Nicor
Inc.
 Form
10-Q
 Exhibit
4.01
 When
      recorded return to:Nicor
      GasAttn:
      Dave Behrens1844
      Ferry RoadNaperville,
      IL 60653-9600Space Above this Line Reserved for Recorder’s Use
  Only







Supplemental
Indenture





MADE
AS OF AUGUST 1, 2008, TO BE EFFECTIVE AUGUST 15, 2008


____________________




NORTHERN
ILLINOIS GAS COMPANY




TO




THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A.




TRUSTEE
UNDER INDENTURE DATED AS OF




JANUARY
1, 1954




AND




SUPPLEMENTAL




INDENTURES
THERETO


____________________




FIRST
MORTGAGE BONDS


6.25%
SERIES DUE AUGUST 15, 2038





Prepared by Andrew Kling, Schiff Hardin LLP, 6600 Sears Tower, 233 S.
Wacker Drive, Chicago, IL 60606


THIS
SUPPLEMENTAL INDENTURE, made as of the 1st day of August, 2008 and effective the
15th day of August, 2008, between NORTHERN ILLINOIS GAS COMPANY, a corporation
organized and existing under the laws of the State of Illinois (hereinafter
called the “Company”),
and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (hereinafter called the
“Trustee”), as successor
Trustee under an Indenture dated as of January 1, 1954, as supplemented by
Supplemental Indentures dated (or made effective), respectively, February 9,
1954, April 1, 1956, June 1, 1959, July 1, 1960, June 1, 1963, July 1, 1963,
August 1, 1964, August 1, 1965, May 1, 1966, August 1, 1966, July 1, 1967, June
1, 1968, December 1, 1969, August 1, 1970, June 1, 1971, July 1, 1972, July 1,
1973, April 1, 1975, April 30, 1976, April 30, 1976, July 1, 1976, August 1,
1976, December 1, 1977, January 15, 1979, December 1, 1981, March 1, 1983,
October 1, 1984, December 1, 1986, March 15, 1988, July 1, 1988, July 1, 1989,
July 15, 1990, August 15, 1991, July 15, 1992, February 1, 1993, March 15, 1993,
May 1, 1993, July 1, 1993, August 15, 1994, October 15, 1995, May 10, 1996,
August 1, 1996, June 1, 1997, October 15, 1997, February 15, 1998, June 1, 1998,
February 1, 1999, February 1, 2001, May 15, 2001, August 15, 2001, December 15,
2001, December 1, 2003, and December 15, 2006, such Indenture dated as of
January 1, 1954, as so supplemented, being hereinafter called the “Indenture.”




WITNESSETH:




WHEREAS,
the Indenture provides for the issuance from time to time thereunder, in series,
of bonds of the Company for the purposes and subject to the limitations therein
specified; and




WHEREAS,
the Company desires, by this Supplemental Indenture, to create an additional
series of bonds to be issuable under the Indenture, such bonds to be designated
“First Mortgage Bonds, 6.25% Series due August 15, 2038” (hereinafter called the
“bonds of this Series”),
and the terms and provisions to be contained in the bonds of this Series or to
be otherwise applicable thereto to be as set forth in this Supplemental
Indenture; and




WHEREAS,
the forms, respectively, of the bonds of this Series, and the Trustee’s
certificate to be endorsed on all bonds of this Series, are to be substantially
as follows:







(FORM OF
FACE OF BOND)




NO.
RU-_____________                                                                                                                                                                                                                                                                    $________




Ill.
Commerce Commission No.
6484                                                                                                                                                                                                                              CUSIP
No. 665228 B@0




NORTHERN
ILLINOIS GAS COMPANY




First
Mortgage Bond, 6.25% Series due August 15, 2038




NORTHERN
ILLINOIS GAS COMPANY, an Illinois corporation (hereinafter called the “Company”), for value received,
hereby promises to pay
to                   
or registered assigns, the sum
of                  
Dollars, on the 15th day of August, 2038, and to pay to the registered owner
hereof interest on said sum from the date hereof until said sum shall be paid,
at the rate of six and one-quarter per centum (6.25%) per annum, payable
semi-annually on the fifteenth day of August and the fifteenth day of February
in each year.  Both the principal of and the interest on this bond
shall be payable at the office or agency of the Company in the City of Chicago,
State of Illinois, or, at the option of the registered owner, at the office or
agency of the Company in the Borough of Manhattan, The City and State of New
York, in any coin or currency of the United States of America which at the time
of payment is legal tender for the payment of public and private
debts.  Any installment of interest on this bond may, at the Company’s
option, be paid by mailing checks for such interest payable to or upon the
written order of the person entitled thereto to the address of such person as it
appears on the registration books.




So long as there is no existing default in the payment of
interest on this bond, the interest so payable on any interest payment date will
be paid to the person in whose name this bond is registered on February 1 or
August 1 (whether or not a business day), as the case may be, next preceding
such interest payment date.  If and to the extent that the Company
shall default in the payment of interest due on such interest payment date, such
defaulted interest shall be paid to the person in whose name this bond is
registered on the record date fixed, in advance, by the Company for the payment
of such defaulted interest.




Additional
provisions of this bond are set forth on the reverse hereof.




This bond
shall not be entitled to any security or benefit under the Indenture or be valid
or become obligatory for any purpose unless and until it shall have been
authenticated by the execution by the Trustee, or its successor in trust under
the Indenture, of the certificate endorsed hereon.




IN
WITNESS WHEREOF, Northern Illinois Gas Company has caused this bond to be
executed in its name by its Vice President, manually or by facsimile signature,
and has caused its corporate seal to be impressed hereon or a facsimile thereof
to be imprinted hereon and to be attested by its Assistant Secretary, manually
or by facsimile signature.




Dated:  August
15, 2008







NORTHERN
      ILLINOIS GAS COMPANYBY:Vice
      PresidentATTEST:Assistant
      Secretary







(FORM OF
TRUSTEE’S CERTIFICATE OF AUTHENTICATION)




This bond
is one of the bonds of the series designated therein, referred to and described
in the within-mentioned Supplemental Indenture dated as of August 1, 2008,
effective August 15, 2008.




THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,


TRUSTEE


BY:Authorized
      Officer







(FORM OF
REVERSE SIDE OF BOND)




This bond
is one, of the series hereinafter specified, of the bonds issued and to be
issued in series from time to time under and in accordance with and secured by
an Indenture dated as of January 1, 1954, to The Bank of New York Mellon Trust
Company, N.A., as Trustee, as supplemented by certain indentures supplemental
thereto, executed and delivered to the Trustee; and this bond is one of a series
of such bonds, designated “Northern Illinois Gas Company First Mortgage Bonds,
6.25% Series due August 15, 2038 (“herein called “bonds of this Series”), the
issuance of which is provided for by a Supplemental Indenture dated as of August
1, 2008, effective August 15, 2008 (hereinafter called the “Supplemental Indenture”),
executed and delivered by the Company to the Trustee.  The term “Indenture”, as hereinafter
used, means said Indenture dated as of January 1, 1954, and all indentures
supplemental thereto (including, without limitation, the Supplemental Indenture)
from time to time in effect.  Reference is made to the Indenture for a
description of the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders and registered owners of said bonds, of the
Company and of the Trustee in respect of the security, and the terms and
conditions governing the issuance and security of said bonds.




Any
transferee, by its acceptance of a bond registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2 of the Bond Purchase Agreement dated as of April 7, 2008, among the
Company and the purchasers listed on Schedule A attached thereto, as amended,
restated, supplemented or otherwise modified from time to time.




With the
consent of the Company and to the extent permitted by and as provided in the
Indenture, modifications or alterations of the Indenture or of any supplemental
indenture and of the rights and obligations of the Company and of the holders
and registered owners of the bonds may be made, and compliance with any
provision of the Indenture or of any supplemental indenture may be waived, by
the affirmative vote of the holders and registered owners of not less than
sixty-six and two-thirds per centum (66 2/3%) in principal amount of the bonds
then outstanding under the Indenture, and by the affirmative vote of the holders
and registered owners of not less than sixty-six and two-thirds per centum (66
2/3%) in principal amount of the bonds of any series then outstanding under the
Indenture and affected by such modification or alteration, in case one or more
but less than all of the series of bonds then outstanding under the Indenture
are so affected, but in any case excluding bonds disqualified from voting by
reason of the Company’s interest therein as provided in the Indenture; subject,
however, to the condition, among other conditions stated in the Indenture, that
no such modification or alteration shall be made which, among other things, will
permit the extension of the time or times of payment of the principal of or the interest or the premium, if any, on this
bond, or the reduction in the principal amount hereof or in the rate of interest
or the amount of any premium hereon, or any other modification in the terms of
payment of such principal, interest or premium, which terms of payment are
unconditional, or, otherwise than as permitted by the Indenture, the creation of
any lien ranking prior to or on a parity with the lien of the Indenture with
respect to any of the mortgaged property, all as more fully provided in the
Indenture.









The bonds
of this Series may be called for redemption by the Company, as a whole at any
time or in part from time to time, at a redemption price equal to 100% of the
principal amount of the bonds of this Series to be redeemed plus accrued and
unpaid interest on the principal amount being redeemed to the date of redemption
and the Make-Whole Amount (as defined in the Supplemental Indenture) applicable
thereto.




Notice of
each redemption shall be mailed to all registered owners not less than thirty
nor more than forty-five days before the redemption date.




In case
of certain completed defaults specified in the Indenture, the principal of this
bond may be declared or may become due and payable in the manner and with the
effect provided in the Indenture.




No
recourse shall be had for the payment of the principal of or the interest or the
premium, if any, on this bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture, to or against any incorporator, stockholder,
officer or director, past, present or future, of the Company or of any
predecessor or successor corporation, either directly or through the Company or
such predecessor or successor corporation, under any constitution or statute or
rule of law, or by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders, directors and officers being
waived and released by the registered owner hereof by the acceptance of this
bond and being likewise waived and released by the terms of the Indenture, all
as more fully provided therein.




This bond
is transferable by the registered owner hereof, in person or by duly authorized
attorney, at the office or agency of the Company in the City of Chicago, State
of Illinois, or, at the option of registered owner, at the office or agency of
the Company in the Borough of Manhattan, The City and State of New York, upon
surrender and cancellation of this bond; and thereupon a new registered bond or
bonds without coupons of the same aggregate principal amount and series will,
upon the payment of any transfer tax or taxes payable, be issued to the
transferee in exchange herefor.  The Company shall not be required to
exchange or transfer this bond if this bond or a portion hereof has been
selected for redemption.




The
security represented by this certificate has not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or qualified
under any state securities laws and may not be transferred, sold or otherwise
disposed of except while a registration statement is in effect or pursuant to an
available exemption from registration under the Securities Act and applicable
state securities laws.




(END OF
BOND FORM)




and




WHEREAS,
all acts and things necessary to make this Supplemental Indenture, when duly
executed and delivered, a valid, binding and legal instrument in accordance with
its terms, and for the purposes herein expressed, have been done and performed,
and the execution and delivery of this Supplemental Indenture have in all
respects been duly authorized;









NOW,
THEREFORE, in consideration of the premises and of the sum of one dollar paid by
the Trustee to the Company, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, for the purpose of securing the due and
punctual payment of the principal of and the interest and premium, if any, on
all bonds which shall be issued under the Indenture, and for the purpose of
securing the faithful performance and observance of all the covenants and
conditions set forth in the Indenture and in all indentures supplemental
thereto, the Company by these presents does grant, bargain, sell, transfer,
assign, pledge, mortgage, warrant and convey unto The Bank of New York Mellon
Trust Company, N.A., as Trustee, and its successor or successors in the trust
hereby created, all property, real and personal (other than property expressly
excepted from the lien and operation of the Indenture), which, at the actual
date of execution and delivery of this Supplemental Indenture, is solely used or
held for use in the operation by the Company of its gas utility system and in
the conduct of its gas utility business and all property, real and personal,
used or useful in the gas utility business (other than property expressly
excepted from the lien and operation of the Indenture) acquired by the Company
after the actual date of execution and delivery of this Supplemental Indenture
or (subject to the provisions of Section 16.03 of the Indenture) by any
successor corporation after such execution and delivery, and it is further
agreed by and between the Company and the Trustee as follows:







ARTICLE
I.




BONDS OF
THIS SERIES




Section
1.  The bonds
of this Series shall, as hereinbefore recited, be designated as the Company’s
“First Mortgage Bonds, 6.25% Series due August 15, 2038”.  The bonds
of this Series which may be issued and outstanding shall not exceed $75,000,000
in aggregate principal amount, exclusive of bonds of such series authenticated
and delivered pursuant to Section 4.12 of the Indenture.




Section
2.  The bonds
of this Series shall be registered bonds without coupons, and the form of such
bonds, and of the Trustee’s certificate of authentication to be endorsed on all
bonds of this Series, shall be substantially as hereinbefore recited,
respectively.




Section
3.  The bonds
of this Series shall be issued in the denomination of $1,000,000 each and in
such integral multiple or multiples thereof as shall be determined and
authorized by the Board of Directors of the Company or by any officer of the
Company authorized by the Board of Directors to make such determination, the
authorization of the denomination of any bond to be conclusively evidenced by
the execution thereof on behalf of the Company.  The bonds of this
Series shall be numbered RU-1 and consecutively upwards, or in such other
appropriate manner as shall be determined and authorized by the Board of
Directors of the Company.




All bonds
of this Series shall be dated August 15, 2008 except that each bond issued on or
after the first payment of interest thereon shall be dated as of the date of the
interest payment date thereof to which interest shall have been paid on the
bonds of such series next preceding the date of issue, unless issued on an
interest payment date to which interest shall have been so paid, in which event
such bonds shall be dated as of the date of issue; provided, however, that bonds









issued on
or after February 1 and before the next succeeding February 15 or on or after
August 1 and before the next succeeding August 15 shall be dated the next
succeeding interest payment date if interest shall have been paid to such
date.  All bonds of this Series shall mature August 15, 2038 and shall
bear interest at the rate of 6.25% per annum until the principal thereof shall
be paid.  Such interest shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months and shall be payable semi-annually on
the fifteenth day of February and the fifteenth day of August in each year,
beginning February 15, 2009.  So long as there is no existing default
in the payment of interest on the bonds of this Series, such interest shall be
payable to the person in whose name each such bond is registered on the February
1 or August 1 (whether or not a business day), as the case may be, next
preceding the respective interest payment dates; provided, however, if and to
the extent that the Company shall default in the payment of interest due on such
interest payment date, such defaulted interest shall be paid to the person in
whose name each such bond is registered on the record date fixed, in advance, by
the Company for the payment of such defaulted interest.Interest will accrue on
overdue interest installments at the rate of 6.25% per annum.




The
principal of and interest and premium, if any, on the bonds of this Series shall
be payable in any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and private debts, and
shall be payable at the office or agency of the Company in the City of Chicago,
State of Illinois, or, at the option of the registered owner, at the office or
agency of the Company in the Borough of Manhattan, The City and State of New
York.  Any installment of interest on the bonds may, at the Company’s
option, be paid by mailing checks for such interest payable to or upon the
written order of the person entitled thereto to the address of such person as it
appears on the registration books.  The bonds of this Series shall be
registrable, transferable and exchangeable in the manner provided in Sections
4.08 and 4.09 of the Indenture, at either of such offices or
agencies.




Section
4. The bonds of this Series, upon the mailing of notice and in the manner
provided in Section 7.01 of the Indenture (except that no published notice shall
be required for the bonds of this Series) and with the effect provided in
Section 7.02 thereof, shall be redeemable at the option of the Company, as a
whole at any time or in part from time to time, at a redemption price equal to
100% of the principal amount of the bonds of this Series to be redeemed plus
accrued and unpaid interest of the principal amount being redeemed to the date
of redemption plus the Make-Whole Amount applicable thereto. “Make-Whole Amount” means,
with respect to any bond of this Series, an amount equal to the excess, if any,
of the Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such bond of this Series over the amount of such Called
Principal, provided
that the Make-Whole Amount may in no event be less than zero.  For the
purposes of determining the Make-Whole Amount, the following terms have the
following meanings:




“Called Principal” means, with
respect to any bond of this Series, the principal of such bond of this Series
that is to be redeemed.




“Discounted Value” means, with
respect to the Called Principal of any bond of this Series, the amount obtained
by discounting all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted financial practice
and at a discount









factor
(applied on the same periodic basis as that on which interest on the bond of
this Series is payable) equal to the Reinvestment Yield with respect to such
Called Principal.




“Reinvestment Yield” means,
with respect to the Called Principal of any bond of this Series, .50% over the
yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New
York City time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as “Page PX1” (or
such other display as may replace Page PX1) on Bloomberg Financial Markets
(“Bloomberg”) or, if
Page PX1 (or its successor screen on Bloomberg) is unavailable, the Telerate
Access Service screen which corresponds most closely to Page PX1 for the most
recently issued actively traded U.S. Treasury securities having a maturity equal
to the Remaining Average Life of such Called Principal as of such Settlement
Date, or(ii) if
such yields are not reported as of such time or the yields reported as of such
time are not ascertainable (including by way of interpolation), the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date.  Such implied yield will be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the actively traded U.S. Treasury security with the maturity
closest to and greater than such Remaining Average Life and (2) the actively
traded U.S. Treasury security with the maturity closest to and less than such
Remaining Average Life.  The Reinvestment Yield shall be rounded to
the number of decimal places as appears in the interest rate of the applicable
bond of this Series.




“Remaining Average Life”
means, with respect to any Called Principal, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying
(a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.




“Remaining Scheduled Payments”
means, with respect to the Called Principal of any bond of this Series, all
payments of such Called Principal and interest thereon that would be due after
the Settlement Date with respect to such Called Principal if no payment of such
Called Principal were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be made
under the terms of the bond of this Series, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to the terms of this Supplemental Indenture.




“Settlement Date” means, with
respect to the Called Principal of any bond of this Series, the date on which
such Called Principal is to be redeemed.




Section
5.  No
sinking fund is to be provided for the bonds of this Series.









ARTICLE
II.




MISCELLANEOUS
PROVISIONS




Section
1.  This
Supplemental Indenture is executed by the Company and the Trustee pursuant to
provisions of Section 4.02 of the Indenture and the terms and conditions hereof
shall be deemed to be a part of the terms and conditions of the Indenture for
any and all purposes.  The Indenture, as heretofore supplemented and
as supplemented by this Supplemental Indenture, is in all respects ratified and
confirmed.




Section
2.  This
Supplemental Indenture shall bind and, subject to the provisions of Article XVI
of the Indenture, inure to the benefit of the respective successors and assigns
of the parties hereto.




Section
3.  Although
this Supplemental Indenture is made as of August 1, 2008, effective August 15,
2008, it shall be effective only from and after the actual time of its execution
and delivery by the Company and the Trustee on the date indicated by their
respective acknowledgements hereto.




Section
4.  This
Supplemental Indenture may be simultaneously executed in any number of
counterparts, and all such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.




IN
WITNESS WHEREOF, Northern Illinois Gas Company has caused this Supplemental
Indenture to be executed in its name by its President, a Vice President, or
Treasurer, and its corporate seal to be hereunto affixed and attested by its
Assistant Secretary, and The Bank of New York Mellon Trust Company, N.A., as
Trustee under the Indenture, has caused this Supplemental Indenture to be
executed in its name by one of its Vice Presidents, and its seal to be hereunto
affixed and attested by one of its Vice Presidents, all as of the day and year
first above written.




NORTHERN
      ILLINOIS GAS COMPANYBY:
            /s/
      DOUGLAS M. RUSCHAUDouglas
      M. RuschauVice
      President and TreasurerATTEST:BY:
            /s/ NEIL J.
      MALONEYNeil
      J. MaloneyAssistant
      Secretary








THE
      BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,as TrusteeBY:
            /s/
      M. CALLAHANName: 
      M. CallahanTitle: 
      Vice PresidentATTEST:BY:
            /s/
      L. GARCIAName: 
      L. GarciaTitle: 
      Vice President





STATE OF
ILLINOIS                         }           SS:


COUNTY OF
DUPAGE                      }




I, Dawn M.
Opon, a Notary Public in the State aforesaid, DO
HEREBY CERTIFY that Douglas M. Ruschau, Vice President and Treasurer of Northern
Illinois Gas Company, an Illinois corporation, one of the parties described in
and which executed the foregoing instrument, and Neil J. Maloney, Assistant
Secretary of said corporation, who are both personally known to me to be the
same persons whose names are subscribed to the foregoing instrument as such Vice
President and Treasurer and Assistant Secretary, respectively, and who are both
personally known to me to be the Vice President and Treasurer and Assistant
Secretary, respectively, of said corporation, appeared before me this day in
person and severally acknowledged that they signed, sealed, executed and
delivered said instrument as their free and voluntary act as such Vice President
and Treasurer and Assistant Secretary, respectively, of said corporation, and as
the free and voluntary act of said corporation, for the uses and purposes
therein set forth.




GIVEN
under my hand and notarial seal this29thday ofJuly, 2008 A.D.




/s/
      DAWN M. OPONNotary
      Public





My
Commission expires March
31, 2010.







STATE OF
ILLINOIS                         }           SS:


COUNTY OF
COOK                          
}




I,T. Mosterd, a
Notary Public in and for the said County, in the State aforesaid, DO HEREBY
CERTIFY that M.
Callahan, Vice Presidentof The Bank of New York
Mellon Trust Company, N.A., one of the parties described in and which executed
the foregoing instrument, and  L. Garcia, Vice President of said trust company, who are both personally known to
me to be the same persons whose names are subscribed to the foregoing instrument
as such Vice Presidents, and who are both personally known to me to be Vice
Presidents of said trust company, appeared before me this day in person and
severally acknowledged that they signed, sealed, executed and delivered said
instrument as their free and voluntary act as such Vice Presidents of said trust
company, and as the free and voluntary act of said trust company, for the uses
and purposes therein set forth.




GIVEN
under my hand and notarial seal this31stday ofJuly, 2008 A.D.




/s/
      T. MOSTERDNotary
      Public





My
Commission expires Jan.
22, 2009.









CH2\2616199.2