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                                   Nicor Inc.
                              Salary Deferral Plan







                              Amended and Restated

                            Effective January 1, 2002















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                                   Nicor Inc.

                                   Certificate

      I, Russ Strobel, Exec VP, General Counsel & Secretary of Nicor Inc.,
having in my custody and possession the corporate records and seal of said
corporation, do hereby certify that attached hereto is a true and correct copy
of the Nicor Inc. Salary Deferral Plan, as amended and restated effective as of
January 1, 2002.

      WITNESS my hand and the corporate seal of said corporation this 16th day
of October, 2002.

                                ----------------------------------------
                                As Aforesaid

                                     (Seal)
















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                                   Nicor Inc.

                              Salary Deferral Plan

                                   SECTION 1

                                    General


1.1   Purpose.  Nicor Inc.  Salary  Deferral  Plan (the "Plan") has
been  established  by Nicor Inc.  (the  "Company")  so that it, and
each of its  Affiliates  which,  with the  consent of the  Company,
adopts the Plan may provide its eligible key  management  employees
with  an  opportunity  to  build  additional   financial  security,
thereby   aiding  such   companies  in  attracting   and  retaining
employees of exceptional ability.

1.2 Effective Date, Duration of Plan. The "Effective Date" of the Plan is
January 1, 2002, unless otherwise noted. No deferrals of compensation shall be
permitted under the Plan for any Plan Year (other than the Plan Year beginning
on the Effective Date) with respect to compensation otherwise payable by any
Employer during that year unless the Employer has specifically adopted the Plan
with respect to such year.

1.3 Affiliates and Employers. The term "Affiliate" means any corporation, trade
or business during any period during which it is, along with the Company (or,
before the Company was established, Northern Illinois Gas Company now doing
business as Nicor Gas ("Nicor Gas")), a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
section 414(b) and 414(c) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company and each Affiliate that adopts the Plan for the benefit of
its eligible employees are referred to below collectively as the "Employers" and
individually as an "Employer".

1.4 Plan Administration, Source of Benefit Payments. The authority to control
and manage the operation and administration of the Plan shall be vested in the
compensation committee (the "Committee") of the Board of Directors of the
Company (the "Board"). In controlling and managing the operation and
administration of the Plan, the Committee shall have the rights, powers and
duties set forth in Section 7. The amount of any benefit payable under the Plan
shall be paid from the general assets of the Employer with respect to whose
employee or former employee the benefit is payable. Subject to the provisions of
the Plan, the liability of an Employer (the "Original Employer") with respect to
a Participant on account of reduction in the Participant's cash remuneration
from the Original Employer pursuant to a Participation Election shall not be
affected by the Participant's leaving the employ of such Original Employer to
become an employee of another Employer or an Affiliate (the "New Employer");
provided, however, that, with the consent of the Original Employer and the New
Employer, but without the consent of the Participant, the liability of the
Original Employer may be transferred to the New Employer. In the event of such
transfer (a) the Original Employer shall thereafter have no obligation to the
Participant under the Plan; (b) the New Employer's rights and obligations with
respect to the Participant shall be governed by the terms of the Plan, with the
New Employer substituted for the Original Employer under the Plan; and (c) the
New Employer shall not be required to give effect to the Participant's
Participation Election with respect to remuneration earned at the New Employer.
Neither the Participant nor any other person shall acquire by reason of the Plan
any right in or title to any assets, funds or property of the Employers
whatsoever, including, without limiting the generality of the foregoing, any
specific funds, assets, or other property which the Employers, in their sole
discretion, may set aside in anticipation of a liability under the Plan. The
Participant shall have only a contractual right to the amounts, if any, payable
under the Plan, unsecured by any assets of the Employers. Nothing contained in
the Plan shall constitute a guarantee by any of the Employers that the assets of
the Employers shall be sufficient to pay any benefits to any person.

1.5 Plan Year. The term "Plan Year" means the twelve-consecutive-month period
beginning on each April 1, 1990, the nine-consecutive-month period beginning
April 1, 1991 and the twelve-consecutive-month period beginning on January 1,
1992 and each January 1 thereafter.

1.6 Applicable Laws. The Plan shall be construed and administered in accordance
with the laws of the State of Illinois to the extent that such laws are not
preempted by the laws of the United States of America.

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

1.8 Notices. Any notice or document required to be filed with the Committee
under the Plan will be properly filed if delivered or mailed by registered mail,
postage prepaid, to the Committee, in care of the Company, at its principal
executive offices. Any notice required under the Plan may be waived by the
person entitled to notice.

1.9 Form and Time of Elections. Unless otherwise specified herein, each election
permitted to be made by any Participant or other person entitled to benefits
under the Plan, and any permitted modification or revocation thereof, shall be
in writing filed with the Committee at such times and in such form as the
Committee shall require.

1.10 Evidence. Evidence required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person acting on it considers
pertinent and reliable, and signed, made or presented by the proper party or
parties.

1.11 Action by Employers. Any action required or permitted to be taken by any
Employer shall be by resolution of its Board of Directors, or by a duly
authorized officer of the Employer.

1.12 Defined Terms. Terms used frequently with the same meaning are indicated by
initial capital letters, and are defined throughout the Plan. Appendix A
contains an alphabetical listing of all such terms and the subsections in which
they are defined.

                                    SECTION 2

                                  Participation

2.1 Eligible Participants. Employees of any Employer who shall be eligible to
participate in the Plan for any Plan Year shall be determined annually by the
compensation committee of that Employer prior to the beginning of such Plan
Year. Notwithstanding the foregoing provisions of this subsection 2.1,
participation in the Plan shall be limited to a select group of management or
highly compensated employees within the meaning of sections 201, 301 and 401 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), as
determined by the Committee. If the Committee determines that participation in
the Plan by any one or more Participants shall cause the Plan, as applied to any
Employer, to be subject to Parts 2, 3 or 4 of ERISA, the entire interest of such
Participant or Participants under the Plan shall be immediately paid to such
Participant by the applicable Employer or Employers, or shall otherwise be
segregated from the Plan in the discretion of the Committee, and such
Participant or Participants shall cease to have any interest under the Plan.

2.2   Participation  Elections.  An individual's  participation  in
the Plan shall be subject to the following:

(a)        An employee of an Employer who, prior to the beginning of any Plan
           Year, has been designated by the compensation committee of such
           Employer as eligible to participate in the Plan for the Plan Year
           shall become a Participant for that year by filing a Participation
           Election before the first day of that year.

(b)        The Participant shall elect, by his  Participation  Election,
           to have the  amount of salary  that would  otherwise  be
           payable to him from the Employer  during each pay period
           during  the  Plan  Year  for  which  the   Participation
           Election  is in effect  reduced by an amount that is not
           less  than 2  percent  nor  more  than  10  percent  (in
           multiples  of 1 percent) of his Salary for each such pay
           period.  If a Participant's  rate of Salary changes from
           pay   period   to  pay   period,   there   shall   be  a
           corresponding  change in the amount of the  reduction in
           his  cash  remuneration  pursuant  to his  Participation
           Election,  so that the  percentage of Salary  subject to
           such election remains constant.

(c)        Effective  with Plan Years on or after  January 1, 2002,  the
           Participant shall elect, by his Participation  Election,
           to have the amount of annual bonus that would  otherwise
           be  payable  to him from the  Employer  after the end of
           the Plan Year for which the  Participation  Election  is
           in effect  reduced by an amount that is not less than 10
           percent  nor more than 20  percent  (in  multiples  of 1
           percent) of his annual bonus for such Plan Year.

(d)        The  Committee  may  revoke  a  Participant's   Participation
           Election as of the date on which the Participant  ceases
           to be a member  of the group of  employees  to which the
           Plan is then extended.  When the Participation  Election
           is revoked,  salary  reductions  as  previously  elected
           will  continue  for  the  remainder  of the  Plan  Year,
           however,  the former  Participant  will not be permitted
           to file a Participation  Election for subsequent  years,
           unless  he  again  becomes  a  member  of the  group  of
           employees to which the Plan is extended.

(e)        Each Participant's Participation Election shall be revoked as of the
           date on which a Change in Control occurs, and no new Participation
           Election shall be accepted for any date after the date of a Change in
           Control.

(f)        A  Participant's  Participation  Election  for any Plan  Year
           shall be  applicable  to  Salary  paid in that Plan Year
           and to Bonus for that Plan Year,  but such bonus is paid
           after  the end of the Plan  Year.  Except  as  otherwise
           provided  in  this   subsection   2.2,  a  Participant's
           Participation  Election  shall  be  irrevocable  for the
           Plan Year to which it applies;  provided,  however  that
           the Committee may grant a modification  or waiver of the
           Participant's  Participation  Election upon finding that
           the Participant has suffered an unforeseeable  financial
           emergency or has incurred a material change in Salary.

(g)        Effective  for  Plan  Years  prior  to  January  1,  2002,  a
           Participant  who wishes to receive,  in accordance  with
           subsection  5.5,  a  distribution  with  respect  to any
           reduction  in  his  cash  remuneration   pursuant  to  a
           Participation  Election shall  specify,  as part of such
           election,  the amount of such  distribution and the time
           at which such  distribution  is to be made in accordance
           with subsection  5.5.  Starting with Plan Year beginning
           on  January  1, 2002 and for each Plan Year  thereafter,
           this election is no longer available.

(h)        A Participant may elect in accordance with the provisions of
           paragraph 5.9(b) to have payment of any benefits he may be entitled
           to receive on account of Early Retirement commence as of his
           Termination Date.

2.3 Salary. For purposes of the Plan, a Participant's "Salary" from any Employer
means the regular basic cash remuneration paid to him for such period by reason
of his employment with that Employer as a Participant, excluding bonuses,
overtime pay, and all other kind of remuneration of any kind including, but not
limited to pre-paid salary increase advances and lump sum raise payments, and
including vacation pay, reductions in cash remuneration under this Plan,
reductions to reflect contributions under a plan described in section 125 of the
Code and contributions under a cash or deferred arrangement described in section
401(k) of the Code.

2.4 Bonus. For purposes of the Plan, a Participant's "Bonus" from any Employer
means the gross annual bonus amount(s) payable to a Participant from the
Employer's Annual Incentive Plan or successor plan(s), if any, in effect for the
Employer's fiscal year coinciding with the Plan Year (but payable after the end
of the Plan Year) otherwise payable in cash, and considered "wages" for FICA and
federal income tax withholding; provided, however, that a participant's bonus
shall be determined without regard to any reduction to reflect contributions
under a plan described in section 125 of the Code or contributions under a cash
or deferred arrangement described in section 401(k) of the Code, or any amount
deferred under an unfunded, nonqualified plan maintained by the Employer.

2.5 Plan Not Contract of Employment. The Plan does not constitute a contract of
employment, and participation in the Plan will not give any employee or
Participant the right to be retained in the employ of any Employer nor any right
or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.

                                    SECTION 3

                                 Plan Accounting

3.1 Accounts. For each Participant who has filed a Participation Election, the
Committee shall establish an Account. A Participant's Account balance as of any
date shall be equal to the amount determined in accordance with the following
provisions of this subsection 3.1 based on the Interest Yield then applicable to
such Account balance:

(a)        first,  credit to the Account balance the applicable Interest
           Yield  based  on the  average  Account  balance  for the
           previous day;

(b)        then, charge to the Account balance the amount of any distributions
           under the Plan with respect to that Account balance as of that date;
           and

(c)        then, credit to the Account balance the amount to be credited as of
           that date in accordance with subsection 3.4.

The foregoing provisions shall apply so long as a Participant has an account
balance under the Plan even if the Participant's Participation Election has been
revoked pursuant to subsection 2.2.

A distribution to a Participant pursuant to the provisions of subsections 5.5 or
5.6 shall not affect the Interest Yield used to determine the Participant's
Account balance as of any subsequent date. Accordingly, if any amounts are
distributed to or on behalf of a Participant under the Plan at a time when a
portion of the Account balance is to be determined in accordance with the
Termination Interest Yield, the last three years of deferrals (to the nearest
quarter) in the Participant's Account balance shall be recomputed using the
Termination Interest Yield from the date each such deferral was first made. If
any amounts are distributed to or on behalf of a participant under the Plan at a
time when all or any portion of the Account balance is to be determined in
accordance with the Retirement Interest Yield, the affected deferrals in the
Participant's Account balance shall be recomputed from the date such deferrals
were first made, using the Retirement Interest Yield.

3.2 Limit on Crediting of Interest. Notwithstanding the foregoing provisions of
this Section 3, a Participant's Account balance shall not be credited with
interest in accordance with the provisions of paragraph 3.1(a) with respect to
the amount of any payment or distribution for the period occurring after the
date as of which such amount is to be paid in accordance with the provisions of
the Plan, regardless of the date on which payment is actually made.

3.3   Interest  Yield.  The  applicable  "Interest  Yield"  for any
date in any calendar quarter shall be equal to:

(a)        for any portion of the Account balance to be determined on the basis
           of the Termination Interest Yield, the applicable Interest Yield
           shall be 100% of the Bond Rate for the next preceding calendar
           quarter; and

(b)        for any portion of the Account balance to be determined on the basis
           of the Retirement Interest Yield, the applicable Interest Yield shall
           be 130% of the Bond Rate for the next preceding calendar quarter.

The "Bond Rate" for any calendar quarter shall be the composite average yield of
industrial and public utility bonds, rated Aaa through Baa for that quarter, as
determined from Mergent Bond Record published monthly by Mergent FIS, Inc. (or
any successor thereto) or, if such yield is no longer available, a substantially
similar average selected by the Committee.

3.4 Crediting Under Participation Election. A Participant's Account balance
shall be credited, in accordance with the provisions of paragraph 3.1(c), with
the amount by which his cash remuneration from his Employer is reduced pursuant
to a Participation Election, as of the date on which such cash remuneration
would otherwise have been paid to the Participant by the Employer were it not
for the reduction made pursuant to the Participation Election.

3.5 Limit on Distributions. In no event shall the amount distributed under the
Plan to any Participant as of any date exceed the amount of his Account balance
as of that date.

                                   SECTION 4

                                Termination Date

      A Participant's "Termination Date" is the first to occur of the following
dates (but determined without regard to terminations occurring prior to the date
on which he commenced participation in the Plan):

(a)        Normal  Retirement.  The  date the  Participant's  employment
           with  the  Employers  and   Affiliates   terminates  for
           reasons other than death after he has attained age 65.

(b)        Early  Retirement.  The  date  the  Participant's  employment
           with  the  Employers  and   Affiliates   terminates  for
           reasons  other than death or his being  Disabled  before
           he has  attained  age 65,  and either (i) at the time of
           such  termination,  he  has  attained  age  55  and  has
           completed  at least  ten  Years of  Service  or (ii) his
           termination   of   employment   is   designated  by  the
           Committee  as an Early  Retirement  for  purposes of the
           Plan.  For  purposes  of  the  Plan,  an  employee's  or
           Participant's  "Years of  Service"  as of any date shall
           equal the total number of years,  computed to fractional
           portions  thereof,  during  which he was employed by any
           entity that either (i) was an Employer or  Affiliate  at
           the  time  of  such  employment;   or  (ii)  becomes  an
           Employer or Affiliate  after the time of such employment
           but   prior  to  the  date  his   Account   balance   is
           distributed to him.

(c)        Disability.  The date the  Participant's  employment with the
           Employers  and  Affiliates  terminates  by reason of his
           being Disabled.  A Participant  will be considered to be
           "Disabled"  if he is  unable to  perform  satisfactorily
           the essential  duties of his position with his employer,
           and such inability is reasonably  likely to continue for
           a period of at least twelve  months,  all as  determined
           by the Committee.

(d)        Death.  The  date  the  Participant's   employment  with  the
           Employers  and  Affiliates  terminates  because  of  his
           death.

(e)        Resignation or Dismissal. The date the Participant's employment with
           the Employers and Affiliates terminates for reasons other than his
           death or his being Disabled and prior to his Normal Retirement or
           Early Retirement, as described in paragraphs (a) and (b) next above.

                                  SECTION 5

                            Distribution of Benefits

5.1 Normal or Early Retirement Benefit. If a Participant's Termination Date
occurs in accordance with paragraph 4(a) or paragraph 4(b) (relating to Normal
Retirement or Early Retirement), his Account balance shall be determined based
on the Retirement Interest Yield and shall be distributed in accordance with
subsection 5.9.

5.2 Disability Benefit. If a Participant's Termination Date occurs in accordance
with paragraph 4(c) (relating to disability), his Account balance shall be
determined based on the Retirement Interest Yield and shall be distributed in
accordance with subsection 5.10.

5.3 Death Benefit. If a Participant's Termination Date occurs on account of his
death, his Account balance shall be determined based on the Retirement Interest
Yield, and shall be distributed in a lump sum as of the date of his death, as
soon as practicable after the date of his death.

5.4 Resignation or Dismissal Benefit. If a Participant's Termination Date occurs
in accordance with paragraph 4(e) (relating to resignation or dismissal), his
Account balance shall be determined as follows: (a) deferrals made for the three
(3) years immediately prior to his Termination Date shall have the Termination
Interest Yield applied and (b) deferrals made prior to the three years
immediately before his Termination Date shall have the Retirement Interest Yield
applied; and such Account balance shall be distributed in a lump sum as of the
Participant's Termination Date, as soon as practicable after such Termination
Date.

5.5 Interim Distribution. For Plan Years beginning prior to January 1, 2002, a
Participant may elect, as part of his Participation Election, in accordance with
subsection 2.2, to have a portion of his Account balance paid to him at the time
specified in such election, subject to the following:

(a)        A  Participant's  Participation  Election may not provide for
           receipt  of  a  distribution  in  accordance  with  this
           subsection  5.5 unless:  (i) the date  selected  for the
           distribution  is a January 1  occurring  after the fifth
           anniversary  of  the  date  the  Participation  Election
           became effective;  and (ii) the amount to be distributed
           pursuant to such  Participation  Election is not greater
           than the  amount  by  which  his  cash  remuneration  is
           reduced pursuant to such Participation Election.

(b)        A Participant's Participation Election may not provide for more than
           one date on which distribution shall be made in accordance with this
           subsection 5.5.

(c)        Any election to receive  benefits at a date  specified  under
           the   Participation   Election  shall  be   irrevocable;
           provided,   however,   that   the   Committee   in   its
           discretion,  may,  upon the  request of the  Participant
           filed  with the  Committee  not less than one year prior
           to the  calendar  year during  which a  distribution  is
           otherwise  to be  made,  defer  distribution  until  his
           Termination Date.

(d)        Any election to receive benefits at the date specified under the
           Participation Election shall be disregarded if the Participant's
           Termination Date occurs prior to the date specified under the
           Participation Election.

(e)        Subject to the provisions of the Plan, the amount that a Participant
           elects to have distributed in accordance with this subsection 5.5
           shall be distributed in accordance with such election (without
           Committee approval being necessary).

5.6 Pre-Termination Hardship Distribution. With the consent of the compensation
committee of the Participant's Employer (or, if the Participant is then employed
by an Affiliate, the compensation committee of the Company), a Participant who
is employed by an Employer or Affiliate may, upon a showing of financial
hardship, elect to have paid to him as of any date an amount that does not
exceed the lesser of (a) the amount necessary to satisfy the financial hardship
or (b) the amount that would be distributable to him under the Plan if the date
as of which such payment is to be made were his Termination Date and his Plan
benefit were paid in a lump sum. Such distribution will have a five percent (5%)
penalty applied. Such penalty amount shall reduce the value of a Participant's
Account balance and shall be forfeited. For purposes of the Plan, the term
"financial hardship" shall mean a Participant's unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal, or other unforseeable
occurrence. Cash needs arising from foreseeable events, such as the purchase of
a house or education expenses for dependents, shall not be considered to result
in a financial hardship.

5.7 Distribution on Change in Control. Upon the occurrence of a Change in
Control, the Account balance of each Participant who was employed by an Employer
or an Affiliate on the date of such Change in Control shall be determined as of
the date of the Change in Control based on the Retirement Interest Yield. The
Account balance of each Plan Participant (regardless of any elections that may
otherwise be applicable to him under the Plan) shall be distributed in a lump
sum as of the date of such Change in Control, as soon as practicable after the
date of such Change in Control, but in no event later than 15 days after the
occurrence of such Change in Control. Payments under this subsection 5.7 shall
be in lieu of any amounts that would otherwise be payable after the date as of
which the Participant's Account balance is determined for purposes of payment
under this subsection. For purposes of the Plan, "Change in Control" means:

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

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

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

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

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

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

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

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

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

5.8   Effect of Sale of Employer.  If:

(a)        an Employer  (including an Affiliate  that is deemed to be an
           Employer  pursuant  to  clause  1.4(b))  ceases to be an
           Affiliate; or

(b)        if all or a portion of the operations of an Employer (including an
           Affiliate that is deemed to be an Employer pursuant to clause 1.4(b))
           are transferred to an entity that is not an Affiliate;

the Account balance of each Affected Participant (regardless of any elections
that may otherwise be applicable to him under the Plan) shall be determined
based on the Retirement Interest Yield, and shall be distributed in a lump sum
as of the date of the event described in paragraph (a) or (b) next above,
whichever is applicable, as soon as practicable after such date. For purposes of
the Plan, the term "Affected Participant" shall mean each Participant who is
employed by an Employer described in paragraph (a) next above immediately prior
to the date described in such paragraph (a), and each Participant who is
employed with respect to the operations of an Employer that are transferred in a
manner described in paragraph (b) next above immediately prior to the date
described in such paragraph (b).

5.9 Form of Retirement Benefit Payment. Benefits payable in accordance with the
provisions of subsection 5.1 (relating to Normal Retirement and Early Retirement
benefits) shall be distributed in accordance with the following provisions of
this subsection 5.9:

(a)        Benefits  shall be paid in annual  installments.  The  amount
           of each  installment  payment  shall  be a fixed  amount
           calculated  to amortize  the unpaid  Account  balance in
           equal annual  installments  of principal  and  interest,
           and shall be based on the  Retirement  Interest Yield in
           effect  at the time  payments  commence.  The  Committee
           may,  in its  discretion,  recompute  the  amount of the
           installment  every three (3) years to reflect  actual or
           projected  changes  in the  Retirement  Interest  Yield.
           Benefit  payments  shall cease when the Account  balance
           reaches  zero or  with  the  final  payment.  The  final
           year's   balance  shall  equal  the  remaining   Account
           balance.

(b)        The payments with respect to a Participant under this subsection 5.9
           shall be made in accordance with the following:

           (i)  Subject to the following provisions of this paragraph (b), the
                first such payment under this subsection 5.9 shall be made for
                the calendar year following the calendar year in which occurs
                the later of (A) the Participant's 65th birthday, or (B) the
                Participant's Termination Date; provided, however, that the
                Participant may elect, in the Participation Election that is
                filed for the first Plan Year in which he is a Participant in
                the Plan, to have this paragraph (b) apply to him with respect
                to all benefits payable under the Plan without regard to the
                provisions of clause (A) next above.

           (ii) Notwithstanding the provisions of clause (i) next above, the
                Committee, in its discretion, may, upon the request of the
                Participant filed with the Committee at least 30 days before
                installment payments are to begin, request the Employer to pay
                such benefits paid in a lump sum (in lieu of installments). In
                his request to the Committee, a Participant must state the
                reason for requesting a lump sum payment, and must acknowledge
                that interest that would have been paid during the installment
                period will be foregone.

           (iii)Except in the case where benefits under this subsection 5.9 are
                payable in the form of a lump sum, an installment payment shall
                be made under this subsection 5.9 for each calendar year
                following the year in which the first installment payment is
                made; provided that the last installment shall be made for the
                calendar year in which occurs the 80th anniversary of the
                Participant's birth.

           (iv) The payment with respect to a Participant under this subsection
                5.9 for any calendar year shall be made as of the January 1 of
                that year, as soon as practicable thereafter.

           (v)  Notwithstanding the provisions of clause (iii) above, the
                Committee, in its discretion, may, upon the request of the
                Participant filed with the Committee at least 30 days before
                installment payments are to begin, direct the Employer to have
                the last installment made prior to the calendar year in which
                occurs the 80th anniversary of the Participant's birth.

(c)        If the  Participant  dies  before  the  payment of all of the
           benefits to which he is entitled  under this  subsection
           5.9,  payment of his Account  balance shall  continue to
           be made, in accordance  with this subsection 5.9, to his
           Beneficiary    (as   determined   in   accordance   with
           subsection   5.11);   provided,    however,   that   the
           Participant  may, by election  filed with the  Committee
           before  his  death,  specify  that his  Account  balance
           shall  be  paid   after  his   death  in  fewer   annual
           installments  than the applicable number of installments
           had he  survived.  The  amount of each such  installment
           shall be determined in accordance with paragraph 5.9(a).

5.10 Form of Disability Benefit Payment. Benefits payable in accordance with the
provisions of subsection 5.2 (relating to disability benefits) shall be
distributed in accordance with the following provisions of this subsection 5.10:

(a)        Benefits  shall be paid in annual  installments.  The  amount
           of each  installment  payment  shall  be a fixed  amount
           calculated  to amortize  the unpaid  Account  balance in
           equal annual  installments  of principal  and  interest,
           and shall be based on the  Retirement  Interest Yield in
           effect  at the time  payments  commence.  The  Committee
           may,  in its  discretion,  recompute  the  amount of the
           installment  every three (3) years to reflect  actual or
           projected  changes  in the  Retirement  Interest  Yield.
           Benefit  payments  shall cease when the Account  balance
           reaches  zero or  with  the  final  payment.  The  final
           year's   balance  shall  equal  the  remaining   Account
           balance.

(b)        The payments with respect to a Participant under this subsection 5.10
           shall be made in accordance with the following:

           (i)  Subject to the following provisions of this paragraph (b), the
                first such payment shall be made as of the Participant's
                Termination Date, as soon as practicable after that date.

           (ii) Notwithstanding the provisions of clause (i) next above, the
                Committee in its discretion, may, upon the request of the
                Participant filed with the Committee within 15 days following
                his Termination Date, direct the Employer to have such benefits
                paid in a lump sum (in lieu of installments).

           (iii)Except in the case where benefits under this subsection 5.10 are
                payable in the form of a lump sum, an installment payment shall
                be made under this subsection 5.10 for each calendar year
                following the year in which the first installment payment is
                made; provided that the last installment shall be made for the
                calendar year in which occurs the 15th anniversary of the
                Participant's Termination Date.

            (iv)The payment with respect to a Participant under this subsection
                5.10 for each calendar year following the calendar year in which
                the Participant's installment payments commence shall be made as
                of the January 1 of that year, as soon as practicable
                thereafter.

(c)         Notwithstanding the provisions of paragraph (b) next above:

           (i)  If the Participant recovers from his being Disabled, and he
                returns to the employ of the Employers or Affiliates prior to
                distribution of his entire Account balance under the Plan,
                distributions to him on account of his being Disabled shall
                cease, and the remainder of his Account balance shall thereafter
                be distributed in accordance with the applicable provisions of
                the Plan; provided, however, that notwithstanding any other
                provision of the Plan, his Account balance as of any date
                occurring on or after the Termination Date that resulted from
                his being Disabled shall be determined based on the Retirement
                Interest Yield.

           (ii) If a Participant recovers from being Disabled, does not return
                to the employ of the Employers or Affiliates, the balance
                credited to his Account shall continue to be distributed to him
                in accordance with this subsection 5.10 as though he had not
                recovered.

           (iii)If the Participant dies before the payment of all of the
                benefits to which he is entitled under this subsection 5.10,
                payment of his Account balance shall continue to be made, in
                accordance with this subsection 5.10, to his Beneficiary;
                provided, however, that the Participant may, by election filed
                with the Committee before his death, specify that his Account
                balance shall be paid after his death in fewer annual
                installments than the applicable number of installments had he
                survived. The amount of each such installment shall be
                determined in accordance with paragraph 5.10(a).

5.11 Designation of Beneficiary. Each Participant from time to time, by signing
a form furnished by the Committee, may designate any legal or natural person or
persons (who may be designated contingently or successively) to whom his
benefits under the Plan are to be paid if he dies before he receives all of his
benefits. A beneficiary designation form will be effective only when the signed
form is filed with the Committee while the Participant is alive and will cancel
all beneficiary designation forms filed earlier. Except as otherwise
specifically provided in this subsection 5.11, if a deceased Participant failed
to designate a beneficiary as provided above, or if the designated beneficiary
of a deceased Participant dies before him or before complete payment of the
Participant's benefits, his benefits shall be paid to the legal representative
or representatives of the estate of the last to die of the Participant and his
designated beneficiary.

5.12 Distributions to Persons Under Disability. Notwithstanding the provisions
of this Section 5, if, in the Committee's opinion, a Participant or Beneficiary
is under a legal disability or is in any way incapacitated so as to be unable to
manage his financial affairs, the Committee may direct that payment be made to a
relative or friend of such person for his benefit until claim is made by a
conservator or other person legally charged with the care of his person or his
estate, and such payment shall be in lieu of any such payment to such
Participant or Beneficiary. Thereafter, any benefits under the Plan to which
such Participant or Beneficiary is entitled shall be paid to such conservator or
other person legally charged with the care of his person or his estate.

5.13 Benefit May Not be Assigned or Alienated. Neither the Participant nor any
other person shall have any voluntary or involuntary right to commute, sell,
assign, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part hereof, which are expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall be, prior to actual
payment, subject to seizure or sequestration for payment of any debts,
judgements, alimony or separate maintenance owned by the Participant or any
other person, or be transferred by operation of law in the event of the
Participant's or any other person's bankruptcy or insolvency.

5.14 Offset. If, at the time payments are to be made under the Plan, the
Participant or Beneficiary or both are indebted or obligated to any Employer or
Affiliate, then the payments remaining to be made to the Participant or the
Beneficiary or both may, at the discretion of the Committee, be reduced by the
amount of such indebtedness, or obligation, provided, however, that an election
by the Committee not to reduce any such payment shall not constitute a waiver of
the claim for such indebtedness or obligation.

                                    SECTION 6

                           Claim For Benefit Procedure

6.1 Claim for Benefits. Any claim for benefits under the Plan shall be made in
writing to the Committee. If such claim for benefits is wholly or partially
denied by the Committee, the Committee shall, within a reasonable period of
time, but not later than sixty (60) days after receipt of the claim, notify the
claimant of the denial of the claim. Such notice of denial shall be in writing
and shall contain:

(a)   the specific reasons or reasons for the denial of the claim;

(b)   a reference to the relevant  Plan  provisions  upon which the
           denial is based;

(c)   a description of any additional material or information necessary for the
      claimant to perfect the claim, together with an explanation of why such
      material or information is necessary; and

(d)   an explanation of the Plan's claim review procedure.

6.2 Request for Review of a Denial of a Claim for Benefits. Upon the receipt by
the claimant of written notice of denial of the claim, the claimant may within
ninety (90) days file a written request to the Committee, requesting a review of
the denial of the claim, which review shall include a hearing if deemed
necessary by the Committee. In connection with the claimant's appeal of the
denial of his claim, he may review relevant documents and may submit issues and
comments in writing.

6.3 Decision Upon Review of Denial of Claim for Benefits. The Committee shall
render a decision on the claim review promptly, but no more than sixty (60) days
after the receipt of the claimant's request for review, unless special
circumstances (such as the need to hold a hearing) require an extension of time,
in which case the sixty (60) day period shall be extended to one hundred-twenty
(120) days. Such decision shall:

(a)        include specific reasons for the decision;

(b)        be written in a manner  calculated  to be  understood  by the
           claimant; and

(c)        contain specific references to the relevant Plan provisions upon
           which the decision is based.

The decision of the Committee shall be final and binding in all respects on both
the Company and the claimant.

                                SECTION 7

                                Committee

7.1 Powers of Committee. The Committee is authorized to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan,
and to determine the terms and provisions of any agreements made pursuant to the
Plan, and to make all other determinations that may be necessary or advisable
for the administration of the Plan. Except as otherwise specifically provided by
the Plan, any determinations to be made by the Committee under the Plan shall be
decided by the Committee in its sole discretion. Any interpretation of the Plan
by the Committee and any decision made by it under the Plan is final and binding
on all persons.

7.2 Delegation by Committee. The Committee may allocate all or any part of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked at any time.

7.3 Information to be Furnished to Committee. The Employers and Affiliates shall
furnish the Committee such data and information as may be required for it to
discharge its duties. The records of the Employers and Affiliates as to an
employee's or Participant's period of employment, termination of employment and
the reason therefor, leave of absence, reemployment and Salary shall be
conclusive on all persons unless determined to be incorrect. Participants and
other persons entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers desirable to carry
out the Plan.

7.4 Liability and Indemnification of the Committee. No member of the Committee
shall be liable to any person for any action taken or omitted in connection with
the administration of the Plan unless attributable to his own fraud or willful
misconduct; nor shall the Employers be liable to any person for any such action
unless attributable to fraud or willful misconduct on the part of a director or
employee of the Employers. The Committee and the individual members thereof
shall be indemnified by the Employers against any and all liabilities, losses,
costs and expenses (including legal fees and expenses) of whatsoever kind and
nature which may be imposed on, incurred by or asserted against the Committee or
its members by reason of the performance of a Committee function if the
Committee or such members did not act dishonestly or in willful violation of the
law or regulation under which such liability, loss, cost or expense arises. This
indemnification shall not duplicate but may supplement any coverage available
under any applicable insurance.

                                    SECTION 8

                            Amendment and Termination

8.1  Amend  or  Terminate.  The  Company  may,  at any  time,
amend or terminate the Plan, subject to the following:

(a)        Subject to the following provisions of this Section 8, neither an
           amendment nor a termination shall adversely affect the rights of any
           Participant or beneficiary under the Plan.

(b)        The Company may revoke the Participation Election of any and all
           Participants with respect to cash remuneration that has not been paid
           on the date such revocation is adopted.

(c)        Notwithstanding  the foregoing  provisions of this Section 8,
           if the Company, in its sole discretion,  determines that
           the  economics  of the Plan,  as  applied  to either the
           Employers  or the  Participants,  have  been  materially
           adversely  affected  by one or more  changes  in the tax
           laws, other government  action, a material change in the
           Employers'  cost of  capital,  or any event  that is not
           reasonably  within the control of the  Employers  or the
           Participants:

           (i)  the Company may provide that the Account balances of any and all
                Participants shall be determined based on the Retirement Income
                Yield (determined subject to the provisions of subparagraph (ii)
                next below), and shall be distributed in a lump sum as of the
                date on which the Company took the action providing for such
                payment, as soon as practicable after such date; and

           (ii) except in the case of circumstances leading to a material
                adverse effect on the economics of the Plan as applied to the
                Participants but not the Employers, the Company may reduce the
                Interest Yield to any rate (including zero) that the Company
                determines to be appropriate in view of the circumstances
                leading to the adverse effect on the economics of the Plan for
                periods after the date on which such reduction is adopted.

Notice of any material amendment shall be given in writing to the Committee and
to each Participant and each Beneficiary of a deceased Participant. In the event
of a Plan termination, the Company shall continue to be obligated to pay
benefits accrued prior to the date of such termination in accordance with the
Plan.

8.2 Special Termination. Any other provision of the Plan to the contrary
notwithstanding, the Plan shall terminate if the Plan is held to be ERISA Funded
or Tax Funded by a federal court, and appeals from that holding are no longer
timely or have been exhausted. ERISA Funded shall mean that the Plan does not
meet the "unfunded' criterion of the exceptions to the application of Parts 2, 3
or 4 of ERISA. Tax Funded shall mean that the interest of a Participant in the
Plan will be includable in the gross income of the participant for federal
income tax purposes prior to actual receipt of Plan benefits by the Participant.
The Company may terminate the Plan if it determines, based on legal advice which
is satisfactory to the Company, that either judicial authority or the opinion of
the U.S. Department of Labor, Treasury Department or Internal Revenue Service
(IRS) (as expressed in proposed or final regulations, advisory opinions or
rulings, or similar administrative announcements) creates a significant risk
that the Plan will be held to be ERISA Funded or Tax Funded, and failure to so
terminate the Plan could subject the Company or the Participants to material
penalties. Upon any such termination, the Company may:

(a)        transfer the rights and obligations of the Participants and the
           Company to a new plan established by the Company, which is not deemed
           to be ERISA Funded or Tax Funded, but which is similar in all other
           respect to this Plan, if the Company determines that it is possible
           to establish such a Plan;

(b)        if the Company, in its sole discretion, determines that it is not
           possible to establish the Plan in (a) above, each participant shall
           be paid a lump sum benefit equal to the value of the portion of his
           Account balance;

(c)        pay a lump  sum  benefit  equal to the  value  of the  vested
           portion  of the  Participant's  Account  balance  to the
           extent that a federal  court has held that the  interest
           of the  Participant  in the  Plan is  includable  in the
           gross income of the  Participant  for federal income tax
           purposes prior to actual  payment of Plan benefits.  The
           value  of any  amount  remaining  in  the  Participant's
           Account  balance  shall remain as an  obligation  of the
           Company,  to be paid to the  Participant  as provided in
           the Plan;

(d)        pay to a Participant a lump sum benefit equal to the vested portion
           of a Participant's Account balance if, based on legal advice
           satisfactory to the Company, there is a significant risk that such
           Participant will be determined not to be part of a "select group of
           management or highly compensated employees" for purposes of ERISA.

Any benefit payable under this Section shall be payable as soon as practicable
following the Company's determination that the Plan is ERISA Funded or Tax
Funded, but in no event later than ninety (90) days following receipt of notice
by the Committee that the Plan is ERISA Funded or Tax Funded, or at such other
date as may be determined by the Committee in its sole discretion.

A lump sum payment to be made in accordance with this Section shall be paid in
cash and shall be subject to the provisions of Section 5.4.

8.3 Special Distribution. Any other provision of the Plan to the contrary
notwithstanding, in the event that the IRS prevails in its claims that amounts
contributed to the Plan, and/or earnings thereon, constitute taxable income to
the Participant or his Beneficiary for any taxable year of his, prior to the
taxable year in which such contributions and/or earnings are distributed to the
Participant or Beneficiary, or in the event that legal counsel satisfactory to
the Company, the trustee and the applicable Participant or Beneficiary renders
an opinion that the IRS would likely prevail in such a claim, the amount subject
to such tax shall be immediately distributed to the Participant or Beneficiary.


<PAGE>





                             APPENDIX A
                Account..........................3.1
                Affiliate........................1.3
                Board............................1.4
                Bond Rate........................3.3
                Bonus............................2.4
                Change-in-Control................5.7
                Code.............................1.3
                Committee........................1.4
                Company..........................1.1
                Disabled.........................4.0
                Effective Date...................1.2
                Employer.........................1.3
                ERISA............................2.1
                ERISA Funded.....................8.2
                Early Retirement.................4.0
                Interest Yield...................3.3
                Nicor Gas........................1.3
                Normal Retirement................4.0
                Plan.............................1.1
                Plan Year........................1.5
                Salary...........................2.3
                Tax Funded.......................8.2
                Termination Date.................4.0
                Years of Service.................4.0


<PAGE>






                              Table of Contents

                                                                            Page




SECTION 1    General..............................................1

      1.1  Purpose................................................1

      1.2  Effective Date, Duration of Plan.......................1

      1.3  Affiliates and Employers...............................1

      1.4  Plan Administration, Source of Benefit Payments........1

      1.5  Plan Year..............................................2

      1.6  Applicable Laws........................................2

      1.7  Gender and Number......................................2

      1.8  Notices................................................2

      1.9  Form and Time of Elections.............................2

      1.10 Evidence...............................................2

      1.11 Action by Employers....................................2

      1.12 Defined Terms..........................................2

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

      2.1  Eligible Participants..................................3

      2.2  Participation Elections................................3

      2.3  Salary.................................................4

      2.4  Bonus..................................................4

      2.5  Plan Not Contract of Employment........................5

SECTION 3    Plan Accounting......................................5

      3.1  Accounts...............................................5

      3.2  Limit on Crediting of Interest.........................5

      3.3  Interest Yield.........................................5

      3.4  Crediting Under Participation Election.................6

      3.5  Limit on Distributions.................................6

SECTION 4    Termination Date.....................................6

SECTION 5    Distribution of Benefits.............................7

      5.1  Normal or Early Retirement Benefit.....................7

      5.2  Disability Benefit.....................................7

      5.3  Death Benefit..........................................7

      5.4  Resignation or Dismissal Benefit.......................7

      5.5  Interim Distribution...................................7

      5.6  Pre-Termination Hardship Distribution..................8

      5.7  Distribution on Change in Control......................8

      5.8  Effect of Sale of Employer............................11

      5.9  Form of Retirement Benefit Payment....................11

      5.10 Form of Disability Benefit Payment....................12

      5.11 Designation of Beneficiary............................14

      5.12 Distributions to Persons Under Disability.............14

      5.13 Benefit May Not be Assigned or Alienated..............14

      5.14 Offset................................................14

SECTION 6    Claim For Benefit Procedure.........................15

      6.1  Claim For Benefits....................................15

      6.2  Request for Review of a Denial of a Claim for
           Benefits..............................................15

      6.3  Decision Upon Review of Denial of Claim for
           Benefits..............................................15


SECTION 7    Committee...........................................16

      7.1  Powers of Committee...................................16

      7.2  Delegation by Committee...............................16

      7.3  Information to be Furnished to Committee..............16

      7.4  Liability and Indemnification of the Committee........16

SECTION 8    Amendment and Termination...........................16

      8.1  Amend or Terminate....................................16

      8.2  Special Termination...................................17

      8.3  Special Distribution..................................18


APPENDIX A   ....................................................19