FIRST AMENDMENT TO
                        NICOR, INC. SALARY DEFERRAL PLAN

      Upon the  recommendation  of the  Compensation  Committee  of the Board of
Directors (the "Board") of Nicor Inc. (the  "Company"),  the Nicor,  Inc. Salary
Deferral  Plan (the  "Plan")  has been  amended  by  resolution  of its Board of
Directors (the  "Resolution")  adopted on December 7, 1999, with such amendments
to be  effective  pursuant  to the  terms  of the  Resolution.  Pursuant  to the
Resolution, the following shall be substituted for the portion of subsection 5.7
beginning after "For purposes of the Plan, "Change in Control" means:"

   (a) The acquisition by any individual, entity or group (within the meaning of
   Section  13(d)(3) or  14(d)(2) of the  Securities  Exchange  Act of 1934,  as
   amended (the "Exchange Act"))(a "Person") of beneficial ownership (within the
   meaning of Rule 13d-3  promulgated  under the Exchange  Act) of any shares of
   Common Stock of the Company or any voting  securities of the Company entitled
   to vote  generally  in the  election  of  directors  if,  as a result of such
   acquisition,  such  person  owns 20% or more of  either  (i) the  outstanding
   shares  of common  stock of the  Company  (the  "Outstanding  Company  Common
   Stock"),  or  (ii)  the  combined  voting  power  of the  outstanding  voting
   securities  of the Company  entitled  to vote  generally  in the  election of
   directors (the "Outstanding Company Voting Securities");  provided,  however,
   that for purposes of this subsection 5.7(a), the following acquisitions shall
   not constitute a Change in Control:  (A) any acquisition by the Company,  (B)
   any acquisition by an employee  benefit plan (or related trust)  sponsored or
   maintained  by the Company or any  corporation  controlled  by the Company (a
   "Company  Plan"),  or (C) any  acquisition by any  corporation  pursuant to a
   transaction  which complies with subsections  (c)(1),  (c)(2),  and (c)(3) of
   this definition;  provided  further,  that for purposes of clause (A), if any
   Person  (other  than the  Company  or any  Company  Plan)  shall  become  the
   beneficial  owner of 20% or more of the  Outstanding  Company Common Stock or
   20% or more of the  Outstanding  Company  Voting  Securities  by reason of an
   acquisition by the Company,  and such Person shall, after such acquisition by
   the Company,  become the  beneficial  owner of any  additional  shares of the
   Outstanding Company Common Stock or any additional Outstanding Company Voting
   Securities  (other  than  pursuant  to  any  dividend  reinvestment  plan  or
   arrangement  maintained  by the  Company)  and such  beneficial  ownership is
   publicly announced,  such additional  beneficial ownership shall constitute a
   Change in Control; or

   (b)  Individuals  who,  as of  December  7,  1999,  constitute  the  Board of
   Directors of the Company (for  purposes of this  definition,  the  "Incumbent
   Board")  cease  for any  reason  to  constitute  at least a  majority  of the
   Incumbent Board;  provided,  however, that any individual becoming a director
   subsequent to December 7, 1999 whose election,  or nomination for election by
   the Company  shareholders,  was  approved by a vote of at least a majority of
   the directors  then  comprising  the  Incumbent  Board shall be considered as
   though such individual were a member of the Incumbent  Board,  but excluding,
   for this purpose,  any such  individual  whose  initial  assumption of office
   occurs as a result of an actual or publicly  threatened  election contest (as
   such terms are used in Rule 14a-11  promulgated  under the  Exchange  Act) or
   other actual or publicly threatened solicitation of proxies or consents by or
   on behalf of a Person other than the Board of Directors of the Company; or

   (c) Consummation,  including receipt of any necessary regulatory approval, of
   (i) a reorganization,  merger,  consolidation,  or other business combination
   involving the Company or (ii) the sale or other  disposition of more than 50%
   of the operating assets of the Company (determined on a consolidated  basis),
   other than in connection with a sale-leaseback or other arrangement resulting
   in the continued  utilization  of such assets (or the  operating  products of
   such  assets) by the Company (any  transaction  described in part (i) or (ii)
   being  referred  to as a  "Corporate  Transaction");  excluding,  however,  a
   Corporate Transaction pursuant to which:

      (1) all or  substantially  all of the individuals and entities who are the
      beneficial owners,  respectively,  of the Outstanding Company Common Stock
      and  Outstanding  Company  Voting  Securities  immediately  prior  to such
      Corporate Transaction beneficially own, directly or indirectly,  more than
      60% of, respectively,  the then outstanding shares of common stock and the
      combined voting power of the then outstanding  voting securities  entitled
      to vote generally in the election of directors, as the case may be, of the
      ultimate   parent  entity   resulting  from  such  Corporate   Transaction
      (including,  without  limitation,  an  entity  which,  as a result of such
      transaction, owns the Company or all or substantially all of the assets of
      the  Company  either  directly  or through  one or more  subsidiaries)  in
      substantially  the same proportions as their ownership,  immediately prior
      to such Corporate  Transaction of the Outstanding Company Common Stock and
      Outstanding Company Voting Securities, as the case may be;

      (2) no Person (other than the Company,  any Company Plan or related trust,
      the corporation resulting from such Corporate Transaction,  and any Person
      which beneficially owned, immediately prior to such Corporate Transaction,
      directly or  indirectly,  20% or more of the  Outstanding  Company  Common
      Stock or the Outstanding  Company Voting  Securities,  as the case may be)
      will  beneficially   own,   directly  or  indirectly,   20%  or  more  of,
      respectively,  the then  outstanding  common stock of the ultimate  parent
      entity  resulting from such Corporate  Transaction or the combined  voting
      power of the then outstanding voting securities of such entity; and

      (3) individuals who were members of the Incumbent Board will constitute at
      least a majority of the members of the board of  directors of the ultimate
      parent entity resulting from such Corporate Transaction; or

   (d) A tender offer (for which a filing has been made with the  Securities and
   Exchange   Commission   (the  "SEC")  which   purports  to  comply  with  the
   requirements of Section 14(d) of the Exchange Act and the  corresponding  SEC
   rules) is made for the stock of the  Company,  which has not been  negotiated
   and approved by the Board,  provided that in case of a tender offer described
   in this subsection (d), the Change in Control will be deemed to have occurred
   at the first time  during  the offer  period  when the Person (as  defined in
   subsection (a) above) making the offer  beneficially owns or has accepted for
   payment stock of the Company with 20% or more of the combined voting power of
   the then Outstanding Company Voting Securities; or

   (e)  Approval  by the  shareholders  of the  Company  of a plan  of  complete
   liquidation or dissolution of the Company.

   (f) For  purposes  of this  definition  of  Change in  Control,  (i) the term
   "Company"  shall mean Nicor Inc.  and shall  include any  Successor  to Nicor
   Inc.; and (ii) the term "Successor to Nicor Inc." shall mean any corporation,
   partnership,  joint venture or other entity that succeeds to the interests of
   Nicor Inc. by means of a merger,  consolidation or other  restructuring  that
   does not  constitute a Change in Control  under  subsections  (a), (c) or (d)
   above.

IN WITNESS  WHEREOF,  the  undersigned  officer of the Company has caused  these
presents  to be signed on  behalf of the  Company  as of this 19th day of April,
2000.

                                          Nicor Inc.

                                          By    THOMAS L. FISHER
                                                Thomas L. Fisher
                                                Chairman, President and
                                                Chief Executive Officer