respect to Stock Units already credited hereunder;
          or

     (c)  make any change that would disqualify the Plan or any
          other plan of the Company intended to be so qualified
          from the exemption provided by Rule 16b-3.
                           
                             -10-
                           
                           
                           
                           
                           APPENDIX A

                          Defined Terms

1.1                           Annual Plan
4.5                           Beneficiary
1.1                           Committee
1.1                           Company
4.1                           Deferral Election
3.2                           Deferred Stock Account
3.1                           Dividend Equivalents
1.1                           Effective Date
2.4                           Election Period
2.1                           Eligible Cash Award
The 1989 Plan                 Fair Market Value
1.1                           Incentive Plan(s)
1.1                           Long Term Plan(s)
1.3                           Participant
1.4                           Rule 16b-3
The 1989 Plan                 Stock
2.1                           Stock Payment Election
1.1                           Stock Units
The 1989 Plan                 Subsidiaries
4.6                           Termination Date
1.1                           The 1989 Plan

                             -11-




                            EXHIBIT A


1.   NICOR Inc. 1989 Long-Term Incentive Plan

2.   1994 Long-Term Incentive Program

3.   1995 Long-Term Incentive Program

     A.   Three-Year Program

     B.   Five-Year Program

4.   1996 Long-Term Incentive Program

5.   1996 Annual Bonus Plans

     A.   NICOR Annual Bonus

     B.   NI-Gas Annual Bonus

     C.   Birdsall Annual Bonus


                             -12-