Nicor Inc.
                                                              Form 10-K
                                                              Exhibit 10.28

                           CHANGE-IN-CONTROL AGREEMENT


      THIS AGREEMENT dated as of June 2, 2000 (the "Agreement Date") is made
by and among Nicor Inc. (the "Company"), an Illinois corporation, and Thomas
L. Fisher (the "Executive").

                                    ARTICLE I
                                    PURPOSES

      The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its  shareholders to assure that the
Company and Nicor Gas will have the continued services of the Executive, despite
the  possibility or occurrence of a Change in Control of the Company.  The Board
believes it is imperative to reduce the  distraction of the Executive that would
result from the personal  uncertainties caused by a pending or threatened Change
in Control,  to encourage the  Executive's  full attention and dedication to the
Company  and Nicor Gas,  and to provide  the  Executive  with  compensation  and
benefits  arrangements upon a Change in Control which are competitive with those
of  similarly-situated  corporations.  This  Agreement is intended to accomplish
these objectives.

                                   ARTICLE II
                               CERTAIN DEFINITIONS

      When used in this  Agreement,  the terms  specified  below  shall have the
following meanings:

      2.1 The  "Agreement  Term"  shall  begin on the  Agreement  Date and shall
continue  through  December  31,  2001.  As of December  31,  2001,  and on each
December 31 thereafter,  the Agreement Term shall  automatically be extended for
one additional  year unless,  not later than the preceding June 30, either party
shall have given  notice  that such party does not wish to extend the  Agreement
Term. If a Change in Control shall have occurred  during the Agreement  Term (as
it may be extended from time to time),  the Agreement  Term shall continue for a
period ending on the two-year  anniversary of the date of the Change in Control,
but if the  Termination  Date (as defined  below)  occurs  during that  two-year
period,  then the Agreement  Term shall  continue until the end of the Severance
Period  (as  defined  below).  Unless the  Termination  Date  occurs  during the
two-year period after a Change in Control so that the Agreement Term is extended
to include  the  Severance  Period,  as provided  in the  immediately  preceding
sentence, the Agreement Term shall not extend beyond the two-year anniversary of
the Change in Control.

      2.2   "Effective  Date" means the first date during the Agreement  Term on
            which a Change in Control occurs.

      2.3   "Change in Control" means:

            2.3.1 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
      2.3.1,  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 2.3.3.1, 2.3.3.2 and 2.3.3.3 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

            2.3.2  Individuals who, as of the date hereof,  constitute the Board
      of  Directors  of the Company  (for  purposes  of this  Section  2.3,  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 the date hereof 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

            2.3.3  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:

                  2.3.3.1  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;

                  2.3.3.2 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

                  2.3.3.3  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

            2.3.4 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  2.3.4,  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  2.3.1,  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

            2.3.5 Approval by the shareholders of the Company of a plan of
      complete liquidation or dissolution of the Company.

            2.3.6 For purposes of this Section 2.3, (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 paragraphs 2.3.1, 2.3.3
      or 2.3.4 above.

            2.3.7 By entering into this  Agreement,  the  Executive  irrevocably
      consents  to the  modification  of the  definition  of "Change in Control"
      (including  "change in control") in all Employee Benefit  Arrangements (as
      defined below),  by substituting for such definition in each such Employee
      Benefit Arrangement the definition of "Change in Control" set forth above,
      with such  substitution  to be effective on the first date this  Agreement
      has been signed by both the Company and the Executive. For purposes of the
      preceding  sentence,  the term "Employee Benefit  Arrangement"  shall mean
      each  agreement  with the Executive to which the Company or any Subsidiary
      is a party, and each plan or arrangement  maintained by the Company or any
      Subsidiary, and including any awards outstanding under any such agreement,
      plan, or arrangement,  to the extent that such award, agreement,  plan, or
      arrangement  contains a definition of "Change in Control." However, to the
      extent that the Employee Benefit  Arrangement  provides for an award based
      on common stock of the Company (including, without limitation, an award of
      stock options or shares of restricted  stock),  and such Employee  Benefit
      Arrangement  provides  that vesting or  exercisability  of such award will
      occur at the time of the Change in Control  (rather than the occurrence of
      a subsequent event, such as termination of employment),  the definition of
      "Change  in  Control"  that  is  substituted  for the  definition  in such
      Employee  Benefit  Arrangement  shall  be the  definition  of  "Change  in
      Control" set forth above,  except that Section  2.3.4 shall be modified by
      adding,  at the end of such Section,  immediately  prior to the word "or,"
      the following:  "provided, however, that the Change in Control shall occur
      three (3) business days before such tender offer is to  terminate,  unless
      the offer is withdrawn first, if the Person making the offer could own, by
      the terms of the offer plus any shares  beneficially owned by that Person,
      stock  with  50% or  more  of  the  combined  voting  power  of  the  then
      Outstanding  Company Voting  Securities when the offer (and any subsequent
      offering period) terminates;"

            2.3.8 By entering into this  Agreement,  the  Executive  irrevocably
      consents to the amendment of the Nicor Inc. Stock Deferral Plan to provide
      for distribution, as soon as practicable following a Change in Control, of
      any amounts which may then be deferred for the Executive under such plan.

      2.4   "Code" means the Internal Revenue Code of 1986, as amended.

      2.5 "Employment  Period" means the period commencing on the Effective Date
      and ending on the two-year anniversary of that date.

      2.6   "Incentive Plan" shall have the meaning set forth in
      Section 3.2.2.

      2.7 "Notice of  Termination"  means a written  notice given in  accordance
      with Section 11.8 which sets forth (a) the specific termination  provision
      in this  Agreement  relied upon by the party  giving such  notice,  (b) in
      reasonable detail the facts and  circumstances  claimed to provide a basis
      for  termination  of the  Executive's  employment  under such  termination
      provision,  and (c) if the  Termination  Date is  other  than  the date of
      receipt of such Notice of Termination, the Termination Date.

      2.8   "Plans" shall have the meaning set forth in Section 3.2.3.

      2.9 A "Potential Change in Control" shall exist during any period in which
      the  circumstances  described  in Sections  2.9.1,  2.9.2,  or 2.9.3 exist
      (provided,  however,  that a  Potential  Change in Control  shall cease to
      exist not later than the occurrence of a Change in Control):

            2.9.1 The Company  enters into an  agreement,  the  consummation  of
      which would result in the occurrence of a Change in Control, provided that
      a Potential Change in Control  described in this Section 2.9.1 shall cease
      to exist upon the expiration or other termination of all such agreements.

            2.9.2 Any person  (including  the  Company)  publicly  announces  an
      intention to take or to consider taking actions the  consummation of which
      would constitute a Change in Control;  provided that a Potential Change in
      Control  described  in this  Section  2.9.2  shall cease to exist upon the
      withdrawal of such intention,  or upon a reasonable  determination  by the
      Board  that  there is no  reasonable  chance  that such  actions  would be
      consummated.

            2.9.3 The Board adopts a resolution to the effect that, for purposes
      of this Agreement,  a Potential Change in Control exists;  provided that a
      Potential Change in Control described in this Section 2.9.3 shall cease to
      exist upon a reasonable  determination  by the Board that the reasons that
      gave rise to the  resolution  providing  for the  existence of a Potential
      Change in Control have expired or no longer exist.

      2.10  "Severance  Incentive"  means the  greater of (i) the target  annual
      incentive  under an Incentive  Plan  applicable  to the  Executive for the
      Performance  Period  in which the  Termination  Date  occurs,  or (ii) the
      average of the actual annual  incentives  paid (or payable,  to the extent
      not previously paid) to the Executive under the applicable  Incentive Plan
      for each of the two calendar  years  preceding  the calendar year in which
      the Termination Date occurs.

      2.11  "Severance  Period"  means the period  beginning on the  Executive's
      Termination Date and ending on the third  anniversary  thereof;  provided,
      however,  that no  Severance  Period  will occur  unless  the  Executive's
      Termination  Date  occurs  under  circumstances  described  in Section 5.1
      (relating  to  termination  by the  Executive  for Good  Reason  or by the
      Company and Nicor Gas other than for Cause or Permanent Disability).

      2.12 "Subsidiary" shall mean any corporation,  partnership,  joint venture
      or other  entity  during  any  period  in  which at least a fifty  percent
      interest in such entity is owned,  directly or indirectly,  by the Company
      (or a successor to the Company).

      2.13  "Termination  Date"  means  the  first  day on or  after  which  the
      Executive is not employed by the Company or Nicor Gas; provided,  however,
      that (a) if the Company and Nicor Gas terminate the Executive's employment
      other than for Cause or Disability (as defined in Section 4.1.2), then the
      Termination Date shall be the date of receipt of the Notice of Termination
      and (b) if the Executive's  employment is terminated by reason of death or
      Disability,  then the  Termination  Date shall be the date of death of the
      Executive or the Disability  Effective Date (as defined in Section 4.1.1),
      as the case may be.

      2.14  "Welfare Plans" shall have the meaning set forth in Section 3.2.4.

                                   ARTICLE III
                               TERMS OF EMPLOYMENT

      3.1   Position and Duties.

            3.1.1 The Company  hereby  agrees to cause the Company  and/or Nicor
      Gas to continue the Executive's  employment  during the Employment  Period
      and,  subject to Article IV of this  Agreement,  the  Executive  agrees to
      remain in the employ of the Company and Nicor Gas, as applicable,  subject
      to the terms and conditions hereof.  During the Employment Period, (i) the
      Executive's  position  (including  status,  offices,  titles and reporting
      requirements),  authority,  duties and responsibilities  shall be at least
      commensurate in all material  respects with the most  significant of those
      held,  exercised  and  assigned  to the  Executive  at any time during the
      90-day  period  immediately  preceding the  Effective  Date,  and (ii) the
      Executive's  services  shall  be  performed  at  the  location  where  the
      Executive was employed  immediately  preceding  the Effective  Date or any
      office or location less than 25 miles from such location.

            3.1.2 During the  Employment  Period,  and  excluding any periods of
      vacation and sick leave to which the Executive is entitled,  the Executive
      agrees to devote  reasonable  attention  and time during  normal  business
      hours to the  business  and  affairs  of the  Company  and Nicor  Gas,  as
      applicable, and, to the extent necessary to discharge the responsibilities
      assigned to the Executive  hereunder,  to use the  Executive's  reasonable
      best efforts to perform faithfully and efficiently such  responsibilities.
      During the Employment Period it shall not be a violation of this Agreement
      for the Executive (i) to serve on corporate, civic or charitable boards or
      committees,  (ii) to deliver  lectures,  fulfill  speaking  engagements or
      teach  at   educational   institutions   and  (iii)  to  manage   personal
      investments,  to the extent  that such  other  activities  do not,  in the
      reasonable  judgment of the Board,  inhibit or prohibit the performance of
      the Executive's  duties under this Agreement,  or conflict in any material
      way with the business of the Company or any Subsidiary; provided, however,
      that the Executive  shall not serve on the board of any business,  or hold
      any other position with any business, without the consent of the Board.

      3.2   Compensation.

            3.2.1 Base Salary. During the Employment Period, the Executive shall
      receive an annual base salary ("Annual Base Salary"),  which shall be paid
      at an annual rate at least equal to twelve times the highest  monthly base
      salary paid or payable,  including  any base salary  which has been earned
      but  deferred,  to  the  Executive  by  the  Company  in  respect  of  the
      twelve-month period immediately preceding the month in which the Effective
      Date occurs. During the Employment Period, the Annual Base Salary shall be
      reviewed no more than twelve months after the last salary increase awarded
      to the Executive  prior to the Effective  Date and,  thereafter,  at least
      annually,  and  shall be  increased  at any time and from  time to time as
      shall be substantially consistent with increases in base salary awarded to
      other senior  executives  of the Company.  Annual Base Salary shall not be
      reduced after any such increase unless such reduction is part of a policy,
      program or arrangement  applicable to senior executives of the Company and
      of any successor  entity,  and the term Annual Base Salary as used in this
      Agreement shall refer to Annual Base Salary as so increased.  Any increase
      in Annual Base Salary  shall not limit or reduce any other  obligation  of
      the Company to the Executive under this Agreement.

            3.2.2  Annual  Incentive.  In addition to Annual  Base  Salary,  the
      Company shall pay or cause to be paid to the Executive an incentive  award
      (the "Annual  Incentive") for each  Performance  Period or portion thereof
      which falls within the Employment Period.  "Performance Period" means each
      period of time  designated in accordance  with any annual  incentive award
      arrangement  ("Incentive  Plan")  which  is  based  upon  performance  and
      approved by the Board or any committee of the Board,  or in the absence of
      any  Incentive  Plan or any such  designated  period of time,  Performance
      Period shall mean each calendar year. The  Executive's  target and maximum
      Annual Incentive with respect to any Performance  Period shall not be less
      than the target and maximum annual incentive award payable with respect to
      the Executive under the Company's  annual  incentive  program as in effect
      immediately preceding the Effective Date.

            3.2.3 Incentive, Savings and Retirement Plans. During the Employment
      Period,  the Executive  shall be entitled to participate in all incentive,
      savings and retirement plans,  practices,  policies and programs ("Plans")
      applicable  generally to other senior executives of the Company, but in no
      event shall such Plans provide the Executive with incentive  opportunities
      (measured  with  respect  to long-  term and  special  incentives,  to the
      extent,  if any, that such  distinctions  are  applicable)  or savings and
      retirement benefits which are less favorable,  in the aggregate,  than the
      greater of (i) those provided by the Company for the Executive  under such
      Plans as in  effect  at any time  during  the  90-day  period  immediately
      preceding the Effective Date, or (ii) those provided generally at any time
      after the Effective Date to other senior executives of the Company.

            3.2.4 Welfare  Benefit  Plans.  During the  Employment  Period,  the
      Executive  and/or the  Executive's  family,  as the case may be,  shall be
      eligible for participation in and shall receive all benefits under welfare
      benefit plans, practices, policies and programs ("Welfare Plans") provided
      by the Company  (including,  without  limitation,  medical,  prescription,
      dental,  disability,  salary  continuance,   employee  life,  group  life,
      accidental death and travel accident insurance benefits),  but in no event
      shall such Welfare  Plans provide the  Executive  with benefits  which are
      less favorable,  in the aggregate,  than the greater of (i) those provided
      by the  Company  for the  Executive  under such  Welfare  Plans as were in
      effect at any time  during the 90-day  period  immediately  preceding  the
      Effective  Date,  or (ii) those  provided  generally at any time after the
      Effective Date to other senior executives of the Company.

            3.2.5 Other Employee  Benefits.  During the Employment  Period,  the
      Executive shall be entitled to other employee  benefits and perquisites in
      accordance with the most favorable plans, practices, programs and policies
      of the  Company,  as in effect with  respect to the  Executive at any time
      during the 90-day period  immediately  preceding the Effective Date, or if
      more  favorable,  as in effect  generally  with  respect  to other  senior
      executives of the Company.

            3.2.6 Expenses. During the Employment Period, the Executive shall be
      entitled  to receive  prompt  reimbursement  for all  reasonable  expenses
      incurred by the Executive in accordance  with the policies,  practices and
      procedures  of the Company as in effect with  respect to the  Executive at
      any time during the 90-day  period  immediately  preceding  the  Effective
      Date, or if more favorable,  as in effect  generally with respect to other
      senior executives of the Company.

            3.2.7 Office and Support Staff.  During the Employment  Period,  the
      Executive  shall be  entitled  to an office or  offices of a size and with
      furnishings and other appointments,  and to exclusive personal secretarial
      and other  assistance,  as in effect with respect to the  Executive at any
      time during the 90-day period immediately preceding the Effective Date, or
      if more  favorable,  as provided  generally  with  respect to other senior
      executives of the Company.

            3.2.8 Paid Time Off.  During the  Employment  Period,  the Executive
      shall be entitled to paid time off in accordance with the plans, policies,
      programs  and  practices  of the Company as in effect with  respect to the
      Executive at any time during the 90-day period  immediately  preceding the
      Effective Date, or if more favorable,  as provided  generally with respect
      to other senior executives of the Company.

            3.2.9  Subsidiaries.  To the extent  that  immediately  prior to the
      Effective Date, the Executive has been on the payroll of, and participated
      in the  incentive  or  employee  benefit  plans  of, a  Subsidiary  of the
      Company, the references to the Company contained in Sections 3.2.1 through
      3.2.8 and the other  sections of this  Agreement  referring to benefits to
      which  the  Executive  may be  entitled  shall  be read to  refer  to such
      Subsidiary.

                                   ARTICLE IV
                            TERMINATION OF EMPLOYMENT

      4.1   Disability.

            4.1.1  During the  Agreement  Term,  the  Company  and Nicor Gas may
      terminate  the  Executive's  employment  upon  the  Executive's  Permanent
      Disability  (as defined in Section  4.1.2) by giving the  Executive or his
      legal representative, as applicable, (1) written notice in accordance with
      Section 11.8 of the Company's or Nicor Gas', as  applicable,  intention to
      terminate the Executive's  employment pursuant to this section,  and (2) a
      certification  of the  Executive's  Permanent  Disability  by a  physician
      selected  by the  Company  or Nicor  Gas or its  insurers  and  reasonably
      acceptable to the Executive or the Executive's legal  representative.  The
      Executive's  employment  shall  terminate  effective  on the 30th day (the
      "Permanent  Disability  Effective Date") after the Executive's  receipt of
      such notice unless,  before the Permanent  Disability  Effective Date, the
      Executive shall have resumed the full-time  performance of the Executive's
      duties.  During the period in which the Executive  has a  Disability,  the
      Company or Nicor Gas, as applicable,  may appoint a temporary  replacement
      to assume the Executive's responsibilities.

            4.1.2  The  Executive  shall  be  considered  to  have a  "Permanent
      Disability"  during any period in which he has a  Disability  (as  defined
      below);  provided,  however, that the Executive shall not be considered to
      have  "Permanent  Disability"  until (i) for a period  of 180  consecutive
      days,  the  Executive,  as a result of a Disability,  is incapable,  after
      reasonable accommodation, of performing his duties under this Agreement on
      a full-time basis; (ii) such Disability is reasonably expected to continue
      for at least  another 90 days;  and (iii) at the  Executive's  Termination
      Date, he is eligible for income  replacement  benefits under the Company's
      or Nicor Gas' long-term disability plan. The Executive shall be considered
      to have a  "Disability"  during any  period in which he has a physical  or
      mental   disability   which  renders  him  incapable,   after   reasonable
      accommodation, of performing his duties under this Agreement.

      4.2 Death. The Executive's  employment shall terminate  automatically upon
      the Executive's death during the Agreement Term.

      4.3 Cause.  The Company or Nicor Gas, as  applicable,  may  terminate  the
      Executive's  employment  during  the  Employment  Period  for  Cause.  For
      purposes of this Agreement, "Cause" means:

            4.3.1 the Executive's  willful commission of acts or omissions which
      have,  have had,  or are likely to have a material  adverse  effect on the
      business, operations,  financial condition or reputation of the Company or
      Nicor Gas;

            4.3.2 the Executive's conviction (including a plea of guilty or nolo
      contendere) of a felony or any crime of fraud, theft,  dishonesty or moral
      turpitude; or

            4.3.3 the Executive's  material violation of any statutory or common
      law duty of loyalty to the Company or Nicor Gas.

      For purposes of this Agreement,  no act, or failure to act, on the part of
      the Executive shall be considered  "willful" unless it is done, or omitted
      to be done,  by the  Executive in bad faith or without  reasonable  belief
      that the  Executive's  action or omission was in the best interests of the
      Company or Nicor Gas.  Any act, or failure to act,  pursuant to  direction
      provided  by the person to whom the  Executive  reports,  or provided by a
      resolution duly adopted by the Board, or pursuant to advice of counsel for
      the Company or Nicor Gas,  shall be  conclusively  presumed to be done, or
      omitted  to be  done,  by the  Executive  in good  faith  and in the  best
      interests of the Company or Nicor Gas. The  cessation of employment of the
      Executive shall not be deemed to be for Cause unless and until there shall
      have been  delivered to the Executive a copy of a resolution  duly adopted
      by the affirmative  vote of not less than 60% of the entire  membership of
      the Board at a meeting  of such  Board  called  and held for such  purpose
      (after reasonable notice is provided to the Executive and the Executive is
      given an  opportunity,  together  with  counsel,  to be heard  before  the
      Board),  finding  that,  in the  good  faith  opinion  of the  Board,  the
      Executive  has  engaged  in  conduct  described  in this  Section  4.3 and
      specifying the particulars thereof in detail.

      4.4 Good Reason. During the Employment Period, the Executive's  employment
      may be terminated  by the Executive for Good Reason.  For purposes of this
      Agreement,  "Good Reason" means any material  breach of this  Agreement by
      the Company or Nicor Gas, including:

            4.4.1  the  failure  to  maintain  the  Executive  in the  office or
      position, or in a substantially equivalent office or position, held by the
      Executive immediately prior to the Change in Control, including causing or
      requiring  the  Executive to report to any  individual or group other than
      the board of directors of a corporation whose stock is publicly traded;

            4.4.2 a material adverse alteration in the nature or scope of the
      Executive's position, duties, functions, responsibilities or authority;

            4.4.3 a material reduction of the Executive's salary, incentive
      compensation or benefits;

            4.4.4 the failure of any successor to the Company to assume this
      Agreement, or a material breach of the Agreement by the Company or its
      successor;

            4.4.5 a  relocation  of more  than 25 miles  of (i) the  Executive's
      principal workplace, or (ii) the principal offices of the Company or Nicor
      Gas,  as  applicable,  (if  such  offices  are the  Executive's  principal
      workplace), in each case without the consent of the Executive;

            4.4.6  the  Company  or Nicor  Gas,  as  applicable,  requiring  the
      Executive  to  engage  in  travel  that is  materially  greater  than  the
      Executive's  travel obligations during the 1-year period immediately prior
      to the Change in Control; or

            4.4.7 any  failure by the Company or Nicor Gas,  as  applicable,  to
      comply with any of the provisions of Section 3.2 of this Agreement,  other
      than an isolated,  insubstantial and inadvertent  failure not occurring in
      bad  faith  and  which  is  remedied  by the  Company  or  Nicor  Gas,  as
      applicable,  promptly  after  receipt  of  notice  thereof  given  by  the
      Executive;

provided,  however,  that an act or  omission  of the  Company or Nicor Gas,  as
applicable, shall not constitute Good Reason: (i) unless the Executive gives the
Company or Nicor Gas, as applicable,  written notice of such act or omission and
the  Company or Nicor Gas,  as  applicable,  fails to cure such act or  omission
within the 30-day  period  after such  notice,  or (ii) if the  Executive  first
acquired  knowledge  of such  act or  omission  more  than 6 months  before  the
Executive gives the Company or Nicor Gas, as applicable,  such notice, or (C) if
the  Executive  has  consented  in writing to such act or omission in a document
that makes  specific  reference  to this  Section  4.4. In  addition,  any other
provision of this  Agreement  notwithstanding,  termination by the Executive for
any reason  during the  12-month  period  which begins 90 days after a Change in
Control shall be deemed to be a termination for Good Reason.

      4.5 Without Cause During a Potential Change in Control. If the Executive's
employment is terminated  by the Company and Nicor Gas, as  applicable,  without
Cause during a Potential Change in Control,  and such date of termination occurs
not more than 180 days prior to the  occurrence  of a Change in Control  and the
Executive establishes by reasonable evidence that such termination of employment
was materially connected with and in anticipation of the Change in Control, then
the  Executive  shall be entitled to receive the  benefits  that would have been
provided under Section 5.1, determined as though:

            4.5.1 the  Executive  were  rehired by the Company and Nicor Gas, as
      applicable,  immediately prior to the Change in Control at the salary rate
      equal to the  Executive's  highest salary rate during the one-year  period
      prior to the date of the Change in  Control,  and with other  Company  and
      Nicor  Gas  compensation  and  benefit  arrangements  comparable  to those
      provided to comparable executives of the Company and Nicor Gas;

            4.5.2 the Executive's  employment were terminated by the Company and
      Nicor Gas without Cause immediately after the Change in Control; and

            4.5.3  this  Agreement  were in full force and effect at the time of
      the  Change  in  Control,  and  at the  time  of  the  Executive's  deemed
      termination of employment.

      4.6  Right  of  Resignation  and  Termination.  This  Agreement  does  not
constitute a guarantee of continued employment at any time, but instead provides
for  certain  rights  and  benefits  for the  Executive  during  his  employment
following the occurrence of a Change in Control, and in the event his employment
with  the  Company  and  Nicor  Gas,  as   applicable,   terminates   under  the
circumstances  described herein.  The Company and Nicor Gas, as applicable,  may
terminate the  employment  of the Executive at any time for any reason,  without
breach of this Agreement,  subject to its obligations set forth in Article V and
elsewhere in this Agreement. The Executive may resign from the Company and Nicor
Gas, as applicable,  for Good Reason, or for any other reason, without breach of
this  Agreement,  subject  to the  Executive's  obligations  set  forth  in this
Agreement; provided that, in the event of a resignation without Good Reason, the
Executive  shall provide at least four weeks advance notice of such  resignation
to the Company  and Nicor Gas, as  applicable..  Notwithstanding  the  foregoing
provisions  in this Section 4.6, the Company and Nicor Gas, as  applicable,  may
suspend the Executive from performing his duties under this Agreement  following
the delivery of a Notice of  Termination  by the Executive  without Good Reason;
provided,  however, that during the period of suspension (which shall end on the
Termination Date), the Executive shall continue to be treated as employed by the
Company  and Nicor Gas, as  applicable,  for other  purposes,  and his rights to
compensation or benefits shall not be reduced by reason of the suspension.

                                    ARTICLE V
                 OBLIGATIONS OF THE COMPANY UPON TERMINATION

      5.1 If by the  Executive  for Good Reason or by the Company and Nicor Gas,
as  Applicable,  Other Than for Cause or Permanent  Disability.  If,  during the
Employment Period, the Company and Nicor Gas, as applicable, shall terminate the
Executive's  employment other than for Cause or Permanent Disability,  or if the
Executive  shall terminate  employment for Good Reason,  the Company's and Nicor
Gas'  obligations to the Executive shall be as set forth in this Section 5.1. As
a precondition  to fulfilling  such  obligations,  the Company shall require the
Executive to execute and deliver a release prepared by the Company and providing
for the  Executive's  release of any and all claims  against the Company and its
Subsidiaries  (and those  acting on behalf of them)  that may have  arisen on or
before  the  date  of the  release,  which  release  shall  contain  such  other
reasonable and customary terms as are specified by the Company.  Notwithstanding
any other  provision of this section to the contrary,  to the extent any portion
of such release is subject to the seven-day  revocation period prescribed by the
Age  Discrimination in Employment Act, as amended,  or to any similar revocation
period in effect on the  Termination  Date,  no payment  shall be due under this
Section 5.1 until such  revocation  period has expired  without such  revocation
occurring.

            5.1.1  The  Company  shall,   within  five  business  days  of  such
      termination of  employment,  pay the Executive a cash payment equal to the
      sum of the following amounts:

                  5.1.1.1 to the extent not previously paid, the Annual Base
            Salary and any accrued paid time off through the Termination Date;

                  5.1.1.2  an  amount  equal to the  product  of (i) the  Annual
            Incentive   (as  defined  in  Section   3.2.2)  at  target  for  any
            Performance  Period in which the Termination Date occurs  multiplied
            by (ii) a fraction, the numerator of which is the number of days the
            Executive  was  actually   employed  by  the  Company   during  such
            Performance  Period,  and the  denominator of which is the number of
            days in the Performance  Period;  or, if greater,  the amount of any
            Annual Incentive  otherwise payable to the Executive with respect to
            a Performance  Period in which the  Termination  Date occurs,  which
            payment shall be in full settlement of Annual Incentive  amounts due
            with respect to any such Performance Period; and

                  5.1.1.3 all amounts  previously  deferred by or accrued to the
            benefit   of  the   Executive   under  any   nonqualified   deferred
            compensation  plan  sponsored  by the  Company  (including,  without
            limitation,  any vested  amounts  deferred under  incentive  plans),
            together with any accrued earnings thereon,  and not yet paid by the
            Company; and

                  5.1.1.4  an  amount  equal to the  product  of (A)  three  (3)
            multiplied by (B) the sum of (i) the Executive's Annual Base Salary,
            and (ii) the Severance Incentive.

            5.1.2 For purposes of each of the Executive's  stock options granted
      under the Company's Long Term  Incentive Plan (the "LTIP"),  any successor
      plan,  or otherwise,  that is or becomes  exercisable  on the  Termination
      Date, the Executive's termination of employment shall be disregarded,  and
      each  such  option  shall   continue  to  be  exercisable  as  though  the
      Executive's  employment  had continued  through the last day on which such
      option would be exercisable in the absence of such employment  termination
      (such earlier date being referred to herein as the "Applicable  Expiration
      Date"). This Section 5.1.2 shall be applicable notwithstanding any term of
      any plan, arrangement,  or agreement providing for early expiration of the
      option because of the Executive's termination of employment, except for an
      amendment  adopted in accordance  with Section 11.7 of this  Agreement and
      that by its specific terms amends this Agreement.

            5.1.3 On the  Termination  Date (i) the Executive shall become fully
      vested in, and may thereupon and until the Applicable  Expiration  Date of
      such stock  incentive  awards  exercise  in whole or in part,  any and all
      stock  incentive  awards  granted  to the  Executive  under the LTIP,  any
      successor  plan or otherwise  which have not become  exercisable as of the
      Termination Date; (ii) all dividend  performance units previously  awarded
      to the Executive shall become fully vested, and a prorated  calculation of
      the  target  value of all such units  shall be done as of the  Termination
      Date and full payment of such  prorated  target value shall be made by the
      Company within 30 days after the Termination Date; and (iii) the Executive
      shall become  fully vested at the prorated  target level in any other cash
      incentive  awards  granted  for  the  performance   period  in  which  the
      Termination  Date occurs  under the LTIP,  a successor  plan or  otherwise
      which have not, as of the Termination Date, become fully vested.

            5.1.4 All forfeiture  conditions that as of the Termination Date are
      applicable  to any deferred  stock unit,  restricted  stock or  restricted
      share units awarded to the Executive by the Company  pursuant to the LTIP,
      a successor plan or otherwise shall lapse  immediately (to the extent such
      awards are outstanding immediately prior to the Termination Date).

            5.1.5 During the  Severance  Period (or until such later date as any
      Welfare Plan of the Company may specify),  the Company  shall  continue to
      provide to the  Executive  and the  Executive's  family  welfare  benefits
      (including, without limitation, medical, prescription, dental, disability,
      individual  life and group life insurance  benefits) which are at least as
      favorable as those provided under the most favorable  Welfare Plans of the
      Company applicable (i) with respect to the Executive and his family during
      the 90-day period immediately preceding the Termination Date, or (ii) with
      respect to other senior executives and their families during the Severance
      Period. In determining  benefits under such Welfare Plans, the Executive's
      annual  compensation  attributable  to base salary and  incentives for any
      plan year or calendar year, as applicable,  shall be deemed to be not less
      than the Executive's  Annual Base Salary and Target Annual Incentive.  The
      cost of the welfare  benefits  provided under this Section 5.1.5 shall not
      exceed the cost of such benefits to the Executive  immediately  before the
      Termination  Date or, if less,  the Effective  Date.  Notwithstanding  the
      foregoing,  if the Executive obtains comparable coverage under any Welfare
      Plans sponsored by another employer,  then the amount of coverage required
      to be provided by the Company  hereunder shall be reduced by the amount of
      coverage provided by such other employer's  Welfare Plans. The Executive's
      rights under this  Section  shall be in addition to and not in lieu of any
      post-termination  continuation coverage or conversion rights the Executive
      may have  pursuant  to  applicable  law,  including,  without  limitation,
      continuation  coverage required by Section 4980B of the Code. For purposes
      of  determining  eligibility  for (but not the  time of  commencement  of)
      retiree  benefits  under any Welfare  Plans of the Company,  the Executive
      shall be considered  (i) to have remained  employed  until the last day of
      the  Severance  Period and to have retired on the last day of such period,
      and (ii) to have attained the age the Executive would have attained on the
      last day of the Severance Period.

            5.1.6 If the Executive  participates  in the Company's  nonqualified
      supplemental  executive retirement plan ("SERP"), the amount payable under
      subsection  5.1.1.4  of this  Agreement  shall be taken into  account  for
      purposes of  determining  the amount of benefits to which the Executive is
      entitled  under the SERP;  provided  that such amount  shall be taken into
      account as though it was earned  equally over the  Severance  Period,  and
      further  provided that the Executive  shall be deemed to have attained the
      age he or she  would  have  attained  as of the last day of the  Severance
      Period,  and completed the number of years of service he or she would have
      completed as of the last day of the Severance Period. The Severance Period
      shall be taken into account for purposes of determining  the amount of and
      eligibility to begin to receive benefits under the SERP.

            5.1.7 On the  Termination  Date (i) the Executive shall become fully
      vested in all contributions made by the Company on behalf of the Executive
      under  the  Company's   Savings   Investment   Plan  (the  "SIP")  or  any
      supplemental or successor plan, if applicable,  and (ii) the Company shall
      immediately  make  an  additional  contribution  to the SIP  (or,  if such
      contribution   is  not  permitted  under  the  terms  of  the  SIP,  to  a
      non-qualified plan providing benefits  comparable to the benefits provided
      under the SIP) or any supplemental or successor plan, if applicable, equal
      to the aggregate  maximum matching  contributions  which the Company would
      have made on behalf of the  Executive  to the SIP or any  supplemental  or
      successor plan, if applicable,  for the Severance Period, calculated as if
      the amount  payable under  subsection  5.1.1.4 of this  Agreement had been
      earned  equally over the  Severance  Period and the Executive had made the
      maximum allowable  voluntary  contributions to the SIP or any supplemental
      or successor  plan, if  applicable.  In addition,  if the Executive is not
      eligible to participate in the Company's defined benefit  retirement plan,
      the  Company  shall  also  contribute  to the SIP or any  supplemental  or
      successor plan, if applicable,  on the Termination Date an amount equal to
      the  aggregate  additional  "retirement  growth"  contributions  which the
      Company  would  have  made on behalf of the  Executive  for the  Severance
      Period if the amount  payable under  subsection  5.1.1.4 of this Agreement
      had been earned equally over the Severance Period.

            5.1.8 The Company shall,  at its sole expense,  as incurred,  pay on
      behalf of Executive all fees and costs charged by a nationally  recognized
      outplacement  firm  selected  by the  Company  (subject to approval by the
      Executive,   which  shall  not  be  withheld   unreasonably)   to  provide
      outplacement service.

      5.2 If by the  Company  and Nicor Gas for Cause.  If the Company and Nicor
Gas, as applicable,  terminates the Executive's  employment for Cause during the
Employment Period,  this Agreement shall terminate without further obligation by
the Company  and Nicor Gas,  as  applicable,  to the  Executive,  other than the
obligation  immediately to pay the Executive in cash the Executive's Annual Base
Salary  through the  Termination  Date,  plus any accrued paid time off, in each
case to the extent not previously paid.

      5.3 If by the  Executive  Other  Than for Good  Reason.  If the  Executive
terminates  employment  during the Employment  Period other than for Good Reason
(including,  but not by way of limitation,  voluntary  retirement other than for
Good Reason),  and other than for  Disability  or death,  this  Agreement  shall
terminate without further  obligation by the Executive or by the Company,  other
than the obligation of the Company  immediately to pay the Executive in cash the
Executive's  Annual Base Salary through the  Termination  Date, plus any accrued
paid time off, in each case to the extent not previously paid.

      5.4  If by the  Company  and  Nicor  Gas,  as  applicable,  for  Permanent
Disability.  If the  Company  and Nicor Gas,  as  applicable,  and Nicor Gas, as
applicable,  terminates the Executive's  employment by reason of the Executive's
Permanent   Disability  during  the  Employment  Period,  this  Agreement  shall
terminate without further obligation to the Executive, other than:

            5.4.1 the Company's  obligation  immediately to pay the Executive in
      cash all amounts  specified in Sections 5.1.1.1,  5.1.1.2 and 5.1.1.3,  in
      each case, to the extent unpaid as of the  Termination  Date (such amounts
      collectively, the "Accrued Obligations"), and

            5.4.2 the Executive's right after the Permanent Disability Effective
      Date to  receive  disability  and  other  benefits  at least  equal to the
      greater of (i) those provided under the most  favorable  disability  Plans
      applicable  to  disabled  senior  executives  of  the  Company  in  effect
      immediately  before the Termination Date, or (ii) those provided under the
      most  favorable  disability  Plans of the  Company  in  effect at any time
      during the 90-day period immediately before the Effective Date.

      5.5 If upon Death. If the  Executive's  employment is terminated by reason
of the  Executive's  death during the Employment  Period,  this Agreement  shall
terminate without further  obligation to the Executive's  legal  representatives
under  this  Agreement,  other  than  the  obligation  immediately  to  pay  the
Executive's   estate   or   beneficiary   in  cash  all   Accrued   Obligations.
Notwithstanding  anything in this  Agreement to the  contrary,  the  Executive's
family  shall  be  entitled  to  receive  benefits  at  least  equal to the most
favorable benefits provided under Plans of the Company to the surviving families
of senior  executives  of the Company,  but in no event shall such Plans provide
benefits which in each case are less favorable, in the aggregate,  than the most
favorable of those provided by the Company to the Executive  under such Plans in
effect at any time during the 90-day  period  immediately  before the  Effective
Date.

                                   ARTICLE VI
                  CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

      6.1   Gross-up for Certain Taxes.

            6.1.1 If it is determined by the Company's independent auditors that
      any benefit  received or deemed received by the Executive from the Company
      pursuant to this Agreement or otherwise, whether or not in connection with
      a Change in Control (such  monetary or other  benefits  collectively,  the
      "Potential  Parachute  Payments") is or will become  subject to any excise
      tax under  Section  4999 of the Code or any similar tax payable  under any
      United States federal,  state, local or other law (such excise tax and all
      such similar taxes collectively,  "Excise Taxes"), then the Company shall,
      subject to  Sections  6.6 and 6.7,  within five  business  days after such
      determination,  pay the Executive an amount (the "Gross-up Payment") equal
      to the product of:

                  (a)   the amount of such Excise Taxes multiplied by

                  (b)   the Gross-up  Multiple (as defined in Section 6.4).  The
                        Gross-up Payment is intended to compensate the Executive
                        for all  Excise  Taxes  payable  by the  Executive  with
                        respect  to the  Potential  Parachute  Payments  and any
                        federal,  state, local or other income or other taxes or
                        Excise Taxes  payable by the  Executive  with respect to
                        the Gross-up Payment.

            6.1.2  The  determination  of  the  Company's  independent  auditors
      described in Section  6.1.1,  including the detailed  calculations  of the
      amounts of the  Potential  Parachute  Payments,  Excise Taxes and Gross-Up
      Payment  and the  assumptions  relating  thereto,  shall be set forth in a
      written certificate of such auditors (the "Company Certificate") delivered
      to the Executive. The Executive or the Company may at any time request the
      preparation  and delivery to the Executive of a Company  Certificate.  The
      Company  shall  cause  the  Company  Certificate  to be  delivered  to the
      Executive as soon as reasonably possible after such request.

      6.2   Determination by the Executive.

            6.2.1 If (i) the Company shall fail to deliver a Company Certificate
      to the Executive  within 30 days after its receipt of his written  request
      therefor,  or (ii) at any time after the Executive's  receipt of a Company
      Certificate,  the Executive disputes either (x) the amount of the Gross-Up
      Payment set forth therein,  or (y) the  determination set forth therein to
      the effect that no Gross-Up  Payment is due  (whether by reason of Section
      6.7 or otherwise),  then the Executive may elect to require the Company to
      pay a Gross-Up  Payment in the amount  determined  by the Executive as set
      forth in an Executive  Counsel  Opinion (as defined in Section  6.5).  Any
      such demand by the Executive shall be made by delivery to the Company of a
      written  notice which  specifies  the Gross-Up  Payment  determined by the
      Executive  (together  with the  detailed  calculations  of the  amounts of
      Potential  Parachute  Payments,  Excise Taxes and Gross-Up Payment and the
      assumptions  relating  thereto) and an Executive Counsel Opinion regarding
      such Gross-Up Payment (such written notice and opinion  collectively,  the
      "Executive's  Determination").   Within  30  days  after  delivery  of  an
      Executive's Determination to the Company, the Company shall either (i) pay
      the Executive the Gross-Up Payment set forth in Executive's  Determination
      (less the portion  thereof,  if any,  previously  paid to Executive by the
      Company)  or (ii)  deliver to the  Executive a Company  Certificate  and a
      Company Counsel Opinion (as defined in Section 6.5), and pay the Executive
      the Gross-Up  Payment  specified in such Company  Certificate.  If for any
      reason  the  Company  fails to comply  with the  preceding  sentence,  the
      Gross-Up  Payment  specified  in the  Executive's  Determination  shall be
      controlling for all purposes.

            6.2.2 If the Executive does not request a Company  Certificate,  and
      the Company does not deliver a Company Certificate to the Executive,  then
      (i) the Company  shall,  for  purposes  of Section  6.7, be deemed to have
      determined  that no Gross-up  Payment is due, and (ii) the Executive shall
      not pay any  Excise  Taxes in  respect of  Potential  Parachute  Payments,
      except in accordance with Sections 6.6.1 or 6.6.4.

      6.3 Additional  Gross-up Amounts. If for any reason it is later determined
(whether  pursuant to the  subsequently-enacted  provisions  of the Code,  final
regulations  or  published  rulings of the IRS, a final  judgment  of a court of
competent  jurisdiction,  a determination of the Company's  independent auditors
set forth in a Company  Certificate  or,  subject to the last two  sentences  of
Section  6.2.1,  an Executive's  Determination)  that the amount of Excise Taxes
payable by the Executive is greater than the amount determined by the Company or
the Executive  pursuant to Section 6.1 or 6.2, as  applicable,  then the Company
shall, subject to Sections 6.6 and 6.7, pay the Executive an amount (which shall
also be deemed a Gross-up Payment) equal to the product of:

            (a)   the  sum of (1)  such  additional  Excise  Taxes  and  (2) any
                  interest,  fines, penalties,  expenses or other costs incurred
                  by the  Executive  as a result of having  taken a position  in
                  accordance with  determination made pursuant to Section 6.1 or
                  6.2, as applicable,

                  multiplied by

            (b)   the Gross-up Multiple.

      6.4 Gross-up Multiple.  The Gross-up Multiple shall equal a fraction,  the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the lesser of (i) the sum,  expressed as a decimal  fraction,  of the  effective
marginal tax rates of all federal, state, local and other income and other taxes
and any Excise Taxes applicable to the Gross-up Payment;  or (ii) 0.80, it being
intended  that the Gross-up  Multiple  shall in no event exceed five (5.0).  (If
different rates of tax are applicable to various portions of a Gross-up Payment,
the weighted average of such rates shall be used.)

      6.5 Opinion of Counsel.  "Executive  Counsel  Opinion" means an opinion of
nationally-recognized  executive compensation counsel to the effect (i) that the
amount of the Gross-Up Payment  determined by the Executive  pursuant to Section
6.2 is the  amount  that a court  of  competent  jurisdiction,  based on a final
judgment  not subject to further  appeal,  is most likely to decide to have been
calculated in accordance  with this Article and  applicable  law and (ii) if the
Company has previously  delivered a Company  Certificate to the Executive,  that
there is no reasonable basis or no substantial  authority for the calculation of
the  Gross-Up  Payment set forth in the Company  Certificate.  "Company  Counsel
Opinion"  means  an  opinion  of  nationally-recognized  executive  compensation
counsel to the effect that (i) the amount of the  Gross-Up  Payment set forth in
the Company  Certificate  is the amount that a court of competent  jurisdiction,
based on a final  judgment  not  subject to further  appeal,  is most  likely to
decide to have been  calculated in accordance  with this Article and  applicable
law and (ii) for  purposes  of  Section  6662 of the  Code,  the  Executive  has
substantial  authority to report on his federal  income tax return the amount of
Excise Taxes set forth in the Company Certificate.

      6.6   Amount Increased or Contested.

            6.6.1  The  Executive  shall  notify  the  Company  in  writing  (an
      "Executive's  Notice") of any claim by the IRS or other  taxing  authority
      (an "IRS Claim")  that,  if  successful,  would require the payment by the
      Executive of Excise Taxes in respect of Potential Parachute Payments in an
      amount  in  excess  of the  amount  of such  Excise  Taxes  determined  in
      accordance with Section 6.1 or 6.2, as applicable. Such Executive's Notice
      shall  include the nature and amount of such IRS Claim,  the date on which
      such IRS Claim is due to be paid (the "IRS Claim Deadline"), and a copy of
      all  notices  and  other  documents  or  correspondence  received  by  the
      Executive  in  respect  of such IRS Claim.  The  Executive  shall give the
      Executive's  Notice as soon as practicable,  but no later than the earlier
      of (i) 10 business days after the Executive first obtains actual knowledge
      of such IRS Claim or (ii) five business days after the IRS Claim Deadline;
      provided,  however, that the Executive's failure to give such notice shall
      affect the  Company's  obligations  under this  Article only to the extent
      that the Company is actually  prejudiced by such failure.  If at least one
      business day before the IRS Claim Deadline the Company shall:

                  6.6.1.1 deliver to the Executive a Company  Certificate to the
            effect  that  the IRS  Claim  has  been  reviewed  by the  Company's
            independent auditors and,  notwithstanding the IRS Claim, the amount
            of Excise Taxes,  interest and penalties payable by the Executive is
            either zero or an amount less than the amount  specified  in the IRS
            Claim,

                  6.6.1.2 pay to the  Executive  an amount  (which shall also be
            deemed a Gross-Up Payment) equal to the positive  difference between
            (x)  the  product  of the  amount  of  Excise  Taxes,  interest  and
            penalties specified in the Company  Certificate,  if any, multiplied
            by the Gross-Up  Multiple,  and (y) the portion of such product,  if
            any, previously paid to Executive by the Company, and

                  6.6.1.3  direct the  Executive  pursuant  to Section  6.6.4 to
            contest the balance of the IRS Claim,  then the Executive  shall pay
            only the amount,  if any, of Excise  Taxes,  interest and  penalties
            specified  in  the  Company  Certificate.  In  no  event  shall  the
            Executive  pay an IRS Claim  earlier than 30 days after having given
            an Executive's  Notice to the Company (or, if sooner,  the IRS Claim
            Deadline).

            6.6.2 At any time after the payment by the  Executive  of any amount
      of Excise  Taxes or related  interest or penalties in respect of Potential
      Parachute  Payments  (whether  or not such amount was based upon a Company
      Certificate  or an  Executive's  Determination),  the  Company  may in its
      discretion require the Executive to pursue a claim for a refund (a "Refund
      Claim") of all or any portion of such Excise Taxes,  interest or penalties
      as the Company may specify by written notice to the Executive.

            6.6.3 If the Company  notifies  the  Executive  in writing  that the
      Company  desires  the  Executive  to  contest  an IRS Claim or to pursue a
      Refund Claim, the Executive shall:

                  6.6.3.1 give the Company all  information  that it  reasonably
            requests in writing from time to time  relating to such IRS Claim or
            Refund Claim, as applicable,

                  6.6.3.2 take such action in connection  with such IRS Claim or
            Refund Claim (as applicable) as the Company  reasonably  requests in
            writing from time to time,  including accepting legal representation
            with respect thereto by an attorney selected by the Company, subject
            to the  approval  of the  Executive  (which  approval  shall  not be
            unreasonably withheld or delayed),

                  6.6.3.3  cooperate  with the  Company in good faith to contest
            such IRS Claim or pursue such Refund Claim, as applicable,

                  6.6.3.4 permit the Company to participate in any
            proceedings relating to such IRS Claim or Refund Claim, as
            applicable, and

                  6.6.3.5  contest such IRS Claim or prosecute such Refund Claim
            (as  applicable)  to  a  determination   before  any  administrative
            tribunal,  in a court  of  initial  jurisdiction  and in one or more
            appellate  courts, as the Company may from time to time determine in
            its discretion.

            The Company shall control all  proceedings  in connection  with such
            IRS Claim or Refund Claim (as  applicable) and in its discretion may
            cause the  Executive to pursue or forego any and all  administrative
            appeals, proceedings, hearings and conferences with the IRS or other
            taxing  authority  in respect of such IRS Claim or Refund  Claim (as
            applicable);  provided  that (i) any  extension  of the  statute  of
            limitations relating to payment of taxes for the taxable year of the
            Executive  relating  to the IRS Claim is limited  solely to such IRS
            Claim,  (ii) the Company's  control of the IRS Claim or Refund Claim
            (as  applicable)  shall be limited to issues with respect to which a
            Gross-Up Payment would be payable,  and (iii) the Executive shall be
            entitled to settle or  contest,  as the case may be, any other issue
            raised by the IRS or other taxing authority.

            6.6.4  The  Company  may at any time in its  discretion  direct  the
      Executive  to (i) contest  the IRS Claim in any lawful  manner or (ii) pay
      the amount specified in an IRS Claim and pursue a Refund Claim;  provided,
      however, that if the Company directs the Executive to pay an IRS Claim and
      pursue a Refund  Claim,  the  Company  shall  advance  the  amount of such
      payment to the Executive on an interest-free basis and shall indemnify the
      Executive, on an after-tax basis, for any income or other applicable taxes
      or Excise Tax, and any related interest or penalties  imposed with respect
      to such advance.

            6.6.5 The Company shall pay directly all legal, accounting and other
      costs and expenses (including  additional interest and penalties) incurred
      by the Company or the Executive in connection with any IRS Claim or Refund
      Claim, as applicable,  and shall indemnify the Executive,  on an after-tax
      basis,  for any income or other applicable  taxes,  Excise Tax and related
      interest  and  penalties  imposed  on the  Executive  as a result  of such
      payment of costs and expenses.

      6.7  Refunds.  If,  after the receipt by the  Executive  of any payment or
advance of Excise  Taxes  advanced by the Company  pursuant to Section  6.6, the
Executive  receives any refund with respect to such claim,  the Executive  shall
(subject  to the  Company's  complying  with the  requirements  of Section  6.6)
promptly pay the Company the amount of such refund  (together  with any interest
paid or credited thereon after taxes applicable thereto).  If, after the receipt
by  Executive  of an amount  advanced by the Company  pursuant to Section 6.6, a
determination  is made that the  Executive  shall not be  entitled to any refund
with  respect to such claim and the  Company  does not notify the  Executive  in
writing  of its intent to contest  such  determination  within 30 days after the
Company receives written notice of such  determination,  then such advance shall
be  forgiven  and shall not be  required  to be  repaid  and the  amount of such
advance  shall offset,  to the extent  thereof,  the amount of Gross-up  Payment
required to be paid.  Any contest of a denial of refund shall be  controlled  by
Section 6.6.

                                   ARTICLE VII
                              EXPENSES AND INTEREST

      7.1   Legal Fees and Other Expenses.

            7.1.1 If the  Executive  incurs  legal fees or other  expenses in an
      effort to secure,  preserve,  establish entitlement to, or obtain benefits
      under this Agreement  (including,  without limitation,  the fees and other
      expenses of the Executive's  legal counsel in connection with the delivery
      of the Executive  Counsel opinion referred to in Section 6.5), the Company
      shall,  regardless of the outcome of such effort,  promptly  reimburse the
      Executive  on a current  basis for such fees and  expenses  following  the
      Executive's  written  submission of a request for  reimbursement  together
      with evidence that such fees and expenses were incurred.

            7.1.2 If the  Executive  does not prevail  (after  exhaustion of all
      available  judicial remedies) in respect of a claim by the Executive or by
      the  Company  hereunder,  and the  Company  establishes  before a court of
      competent  jurisdiction,  by  clear  and  convincing  evidence,  that  the
      Executive  had no  reasonable  basis for his claim  hereunder,  or for his
      response to the  Company's  claim  hereunder,  and acted in bad faith,  no
      further  reimbursement  for legal  fees and  expenses  shall be due to the
      Executive  in  respect of such claim and the  Executive  shall  refund any
      amounts previously reimbursed hereunder with respect to such claim.

      7.2 Interest.  If the Company and Nicor Gas, as  applicable,  does not pay
any amount due to the  Executive  under this  Agreement  within three days after
such amount became due and owing,  interest shall accrue on such amount from the
date it became due and owing  until the date of payment at an annual  rate equal
to 200 basis points above the base commercial lending rate published in The Wall
Street Journal in effect from time to time during the period of such nonpayment.

                                  ARTICLE VIII
                            NO SET-OFF OR MITIGATION

      8.1 No Set-off by Company.  The Executive's  right to receive when due the
payments  and other  benefits  provided  for under this  Agreement  is absolute,
unconditional  and subject to no  set-off,  counterclaim  or legal or  equitable
defense. Any claim which the Company may have against the Executive, whether for
a breach of this Agreement or otherwise,  shall be brought in a separate  action
or  proceeding  and not as part  of any  action  or  proceeding  brought  by the
Executive to enforce any rights against the Company under this Agreement.

      8.2 No Mitigation.  The Executive  shall not have any duty to mitigate the
amounts  payable  by the  Company  and Nicor  Gas,  as  applicable,  under  this
Agreement  by  seeking  new   employment   following   termination.   Except  as
specifically otherwise provided in this Agreement,  all amounts payable pursuant
to this Agreement shall be paid without  reduction  regardless of any amounts of
salary,  compensation  or other  amounts  which  may be paid or  payable  to the
Executive as the result of the Executive's employment by another employer.

                                   ARTICLE IX
                            NON-EXCLUSIVITY OF RIGHTS

      9.1  Waiver  of  Other  Severance  Rights.  Except  as  may  be  otherwise
specifically  provided in an amendment of this Section 9.1 adopted in accordance
with Section 11.7 of this Agreement, the Executive's rights under Section 5.1 of
this Agreement shall be in lieu of any benefits that may be otherwise payable to
or on  behalf  of the  Executive  pursuant  to the  terms of any  severance  pay
arrangement of the Company or any Subsidiary or any other,  similar  arrangement
of the Company or any Subsidiary providing benefits upon involuntary termination
of  employment  and shall also be in lieu of any  benefits  under the Nicor Inc.
Executive/Key Employee Severance Benefits Program (notwithstanding any provision
of that program to the contrary); provided, however, that this Section 9.1 shall
not affect the  Executive's  rights to receive any  benefits  with  respect to a
termination of employment that occurs outside of the Employment Period.

      9.2 Other Rights.  Except as provided in Section 9.1, this Agreement shall
not prevent or limit the Executive's  continuing or future  participation in any
benefit,  bonus,  incentive or other plans provided by the Company or any of its
Subsidiaries  and for which the Executive may qualify,  nor shall this Agreement
limit or otherwise  affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise  entitled to receive under any plan
of the  Company  or any of its  Subsidiaries  and any other  payment  or benefit
required by law at or after the Termination  Date shall be payable in accordance
with such Plan or applicable law except as expressly modified by this Agreement.

                                    ARTICLE X
                                 CONFIDENTIALITY

      10.1 Confidentiality.  The Executive acknowledges that it is the policy of
the Company and its  Subsidiaries  to  maintain as secret and  confidential  all
valuable and unique  information and techniques  acquired,  developed or used by
the  Company  and its  Subsidiaries  relating  to  their  business,  operations,
employees  and  customers,  which  gives  the  Company  and its  Subsidiaries  a
competitive advantage in the transmission,  distribution,  marketing, or sale of
natural gas or in the energy services industry and other businesses in which the
Company and its  Subsidiaries  are  engaged  ("Confidential  Information").  The
Executive  recognizes  that all such  Confidential  Information  is the sole and
exclusive  property of the Company and its Subsidiaries,  and that disclosure of
Confidential Information would cause damage to the Company and its Subsidiaries.
The Executive  agrees that,  except as required by the duties of his  employment
with the Company or its Subsidiaries and except in connection with enforcing the
Executive's  rights  under  this  Agreement  or  if  compelled  by  a  court  or
governmental   agency,  he  will  not,  without  the  consent  of  the  Company,
disseminate or otherwise disclose any Confidential  Information  obtained during
his  employment  with the  Company or its  Subsidiaries  until such time as such
information  has  been  disclosed   publicly  by  the  Company  or  one  of  its
Subsidiaries,  or with its consent, or is otherwise a matter of public knowledge
(unless the Executive has reason to know that such  information  became a matter
of public knowledge through an unauthorized disclosure).

      10.2 Remedy. The Executive and the Company specifically agree that, in the
event that  Executive  shall  breach his  obligations  under this Article X, the
Company  and its  Subsidiaries  will  suffer  irreparable  injury  and  shall be
entitled to injunctive relief therefor, and shall not be precluded from pursuing
any  and all  remedies  it may  have  at law or in  equity  for  breach  of such
obligations;  provided,  however,  that such  breach  shall not in any manner or
degree  whatsoever  limit,  reduce or otherwise  affect the  obligations  of the
Company or Nicor Gas, as applicable, under this Agreement, and in no event shall
an  asserted  breach  of  the  Executive's  obligations  under  this  Article  X
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.

                                   ARTICLE XI
                                  MISCELLANEOUS

      11.1 No  Assignability.  This  Agreement is personal to the  Executive and
without the prior written  consent of the Company shall not be assignable by the
Executive  otherwise than by will or the laws of descent and distribution.  This
Agreement  shall inure to the benefit of and be enforceable  by the  Executive's
legal representatives.

      11.2 Successors. Before or upon the consummation of any Change in Control,
the Company  shall obtain from each  individual,  group or entity,  if any, that
becomes a  successor  of the  Company  by reason of the Change in  Control,  the
unconditional  written  agreement of such individual,  group or entity to assume
this Agreement and to perform all of the obligations of the Company hereunder.

      11.3  Payments to  Beneficiary.  If the  Executive  dies before  receiving
amounts to which the Executive is entitled  under this  Agreement,  such amounts
shall be paid in a lump sum to the  beneficiary  designated  in  writing  by the
Executive, or if none is so designated, to the Executive's estate.

      11.4  Nonalienation  of Benefits.  Benefits  payable under this  Agreement
shall not be subject in any manner to anticipation,  alienation, sale, transfer,
assignment, pledge, encumbrance,  charge, garnishment,  execution or levy of any
kind,  either  voluntary or  involuntary,  before actually being received by the
Executive,  and any such  attempt to dispose  of any right to  benefits  payable
under this Agreement shall be void.

      11.5 Severability. If any one or more articles, sections or other portions
of this  Agreement  are  declared by any court or  governmental  authority to be
unlawful  or  invalid,  such  unlawfulness  or  invalidity  shall  not  serve to
invalidate any article,  section or other portion not so declared to be unlawful
or invalid. Any article,  section or other portion so declared to be unlawful or
invalid  shall be  construed  so as to  effectuate  the  terms of such  article,
section or other portion to the fullest extent possible while  remaining  lawful
and valid.

      11.6 Arbitration.  Any and all disputes between the parties hereto arising
out of this  Agreement  (other  than  disputes  related  to  Article VI or to an
alleged  breach of the  covenant  contained  in  Article  X) shall be settled by
arbitration before an impartial arbitrator pursuant to the rules and regulations
of the American  Arbitration  Association (AAA) pertaining to the arbitration of
commercial  disputes.  Either  party may  invoke the right to  arbitration.  The
arbitrator shall be selected by means of the parties striking alternatively from
a panel  of  seven  arbitrators  supplied  by the  Chicago  office  of AAA.  The
Arbitrator  shall have the  authority to interpret  and apply the  provisions of
this  Agreement,  consistent  with  Section  11.10  below.  The  decision of the
arbitrator shall be final and binding upon the parties.  Judgment may be entered
on the award in any court of competent  jurisdiction.  The arbitrator's fees and
expenses shall be borne by the Company.

      11.7 Amendments.  This Agreement shall not be altered, amended or modified
except by written instrument executed by the Company and the Executive.

      11.8 Notices.  All notices and other  communications  under this Agreement
shall be in writing and delivered by hand, by a nationally-recognized commercial
delivery service, or by first-class registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

                        If to the Executive:

                        Thomas L. Fisher
                        37 Winthrop New Road
                        Aurora, Illinois  60506

                        If to the Company:

                        Nicor Inc.
                        1844 Ferry Road
                         Naperville, Illinois 60563-9600
                        Attn: Claudia J. Colalillo

or to such other  address as either  party shall have  furnished to the other in
writing.  Notice and communications shall be effective when actually received by
the addressee.

      11.9  Counterparts.  This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

      11.10 Governing Law.  This Agreement is intended to be interpreted and
construed in accordance  with the laws of the State of Illinois, without
regard to its choice of law principles.

      11.11 Captions.  The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.

      11.12 Number and Gender. Wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular and
the plural,  and pronouns  stated in either the  masculine,  the feminine or the
neuter gender shall include the masculine, feminine and neuter genders.

      11.13 Tax  Withholding.  The  Company or Nicor  Gas,  as  applicable,  may
withhold  from any amounts  payable under this  Agreement any federal,  state or
local taxes that are required to be withheld  pursuant to any  applicable law or
regulation.

      11.14 No Waiver.  A waiver of any provision of this Agreement shall not be
deemed a waiver of any other provision,  and any waiver of any default as to any
such  provision  shall not be deemed a waiver of any later default as to that or
any other provision.

      11.15 Entire Agreement.  This Agreement contains the entire
understanding of the Company, Nicor Gas and the Executive with respect to its
subject matter.

      IN WITNESS  WHEREOF,  the  Executive  and the Company have  executed  this
Agreement as of the date first above written.



                                          THOMAS L. FISHER
                                          Thomas L. Fisher

                                          Nicor Inc.


                                          By: KATHLEEN L. HALLORAN
                                              Executive Vice President Finance
                                              and Administration and Secretary