Document:

This Series 1997-A Supplement, dated as of May 1, 1997 is by and among Advanta Business Services Corp

 

HOUSEHOLD FINANCE CORPORATION,

as the Master Servicer,

together with

HOUSEHOLD AUTOMOTIVE TRUST 2001-1,

as Issuer,

HOUSEHOLD AUTO RECEIVABLES CORPORATION,

as Seller,

U.S. BANK NATIONAL ASSOCIATION, 

as Indenture Trustee

and

WILMINGTON TRUST COMPANY,

as Owner Trustee

SERIES 2001-1 SUPPLEMENT

Dated as of February 28, 2001

to the

INDENTURE

Dated as of February 28, 2001

MASTER SALE AND SERVICING AGREEMENT

Dated as of February 28, 2001

and to the

AMENDED AND RESTATED TRUST AGREEMENT

Dated as of February 28, 2001

TABLE OF CONTENTS

Page

Article I CREATION OF THE SERIES 2001-1 NOTES*
SECTION 1.01.  Designation.*

SECTION 1.02.  Pledge of Series 2001-1 Trust Estate.*

SECTION 1.03.  Payments and Computations.*

SECTION 1.04.  Denominations.*

Article II DEFINITIONS*
SECTION 2.01.  Definitions.*

Article III DISTRIBUTIONS AND STATEMENTS TO SERIES 2001-1 NOTEHOLDERS; SERIES SPECIFIC COVENANTS*
SECTION 3.01.  Series 2001-1 Trust Accounts.*

SECTION 3.02.  Reserve Account.*

SECTION 3.03.  Distributions.*

SECTION 3.04.  Statements to Noteholders.*

SECTION 3.05.  Reporting Requirements.*

SECTION 3.06.  Compliance With Withholding Requirements.*

SECTION 3.07.  Special Covenants and Acknowledgements.*

SECTION 3.08.  Tax Characterization.*

Article IV EVENTS OF DEFAULT; REMEDIES*
SECTION 4.01.  Events of Default.*

SECTION 4.02.  Rights Upon Event of Default.*

SECTION 4.03.  Remedies.*

SECTION 4.04.  Priorities.*

Article V PREPAYMENT AND REDEMPTION*
SECTION 5.01.  Optional "Clean-Up" Redemption.*

Article VI MISCELLANEOUS*
SECTION 6.01.  Ratification of Basic Documents.*

SECTION 6.02.  Counterparts.*

SECTION 6.03.  GOVERNING LAW.*

SECTION 6.04.  Amendments Without Consent of Noteholders.*

SECTION 6.05.  Amendments With Consent of the Series 2001-1 Noteholders.*

SECTION 6.06.  Authority to Register Notes and File Reports.*

SECTION 6.07.  Authority to Perform Duties of the Issuer.*

Schedule ISchedule of Eligibility Criteria 

Schedule II-ASchedule of Receivables (New)

Schedule II-BSchedule of Receivables (2000-B Warehouse)

Schedule II-CSchedule of Receivables (2000-C Warehouse)

Exhibit AForm of Master Servicer's Certificate

This Series 2001-1 Supplement, dated as of February 28, 2001, is by and among Household Finance Corporation, a Delaware corporation, as master servicer (the "Master Servicer"), Household Automotive Trust 2001-1, a Delaware
business trust, as Issuer (the "Issuer"), Household Auto Receivables Corporation, a Nevada corporation, as Seller ("Seller"), U.S. Bank National Association, a national banking association, as trustee for the Noteholders (the "Indenture Trustee") and Wilmington
Trust Company, a Delaware banking corporation, as owner trustee (the "Owner Trustee") for the Certificateholders.

RECITALS

This Series 2001-1 Supplement, is executed and delivered by the parties hereto pursuant to Section 9.3 of the Indenture dated as of February 28, 2001 (the "Indenture") among the Issuer, the Master Servicer and the Indenture
Trustee and pursuant to Section 3.2 of the Amended and Restated Trust Agreement (the "Trust Agreement") dated as of February 28, 2001 between the Seller and the Owner Trustee.  In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the
Indenture or the Trust Agreement, the terms and provisions of this Series 2001-1 Supplement shall govern with respect to Series 2001-1.

	

CREATION OF THE SERIES 2001-1 NOTES

	Designation.

	There is hereby created a Series of Notes to be issued pursuant to the Indenture and this Series 2001-1 Supplement to be known as "Household Automotive Trust 2001-1, Series 2001-1 Notes" (as used herein, the "Series 2001-1 Notes
").  The Series 2001-1 Notes shall be issued in four classes (each, a "Class").  The Class A-1 Notes in an aggregate initial principal amount of $137,000,000 (the "Class A-1 Notes"), the Class A-2 Notes in an aggregate initial principal
amount of $159,000,000 (the "Class A-2 Notes"), the Class A-3 Notes in an aggregate initial principal amount of $177,000,000 (the "Class A-3 Notes"), the Class A-4 Notes in an aggregate initial principal amount of $187,000,000 (the "Class A-4 Notes" and together
with Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the "Class A Notes").

	There is hereby created a Series of Certificates to be issued pursuant to the Trust Agreement and this Series 2001-1 Supplement to be known as the "Household Automotive Trust 2001-1, Series 2001-1 Certificates."

	Pledge of Series 2001-1 Trust Estate.

The Issuer hereby Grants to the Indenture Trustee, for the benefit of the Holders of the Notes all of the Issuer's right, title and interest (but none of its obligations) in and to (a) each and every Receivable listed as a Series
2001-1 Receivable on the Schedules of Receivables attached hereto as Schedule II-A, Schedule II-B and Schedule II-C and all monies paid or payable thereon or in respect thereof after the Cutoff Date (including amounts due on or before the Cutoff Date but
received by HAFC, the Seller, the Master Servicer or the Issuer after the Cutoff Date); (b) an assignment of the security interests in the related Financed Vehicles granted by Obligors pursuant to such Series 2001-1 Receivables and any other interest of
the Issuer in the related Financed Vehicles; (c) all rights of HAFC against Dealers pursuant to Dealer Agreements or Dealer Assignments related to such Series 2001-1 Receivables; (d) any proceeds and the right to receive proceeds with respect to such
Series 2001-1 Receivables repurchased by a Dealer, pursuant to a Dealer Agreement as a result of a breach of representation or warranty in the related Dealer Agreement; (e) all rights under any Service Contracts on the related Financed Vehicles; (f) any
proceeds and the right to receive proceeds with respect to such Series 2001-1 Receivables from claims on any physical damage, loss, credit life or disability insurance policies covering the related Financed Vehicles or Obligors including rebates of
insurance premiums relating to such Series 2001-1 Receivables; (g) all funds on deposit from time to time in the Series 2001-1 Trust Accounts (including all investments and proceeds thereof from time to time allocable to the Series 2001-1 Reserve Account,
but excluding all investments and proceeds thereof allocable to the other Series 2001-1 Trust Accounts or allocable to the Master Collection Account); (h) all rights of the Seller in and to the Master Receivables Purchase Agreements, including the
delivery requirements, representations and warranties and the cure and repurchase obligations of HAFC under the Master Receivables Purchase Agreements and such Receivables Purchase Agreement Supplements; (i) all property (including the right to receive
future Net Liquidation Proceeds) that secures such Series 2001-1 Receivables and that has been acquired by or on behalf of the Issuer pursuant to liquidation of such Series 2001-1 Receivables; (j) all items contained in the Receivable Files with respect
to such Series 2001-1 Receivables and any and all other documents that the Master Servicer or HAFC keeps on file in accordance with its customary procedures relating to such Series 2001-1 Receivables, or the related Financed Vehicles or Obligors; (k) all
rights of the Seller in and to the Master Sale and Servicing Agreement and the Transfer Agreement or Transfer Agreements related to Series 2001-1 (including all rights of the Seller under the Master Receivables Purchase Agreements and the related
Receivables Purchase Agreement Supplements, assigned to the Issuer pursuant to the Master Sale and Servicing Agreement and the related Transfer Agreement or Transfer Agreements); (l) one share of the Class SV Preferred Stock of the Seller; and (m) all
present and future claims, demands, causes and chooses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds
of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing (collectively, the "Series 2001-1 Trust Estate")
 .

The foregoing Grant is made in trust to the Indenture Trustee for the benefit of the Holders of the Notes.  The Indenture Trustee hereby acknowledges such Grant, accepts the trusts under the Indenture and this Series 2001-1 Supplement
in accordance with the provisions of the Indenture and this Series 2001-1 Supplement and agrees to perform its duties required in the Indenture and in this Series 2001-1 Supplement in accordance with the provisions hereof and of the Indenture to the best
of its ability to the end that the interests of such parties, recognizing the priorities of their respective interests may be adequately and effectively protected.

	Payments and Computations.

All amounts to be paid or deposited by any Person hereunder shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds.
Notwithstanding the foregoing, any amounts required to be paid by the Trustee hereunder shall be paid in accordance with the terms hereof no later than 3:00 p.m. (New York City time) on the day when due, in immediately available funds.

	Denominations.

The Notes of each Class will be issued in denominations of $100,000 and integral multiples of $1,000 in excess thereof, except for one Note of each Class which may be issued in a denomination other than an integral multiple of $1,000.

	

DEFINITIONS

	Definitions.

	Whenever used in this Series 2001-1 Supplement and when used in the Series 2001-1 Related Documents with respect to the Series 2001-1 Notes or the Series 2001-1 Certificates, the following words and phrases shall have the following
meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.  Unless otherwise defined in this Series 2001-1
Supplement, terms defined in the Basic Documents are used herein as therein defined.  A term used herein preceded by the designation "Series 2001-1" but not defined herein, shall have the meaning specified for such term in the Basic Documents as such term
relates to Series 2001-1.

"Additional Class A Principal Distributable Amount" means with respect to any Distribution Date, the excess of (i) the aggregate of the Principal Balance of all Receivables which became Liquidated Receivables during the
immediately preceding Collection Period over (ii) the sum of (x) the aggregate amount of Net Liquidation Proceeds received by the Indenture Trustee during the immediately preceding Collection Period and (y) Excess Interest with respect to
such Distribution Date.  The "Additional Class A Principal Distributable Amount" shall in no event be less than zero.

"Aggregate Note Principal Balance" means, as of any date, the aggregate outstanding principal amount of all the Notes on such date.

"Aggregate Optimal Note Principal Balance" means, with respect to any Distribution Date, the excess, if any, of (x) the Pool Balance as of the close of business on the last day of the prior Collection Period over (y) the Targeted
Overcollateralization Amount for such Distribution Date.

"Available Funds" means, with respect to any Collection Period, and the related Distribution Date, the sum of (i) the Collected Funds for such Collection Period, (ii) investment earnings realized on the Series 2001-1 Collection Account
during the related Collection Period, (iii) all Repurchase Amounts deposited in the Collection Account during such Collection Period, (iv) any proceeds of any liquidation, in whole or in part, of the assets of the Trust and (v) the lesser of (a) the
excess, if any, of the aggregate amount distributable pursuant to Section 3.03(a)(i) - (iv) on such Distribution Date, over the aggregate of the amounts specified in clauses (i), (ii) and (iii) hereof with respect to such Collection Period and
(b) the Reserve Account Balance; provided that with respect to any Distribution Date on which amounts are payable with respect to the Class A-1 Notes pursuant to clause (ii) of the definition of Class A Principal Distributable Amount (or
clause (iii) of such definition to the extent such amount represents amounts not paid pursuant to clause (ii) on a prior Distribution Date), Available Funds shall not include amounts withdrawn from the Reserve Account necessary to make such
payment to the extent such withdrawal would result in the Reserve Account Balance being less than $4,782,608.74, which is 0.50% of the Pool Balance on the Cutoff Date.

"Basic Documents" means the Master Sale and Servicing Agreement, the Indenture, the Trust Agreement, the Master Receivables Purchase Agreements, and other documents and certificates delivered therewith or pursuant thereto in connection
with Series 2001-1.

"Book Entry Notes" means any beneficial interest in the Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.10 of the Indenture.

"Certificateholders" means the holders of Series 2001-1 Certificates.

"Certificateholders' Distributable Amount" means, with respect to any Distribution Date, the amount payable pursuant to Section 3.03 (a)(vii) hereof.

"Chase Warehouse Master Receivables Purchase Agreement" means the Master Receivables Purchase Agreement dated as of December 12, 2000 between HAFC and the Seller.

"Class A Distributable Amount" means, with respect to any Distribution Date and each class of Class A Notes, the sum of (i) the Class A Interest Distributable Amount for such Distribution Date and (ii) the Class A Principal
Distributable Amount for such Distribution Date.

"Class A Interest Carryover Shortfall" means, with respect to any Distribution Date and each Class of Class A Notes, the sum of:  (i) excess of (a) the related Class A Interest Distributable Amount for the preceding Distribution Date,
over (b) the amount actually paid as interest to the Class A Noteholders on such preceding Distribution Date, plus (ii) interest on such excess, to the extent permitted by law, at a rate per annum equal to the related Note Rate with respect to the Class A Notes from such preceding Distribution Date to but excluding the current Distribution Date.

"Class A Interest Distributable Amount" means, with respect to any Distribution Date and each class of Class A Notes, an amount equal to the sum of:  (i) the aggregate amount of interest accrued on the Class A Notes at the related Note
Rate from and including the preceding Distribution Date (or, in the case of the initial Distribution Date, from and including the Closing Date) to but excluding the current Distribution Date plus (ii) the related Class A Interest Carryover Shortfall for the current Distribution Date.

"Class A Monthly Principal Distributable Amount" means (i) with respect to any Distribution Date, prior to the Distribution Date on which the principal balance of the Class A-1 Notes is reduced to zero, 100% of the Principal
Distributable Amount, (ii) with respect to the Distribution Date on which the principal balance of the Class A-1 Notes is reduced to zero, the sum of (x) 100% of the Principal Distributable Amount with respect to that portion of the Principal
Distributable Amount required to reduce the principal balance of the Class A-1 Notes to zero, plus (y) the excess of the amount described in clause (iii) of this definition for such Distribution Date over the amount described in clause (ii) (taking into
account payment of the principal balance of the Class A-1 Notes on such Distribution Date), (iii) with respect to any Distribution Date after the Distribution Date on which the Principal Balance of the Class A-1 Notes is reduced to zero until the
Distribution Date on which the Principal Balance of the Class A Notes is reduced to zero, the excess of (x) the aggregate outstanding principal balance of the Class A Notes over (y) (A) the outstanding Pool Balance as of the end of the immediately
preceding Collection Period minus (B) the Targeted Overcollateralization Amount for such Distribution Date.

"Class A Noteholders" means the Holders of the Class A Notes.

"Class A Principal Carryover Shortfall" means, with respect to any Distribution Date after the Distribution Date on which the principal balance of the Class A-1 Notes is reduced to zero, the excess of the Class A Principal
Distributable Amount for the preceding Distribution Date over the amount that was actually distributed in respect of principal of the Class A Notes on such preceding Distribution Date.

"Class A Principal Distributable Amount" means, with respect to any Distribution Date, the sum of: (i) the Class A Monthly Principal Distributable Amount for such Distribution Date, (ii) the Additional Class A Principal
Distributable Amount, if any, for such Distribution Date and (iii) the Class A Principal Carryover Shortfall for such Distribution Date; provided, however, that (x) the sum of clauses (i), (ii) and (iii) shall not exceed the outstanding principal amount of the Class A Notes, and (y) on the Final Scheduled Distribution Date, the Class A Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary (after giving effect to other amounts having a higher payment priority on such Distribution Date) to reduce the outstanding principal amount of the Class A Notes to zero.

"Class A-1 Noteholders" means the Holders of the Class A-1 Notes.

"Class A-1 Scheduled Maturity Date" means with respect to the Class A-1 Notes, March 18, 2002.

"Class A-2 Noteholders" means the Holders of the Class A-2 Notes.

"Class A-2 Scheduled Maturity Date" means with respect to the Class A-2 Notes, March 17, 2004.

"Class A-3 Noteholders" means the Holders of the Class A-3 Notes.

"Class A-3 Scheduled Maturity Date" means with respect to the Class A-3 Notes, August 17, 2005.

"Class A-4 Noteholders" means the Holders of the Class A-4 Notes. 

"Class A-4 Scheduled Maturity Date" means with respect to the Class A-4 Notes, November 19, 2007.

"Collected Funds" means, with respect to any Collection Period, the amount of funds in the Collection Account representing collections (including all administrative fees, expenses and charges actually paid by or on behalf of Obligors,
including late fees, payment fees and liquidation fees but excluding taxes, assessments, credit insurance charges or similar items) on the Receivables during such Collection Period, including all Net Liquidation Proceeds collected during such Collection
Period (but excluding any Repurchase Amounts).

"CSFB Warehouse Master Receivables Purchase Agreement" means the Master Receivables Purchase Agreement dated as of December 1, 1998 between HAFC and the Seller, as amended and supplemented by the Master Succession and Assumption
Agreement, as such agreement may be further amended and supplemented from time to time.

"Cutoff Date" means the close of business on February 28, 2001.

"Definitive Notes" means the Notes that have been certificated and fully registered in accordance with Section 2.12 of the Indenture.

"Determination Date" means the earlier of the fifth calendar day (or if such day is not a Business Day, the next preceding Business Day) or the third Business Day preceding each Distribution Date.

"Distribution Date" means, with respect to each Collection Period, the seventeenth day of the following calendar month, or if such day is not a Business Day, the immediately following Business Day, commencing on April 17, 2001.

"Eligibility Criteria" means the criteria for eligibility for Eligible Receivables set forth on Schedule I hereto.

"Eligible Receivable" or "Series 2001-1 Eligible Receivable" means a Series 2001-1 Receivable that satisfies the Eligibility Criteria set forth in Schedule I hereto.

"Event of Default" shall have the meaning assigned to such term in Section 4.01.

"Excess Interest" means with respect to a Distribution Date the excess of (i) interest collections on the Receivables during the preceding Collection Period over (ii) amounts payable on such Distribution Date pursuant to
Section 3.03(a)(i)-(iii).

"Final Scheduled Distribution Date" means November 19, 2007. 

"HAFC " means Household Automotive Finance Corporation.

"HFC" means Household Finance Corporation.

"Indenture" means the indenture dated as of February 28, 2001 between the Issuer and U.S. Bank National Association, as indenture trustee, as supplemented by the Series 2001-1 Supplement.

"Initial Reserve Account Deposit" means 1% of the Pool Balance as of the Cutoff Date.

"Interest Period" means, with respect to any Distribution Date, the period from and including the prior Distribution Date (or, in the case of the first Distribution Date, from and including the Series 2001-1 Closing Date) through (and
including) the day preceding such Distribution Date.

"Master Receivables Purchase Agreements" means, collectively, the Chase Warehouse Master Receivables Purchase Agreement, the CSFB Warehouse Master Receivables Purchase Agreement and the Series 2001-1 Master Receivables Purchase Agreement
 .

"Master Sale and Servicing Agreement" means the Master Sale and Servicing Agreement dated as of February 28, 2001, among the Issuer, the Seller, the Master Servicer and the Indenture Trustee, as the same may be amended or supplemented
from time to time. 

"Master Servicer's Certificate" means, with respect to Series 2001-1, a report in substantially the form of Exhibit A hereto (appropriately completed), furnished by the Master Servicer to the Indenture Trustee and the Owner
Trustee pursuant to the Master Sale and Servicing Agreement.

"Master Succession and Assumption Agreement" means the Master Succession and Assumption Agreement dated as of September 1, 1999 by and among the Master Servicer, Household Automotive Funding Trust 1999-A, Household Automotive Funding
Trust 1999-A, the Seller, Credit Suisse First Boston, New York Branch, as agent and purchaser, Alpine Securitization Corp., Gramercy Capital Corporation, The Chase Manhattan Bank, as indenture trustee, and the Owner Trustee, as such agreement may be
amended and supplemented from time to time.

"Maximum Reserve Account Deposit Amount" means, with respect to any Distribution Date, an amount equal to that portion of Collected Funds representing interest collections on the Receivables (including amounts representing Net
Liquidation Proceeds for such Collection Period) for the related Collection Period less the sum of: the Servicing Fee paid to any Master Servicer other than HFC, the fees due to the Indenture Trustee and Owner Trustee, to the extent not paid by the Master
Servicer, plus, the Class A Interest Distributable Amounts for such Distribution Date, plus the aggregate Principal Balances of all Receivables which became Liquidated Receivables during the related Collection Period, plus the aggregate amount of Cram
Down Losses during such Collection Period.

"Note Rate" means the per annum rate of interest due with respect to each Class of Notes as set forth below for the respective Class of Note:

Class A-1 Notes: 4.98875%

Class A-2 Notes: 5.02000%

Class A-3 Notes: 5.26000%

Class A-4 Notes: 5.57000%

Interest on the Class A-1 Notes will be calculated on the basis of a 360-day year and the actual number of days elapsed in an applicable Interest Period. Interest on the Class A-2 , Class A-3 and Class A-4 Notes will be calculated on
the basis of a 360-day year consisting of twelve 30-day months.  The amount of interest payable on the Class A-2, Class A-3 and Class A-4 Notes for the initial Interest Period will be computed on the basis of the actual number of days elapsed in a 30-day
month.

"Notes" means the Class A Notes.

"Original Pool Balance" means the aggregate of the Principal Balance of the Receivables as of the Cutoff Date.

"Owner Trust Estate" has the meaning assigned to such term in the Trust Agreement.

"Owner Trustee" means Wilmington Trust Company, not in its individual capacity but solely as trustee under the Trust Agreement.

"Pledge" means the Grant by the Issuer hereunder to the Indenture Trustee for the benefit of the Holders of Notes in accordance with Section 1.02 hereof in and to specified Pledged Property related thereto.

"Pledged Property" means, with respect to the Series 2001-1 Trust Estate, each Series 2001-1 Receivable, together with all associated property and rights with respect thereto described in the definition of Series 2001-1 Trust Estate.

"Pool Balance" means, as of any date of determination, the aggregate of the outstanding Principal Balances of the Receivables, unless otherwise specified, as of the close of business on the preceding Business Day.

"Principal Amount Available" means, with respect to any Distribution Date, the amount remaining in the Series 2001-1 Collection Account on such Distribution Date after the payment of the amounts required to be paid pursuant to clause
(i) through (iii) of Section 3.03(a) on such Distribution Date minus the Reserve Account Deposit Amount for such Distribution Date.

"Principal Distributable Amount" means, with respect to any Distribution Date, the lesser of (A) the Principal Amount Available for such Distribution Date and (B) the excess, if any, of (i) the Aggregate Note Principal Balance
immediately prior to such Distribution Date over (ii) the Aggregate Optimal Note Principal Balance for such Distribution Date.

"Rating Agencies" means Standard & Poor's and Moody's.  If such organization or a successor does not maintain a rating on the Notes, "Rating Agency" shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Seller, notice of which designation shall be given to the Indenture Trustee, the Owner Trustee and the Master Servicer.

"Redemption Price" has the meaning specified in Section 5.01 hereof. 

"Reserve Account" means the Series 2001-1 Reserve Account which shall be an Eligible Deposit Account created pursuant to Section 3.01 hereof, which initially shall be account no. 77090842 for further credit, account no. 180121167365,
reference Household Auto 2001-1 Reserve Account at the Indenture Trustee, ABA No. 091000022.

"Reserve Account Balance" means, with respect to a Distribution Date, the amount on deposit in the Reserve Account as of the close of business on the Business Day immediately preceding such Distribution Date, provided, however
, that this is immediately prior to the deposit to the Collection Account pursuant to Section 5.1(c) of the Master Sale and Servicing Agreement.

"Reserve Account Deposit Amount" means, with respect to any Distribution Date, the lesser of:  (x) the Maximum Reserve Account Deposit Amount for such Distribution Date and (y) the Reserve Account Shortfall Amount for such Distribution
Date.

"Reserve Account Shortfall Amount" means, with respect to any Distribution Date, the excess of:  (x) the Targeted Reserve Account Balance for such Distribution Date over (y) the Reserve Account Balance for such Distribution Date.

"Scheduled Maturity Date" means, with respect to the Class A-1 Notes, the Class A-1 Scheduled Maturity Date, with respect to the Class A-2 Notes, the Class A-2 Scheduled Maturity Date, with respect to the Class A-3 Notes, the Class A-3
Scheduled Maturity Date, and with respect to the Class A-4 Notes, the Class A-4 Scheduled Maturity Date.

"Schedules of Receivables" means the schedules of all retail installment sales contracts and promissory notes held as part of the Series 2001-1 Trust Estate attached hereto as Schedule II-A, Schedule II-B and Schedule II-C.

"Series 2001-1 Certificates" means the Certificates (as defined in the Trust Agreement).

"Series 2001-1 Closing Date" means March 7, 2001.

"Series 2001-1 Collected Funds" means, with respect to a date of determination, the amount of Collected Funds with respect to the Collection Period immediately preceding such date of determination, including all Net Liquidation
Proceeds collected during the related Collection Period (but excluding any Purchase Amounts).

"Series 2001-1 Collection Account" means the Eligible Deposit Account created pursuant to Section 3.01 hereof which initially shall be account no. 77090841, for further credit, account no. 180121167365, reference Household Auto 2001-1
Collection Account at the Indenture Trustee, ABA No. 091000022.

"Series 2001-1 Eligible Investments" means, with respect to funds in the Series 2001-1 Collection Account and Reserve Account, "Eligible Investments" as defined in the Master Sale and Servicing Agreement, except that (i) all references
in such definition to "rating satisfactory to the Rating Agency" or words of similar import shall mean ratings of not less than "A-1+" or "AAA" by Standard & Poor's and "P-1" or "Aaa" by Moody's (whichever is applicable), and (ii) all such investments
shall have maturities at the time of the acquisition thereof occurring no later than the Business Day immediately preceding the Distribution Date following such date of acquisition.

"Series 2001-1 Master Receivables Purchase Agreement" means the Master Receivables Purchase Agreement dated as of February 28, 2001 between HAFC and the Seller, as such agreement may be amended or supplemented from time to time. 

"Series 2001-1 Receivables" means each Receivable listed on the Schedules of Receivables, which (a) has not been released from the Series 2001-1 Trust Estate as provided herein or in the Indenture and (b) is not a Liquidated Receivable.

"Series 2001-1 Related Documents" means the Basic Documents, this Series 2001-1 Supplement, the Master Receivables Purchase Agreements, each Transfer Agreement related to the Series 2001-1 Trust Estate, the Series 2001-1 Notes, the
Series 2001-1 Certificates and other documents and certificates delivered in connection therewith.

"Series 2001-1 Reserve Account" means the Reserve Account.

"Series 2001-1 Securities" means the Series 2001-1 Notes and the Series 2001-1 Certificates.

"Series 2001-1 Supplement" means this Series 2001-1 Supplement to the Indenture, Master Sale and Servicing Agreement and the Trust Agreement.

"Series 2001-1 Support" means, with respect to the Series 2001-1 Notes, the Series 2001-1 Certificates.

"Series 2001-1 Trust Accounts" means the Series 2001-1 Collection Account and the Series 2001-1 Reserve Account.

"Series 2001-1 Trust Estate" means the property Granted to the Indenture Trustee pursuant to Section 1.02.

"Servicing Fee" means, with respect to any Collection Period, the fee payable to the Master Servicer for services rendered during such Collection Period, which shall be equal to one-twelfth of the Servicing Fee Rate multiplied by the
Aggregate Principal Balances of the Series 2001-1 Receivables, as of the Accounting Date immediately preceding such Collection Period.  For the avoidance of doubt, the Servicing Fee does not include any administrative fees, expenses or charges paid by or
on behalf of Obligors during any Collection Period.

"Servicing Fee Rate" means 2.25% per annum, or, if the Indenture Trustee is the successor Master Servicer, the rate determined in accordance with Section 10.3(c) of the Master Sale and Servicing Agreement.

"Targeted Credit Enhancement Amount" means, with respect to any Distribution Date, 37.25% of the Pool Balance as of the of last day of the related Collection Period.

"Targeted Overcollateralization Amount" means, with respect to any Distribution Date, the excess (but not less than zero), if any, of: (i) the Targeted Credit Enhancement Amount over (ii) the Targeted Reserve Account Balance.

"Targeted Reserve Account Balance" means, with respect to any Distribution Date, the lesser of: (i) the greater of (a) 3% of the outstanding Pool Balance as of the end of the related Collection Period, and (b) $19,130,434.94 (2% of the
Pool Balance as of the Cutoff Date) and (ii) the Aggregate Note Principal Balance.

"Trust" means the Issuer.

"Trust Agreement" means the Trust Agreement, dated as of February 21, 2001, between the Seller and the Owner Trustee, as amended and restated as of February 28, 2001 and as supplemented by the Series 2001-1 Supplement.

	

DISTRIBUTIONS AND STATEMENTS TO

SERIES 2001-1 NOTEHOLDERS; SERIES SPECIFIC COVENANTS

	Series 2001-1 Trust Accounts.

	The Indenture Trustee, for the benefit of the Holders of the Series 2001-1 Securities, shall establish and maintain an account (the "Series 2001-1 Collection Account") as a segregated trust account in the Indenture Trustee's
corporate trust department, identified as the "Collection Account for Household Automotive Trust 2001-1, in trust for the registered Holders of the Series 2001-1 Securities."  The Indenture Trustee shall make or permit withdrawals from the Series 2001-1
Collection Account only as provided in this Series 2001-1 Supplement.  Notwithstanding anything in the Series 2001-1 Related Documents to the contrary, at least one Business Day prior to each Distribution Date the Master Servicer and the Issuer shall
deposit Collected Funds (which shall be immediately available) directly into the Series 2001-1 Collection Account without any prior deposit into the Master Collection Account. 

	The Indenture Trustee for the benefit of the Holders of the Series 2001-1 Notes shall establish and maintain an account (the "Series 2001-1 Reserve Account") as a segregated trust account in the Indenture Trustee's corporate
trust department, identified as the "Series 2001-1 Reserve Account for Household Automotive Trust 2001-1, in trust for the registered Holders of the Series 2001-1 Notes."  The Indenture Trustee shall make or permit withdrawals from the Reserve Account
only as provided in this Series 2001-1 Supplement.  On the Series 2001-1 Closing Date, the Series 2001-1 Reserve Account will be funded with the Initial Reserve Account Deposit.  

	In the event that any Series 2001-1 Trust Account ceases to be an Eligible Deposit Account, the Indenture Trustee, as applicable, within five Business Days, shall establish a new Eligible Deposit Account.  No withdrawals may be
made of funds in any Series 2001-1 Trust Account except as provided in this Series 2001-1 Supplement.  Except as specifically provided in this Series 2001-1 Supplement, funds in the Series 2001-1 Trust Accounts shall not be commingled with any other
moneys.  All moneys deposited from time to time in each of the Series 2001-1 Trust Accounts shall be invested and reinvested by the Indenture Trustee in Series 2001-1 Eligible Investments selected in writing by the Master Servicer (pursuant to standing
instructions or otherwise) which, absent any instruction shall be the investments specified in clause (d) of the definition of Eligible Investment.  The provisions of Section 5.1 of the Master Sale and Servicing Agreement shall apply to the investment of
funds in the Series 2001-1 Trust Accounts to the same extent as they apply to the Master Collection Account.

	Reserve Account. 

On the earlier of (x) the maturity date of the Series 2001-1 Notes (whether by acceleration or otherwise) or (y) the Final Scheduled Distribution Date, the amount on deposit in the Reserve Account shall be withdrawn from the Reserve Account and
distributed in accordance with Section 4.04.

	Distributions.

	On each Distribution Date, the Indenture Trustee shall (based solely on the information contained in the Master Servicer's Certificate delivered with respect to such Distribution Date) distribute the following amounts
from Available Funds with respect to such Distribution Date, and in the following order of priority:

	to the Master Servicer, if HFC is no longer acting as Master Servicer, the Servicing Fee for the related Collection Period; 

	to the Indenture Trustee and the Owner Trustee, any accrued and unpaid trustees' fees and any unreimbursed costs and expenses (including, if the Indenture Trustee is the successor Master Servicer, reasonable transition expenses in
an amount not to exceed $100,000) (in each case, to the extent such fees have not been previously paid by the Master Servicer);

	to the Class A Noteholders, the Class A Interest Distributable Amount;

	(a) to the Class A-1 Noteholders, 100% of the Class A Principal Distributable Amount until the outstanding principal amount of the Class A-1 Notes has been reduced to zero; and (b) on and after the Distribution Date on which the
outstanding principal amount of the Class A-1 Notes has been reduced to zero, the Class A Principal Distributable Amount will be allocated to payment of the Class A-2, Class A-3 and Class A-4 Notes, in "sequential pay" fashion, beginning with the Class
A-2 Notes, in each case, until the respective outstanding principal amount of the Class A-2, Class A-3 and Class A-4 Notes are paid in full;

	to the Reserve Account, the Reserve Account Deposit Amount, if any, required to increase the amount therein to the Targeted Reserve Account Balance; 

	if HFC is acting as the Master Servicer, the Servicing Fee for the related Collection Period (unless the Master Servicer has retained such amount in accordance with Section 4.8 of the Master Sale and Servicing Agreement) or if the
Indenture Trustee is the successor Master Servicer, reasonable transition expenses in excess of the amounts paid in priority (ii) above; and

	to the holders of the Series 2001-1 Certificates, any remaining Available Funds.

	If on a Distribution Date, the Master Servicer's Certificate delivered with respect to such Distribution Date indicates that the amount specified in clauses (i) through (iv) of the definition of Available Funds with respect to such
Distribution Date is less than the sum of the amounts required to be distributed pursuant to clauses (i) through (iv) of paragraph (a) above on such Distribution Date, the Indenture Trustee shall withdraw from the Series 2001-1 Reserve Account an amount
up to the amount of such deficiency and distribute such amount as a component of Available Funds.

	Each Series 2001-1 Certificateholder by its acceptance of its Certificate will be deemed to have consented to the provisions of paragraph (a) above relating to the priority of distributions, and will be further deemed to have
acknowledged that no property rights in any amount or the proceeds of any such amount shall vest in such Certificateholder until such amounts have been distributed to such Certificateholder pursuant to such provisions; provided, that the foregoing shall not restrict the right of any Certificateholder, upon compliance with the provisions hereof, from seeking to compel the performance of the provisions hereof by the parties hereto.  Each Series 2001-1
Certificateholder, by acceptance of its Certificate, further specifically acknowledges that it has no right to or interest in any monies at any time held in the Series 2001-1 Reserve Account, such monies being held in trust for the benefit of the Series
2001-1 Noteholders.

	Amounts on deposit in the Reserve Account on any Distribution Date (after giving effect to all distributions made on such Distribution Date and the related Distribution Date) in excess of the Targeted Reserve Account Balance for
such Distribution Date shall be released first, to the Master Servicer for any Servicing Fees then due, and any remainder to the Seller. 

	In the event that the Series 2001-1 Collection Account is maintained with an institution other than the Indenture Trustee, the Master Servicer shall instruct and cause such institution to transfer the amounts to be withdrawn
therefrom in accordance with Section 3.03(b) to the Indenture Trustee for distribution pursuant to Section 3.03(a) one Business Day prior to the related Distribution Date.

	Unless Definitive Notes are issued pursuant to Section 2.12 of the Indenture, with respect to Notes registered on the related Record Date in the name of a nominee of the Clearing Agency, payment will be made by wire transfer to an
account designated by such nominee, without presentation or surrender of the Series 2001-1 Notes or the making of any notation thereon. 

	If not theretofore paid in full, all amounts outstanding with respect to the Class A-1 Notes shall be due and payable on the Class A-1 Scheduled Maturity Date, if not theretofore paid in full, all amounts outstanding with respect
to the Class A-2 Notes shall be due and payable on the Class A-2 Scheduled Maturity Date, if not theretofore paid in full, all amounts outstanding with respect to the Class A-3 Notes shall be due and payable on the Class A-3 Scheduled Maturity Date, and
if not theretofore paid in full, all amounts outstanding with respect to the Class A-4 Notes shall be due and payable on the Class A-4 Scheduled Maturity Date.

	Statements to Noteholders.

On or prior to each Determination Date, the Master Servicer shall provide to the Indenture Trustee (with a copy to the Rating Agencies) for the Indenture Trustee to forward to each Noteholder of record, and to each Certificateholder of
record, a statement setting forth at least the following information as to the Notes to the extent applicable:

	the amount of such distribution allocable to principal of each Class of Notes;

	the amount of such distribution allocable to interest on or with respect to each Class of Notes;

	the aggregate outstanding principal amount of each Class of the Notes after giving effect to payments allocated to principal reported under (i) above;

	the Class A Interest Carryover Shortfall, the Class A Principal Carryover Shortfall, if any, and the change in such amounts from the preceding statement.

	the amount of the Servicing Fee paid to the Master Servicer with respect to such Collection Period; and

	the Targeted Reserve Account Balance and the amount on deposit in the Reserve Account at the end of such Distribution Date.

Each amount set forth pursuant to paragraph (i) through (iv) above shall be expressed as a dollar amount per $1,000 of the initial principal balance of the applicable Class of Notes.

	Reporting Requirements.

	The Master Servicer's Certificate shall be in the form attached as Exhibit A hereto.

	By January 31 of each calendar year, commencing January 31, 2002, the Master Servicer on behalf of the Issuer shall prepare and distribute to the Indenture Trustee a statement containing such information as is required to be
provided by an issuer of indebtedness under the Code and such other customary information as is necessary to enable the Noteholders to prepare their tax returns.

	If an Event of Default occurs and is continuing and if it is either known by, or written notice of the existence thereof has been delivered to, a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to
each Noteholder notice of the Default within 30 days after such knowledge or notice occurs.

	Compliance With Withholding Requirements.

Notwithstanding any other provisions of this Series 2001-1 Supplement or the Indenture to the contrary, the Indenture Trustee, shall comply with all Federal withholding requirements respecting payments (or advances thereof) to the
Noteholders as may be applicable to instruments constituting indebtedness for Federal income tax purposes. Any amounts so withheld shall be treated as having been paid to the applicable Noteholders for all purposes of the Indenture.  In no event shall the
consent of any Noteholder be required for any such withholding.

	Special Covenants and Acknowledgements.

With respect to the Series 2001-1 Notes, the Issuer hereby represents and warrants, as of the Series 2001-1 Closing Date:

	Valid Pledge.  It is the intention of the Issuer that each pledge herein contemplated constitutes the Grant of a perfected, first priority security interest in all Pledged Property to the Indenture Trustee for the benefit of
the Series 2001-1 Noteholders.

	Governmental Authorization.  Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the Issuer of this Series 2001-1 Supplement, the Indenture, and each Series 2001-1 Related Document to which it is a party.

	Tax Characterization.

It is the intent of the parties hereto that, for all Federal, state, local and foreign taxes, the Series 2001-1 Notes will be evidence of indebtedness.  To the extent permitted by law, the parties hereto, and each owner of a beneficial
interest in the Series 2001-1 Notes by acceptance of such interest, agrees to treat the Series 2001-1 Notes for purposes of all Federal, state, local and foreign taxes as indebtedness secured by the Series 2001-1 Trust Estate.  

	

EVENTS OF DEFAULT; REMEDIES

	Events of Default.

"Event of Default", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

	default in the payment of any interest on any Note when the same becomes due and payable, and such default shall continue for a period of five calendar days; or

	default in the payment of the outstanding principal balance of any Class of Notes on the related Scheduled Maturity Date, which default shall continue for a period of five calendar days; or

	the Aggregate Note Principal Balance on any Distribution Date exceeds the Pool Balance as of the first day of the current Collection Period after the application of all Available Funds; or

	default in the observance or performance of any covenant or agreement of the Issuer made in the Series 2001-1 Related Documents (other than a covenant or agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty of the Issuer made in the Series 2001-1 Related Documents or in any certificate or other writing delivered pursuant thereto or in connection therewith proving to have been
incorrect in any material respect as of the time when the same shall have been made and has a material adverse effect on the Noteholders, and such default shall continue or not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, for a period of 60 days after there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a "Notice of Default"
hereunder; or

	the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Trust Property in an involuntary case under any applicable Federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Property, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

	the commencement by the Issuer of a voluntary case under any applicable Federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust
Property, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing.

	Rights Upon Event of Default.

	If an Event of Default shall have occurred and be continuing, the Indenture Trustee in its discretion may, or if so requested in writing by Holders holding Notes representing at least 66 2/3% of the Outstanding Amount of the Notes
shall, declare by written notice to the Issuer that the Notes have become due and payable, whereupon they shall become, immediately due and payable at 100% of the outstanding principal balance of the Notes, and accrued interest thereon (together with
interest accrued at the relevant Note Rate on such overdue interest).

	At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee, the Holders of Notes representing a majority of
the Outstanding Amount of the Notes, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

	the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:

	all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and

	all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and

	all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.9 of the Indenture.

No such rescission shall affect any subsequent default or impair any right consequent thereto.

	Remedies.

If an Event of Default shall have occurred and be continuing, the Indenture Trustee, subject to Section 11.17 of the Indenture, may exercise any of the remedies specified in Article V of the Indenture and, in addition, may do one or
more of the following.

	institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under the Indenture with respect thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other obligor upon such Notes moneys adjudged due;

	institute Proceedings from time to time for the complete or partial foreclosure of the Indenture with respect to the Trust Property;

	exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Notes; and

	sell the Trust Property or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; provided, however, that the Indenture Trustee may not sell or
otherwise liquidate the Trust Property following an Event of Default unless:

(x)the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then due and unpaid upon such Notes for principal and interest, or

(y)the Indenture Trustee determines that the Trust Property will not continue to provide sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared
due and payable, and the Indenture Trustee obtains the consent of Holders of 66-2/3% of the Outstanding Amount of the Notes, or

(z)the Indenture Trustee has not determined that the Trust Property will not continue to provide sufficient funds for the principal of and interest on the Notes and the proceeds of such sale or liquidation distributable to the
Noteholders are not sufficient to discharge in full all amounts then due and unpaid upon such Notes for principal and interest, and the Indenture Trustee obtains the consent of Holders of 100% of the Outstanding Amount of the Notes.

In determining such sufficiency or insufficiency with respect to clause (y) and (z), the Indenture Trustee may, but need not, obtain and rely upon an opinion of an independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Property for such purpose.

	Priorities.

	On and after the maturity date of the Series 2001-1 Notes (by acceleration or otherwise) all Available Funds, all amounts on deposit in the Reserve Account withdrawn in accordance with Section 3.02 and any proceeds of the
liquidation of all or any portion of the Series 2001-1 Trust Estate pursuant to Section 4.03(iv), shall be applied by the Indenture Trustee on the date of distribution in the following order of priority:

	amounts due and owing and required to be distributed to the Master Servicer, the Owner Trustee and the Indenture Trustee, respectively, pursuant to priorities (i) and (ii) of Section 3.03(a) hereof and not previously distributed,
in the order of such priorities and without preference or priority of any kind within such priorities;

	to Class A Noteholders for amounts due and unpaid on the Class A Notes for interest, pro rata, in accordance with the amounts due and payable on the Class A Notes on the date of distribution for interest without
preference or priority of any kind;

	to the Class A Noteholders for amounts due and unpaid on the Class A Notes for principal, pro rata, in accordance with the respective aggregate outstanding principal balance of each Class of Class A Notes without
preference or priority of any kind;

	to the Servicer for any Servicing Fees then due;

	to the Series 2001-1 Certificateholders, any remaining Available Funds.

	The Indenture Trustee may fix a record date and distribution date for any payment to Series 2001-1 Noteholders pursuant to this Section 4.04.  At least 15 days before such record date, the Indenture Trustee shall mail to the
Noteholders a notice that states the record date, the Distribution Date and the amount to be paid.

	

PREPAYMENT AND REDEMPTION

	Optional "Clean-Up" Redemption.

On any Distribution Date occurring on or after the date upon which the aggregate outstanding principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes shall have been reduced to an
amount which is less than or equal to 10% of the aggregate outstanding principal balance of such Classes of Notes as of the Series 2001-1 Closing Date, the Master Servicer and the Seller on behalf of the Issuer, shall each have the option to redeem the
outstanding Series 2001-1 Notes at a redemption price (the "Redemption Price") which is not less than the then Aggregate Note Principal Balance, plus all accrued and unpaid interest thereon and all fees and other amounts owing to the Indenture Trustee, the Owner Trustee and the Master Servicer (if other
than HFC) under the Series 2001-1 Related Documents.  The Master Servicer and the Seller, on behalf of the Issuer, shall give the Master Servicer (if other than HFC), the Indenture Trustee, and the Owner Trustee at least 10 days' irrevocable prior written
notice of the date on which the Master Servicer or the Seller, as applicable intends to exercise such option to purchase.  Not later than 12:00 P.M., New York City time, on the day prior to such Distribution Date, the Master Servicer or the Seller, as
applicable, shall deposit such amount in the Collection Account in immediately available funds for distribution pursuant to Section 3.03 against the presentment of the Notes for cancellation.  Such purchase option is subject to payment in full of the
Redemption Price.

	

MISCELLANEOUS

	Ratification of Basic Documents.

Each of the Basic Documents, and to the extent appropriate, as supplemented by this Series 2001-1 Supplement, is in all respects ratified and confirmed and each of the Basic Documents, as so supplemented by this Series 2001-1
Supplement shall be read, taken and construed as one and the same instrument.

	Counterparts.

This Series 2001-1 Supplement may be executed in one or more counterparts, each of which so executed shall be deemed to be an original, but all of which shall together constitute but one and the same instrument.

	GOVERNING LAW.

THIS SERIES 2001-1 SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

	Amendments Without Consent of Noteholders.  

	Without the consent of the Noteholders but with prior written notice to the Rating Agencies, as evidenced to the Indenture Trustee and the Issuer, when authorized by an Issuer Order, at any time and from time to time, the
parties hereto may enter into one or more amendments hereto, in form satisfactory to the Indenture Trustee and the Owner Trustee, for any of the following purposes:

	to correct or amplify the description of any property at any time subject to the lien of the Indenture as supplemented by this Series 2001-1 Supplement, or better to assure, convey and confirm unto the Indenture Trustee, if any,
any property subject or required to be subjected to the lien of the Indenture as supplemented by this Series 2001-1 Supplement, or to subject to the lien of the Indenture as supplemented by this Series 2001-1 Supplement additional property;

	to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Notes contained;

	to add to the covenants of the Issuer, for the benefit of the Noteholders, or to surrender any right or power herein conferred upon the Issuer;

	to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee, if any;

	to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or to make any other provisions with respect to matters or questions arising under the Indenture, the
Trust Agreement or in this Series 2001-1 Supplement; provided that such action shall not adversely affect the interests of the Series 2001-1 Noteholders;

	to evidence and provide for the acceptance of the appointment hereunder and under the Indenture by a successor indenture trustee with respect to the Notes and to add to or change any of the provisions of the Indenture or of this
Series 2001-1 Supplement as shall be necessary to facilitate the administration of the trusts hereunder by more than one indenture trustee, pursuant to the requirements of Article V of the Indenture; or

	to modify, eliminate or add to the provisions of the Indenture or of this Series 2001-1 Supplement to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to the Indenture such other provisions as may be expressly required by the TIA.

Each of the Indenture Trustee and the Owner Trustee is hereby authorized to join in the execution of any amendment and to make any further appropriate agreements and stipulations that may be therein contained.

	Except as otherwise provided herein, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Series 2001-1 Noteholders but with prior written notice to the Rating
Agencies by the Issuer, as evidenced to the Indenture Trustee, enter into an amendment hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture or of this Series 2001-1 Supplement
of modifying in any manner the rights of the Series 2001-1 Noteholders under the Indenture or under this Series 2001-1 Supplement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Series 2001-1 Noteholder.

	Amendments With Consent of the Series 2001-1 Noteholders.

Except as otherwise provided herein, the Issuer and the Indenture Trustee, when authorized by an Issuer Order provided by the Master Servicer, also may, upon satisfaction of the Rating Agency Condition and with the consent of the
Holders of not less than a majority of the Outstanding Amount of each Class of affected Series 2001-1 Notes, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an amendment hereto for the purpose of adding any provisions
to, or changing in any manner or eliminating any of the provisions of, this Series 2001-1 Supplement or of modifying in any manner the rights of the Series 2001-1 Noteholders under the Indenture or under this Series 2001-1 Supplement; provided, however,
that no such amendment shall, without the consent of the Holder of each Outstanding Series 2001-1 Note affected thereby:

	change the date of payment of any installment of principal of or interest on any Series 2001-1 Note, or reduce the principal amount thereof, the interest rate thereon, change the provision of the Indenture relating to the
application of collections on, or the proceeds of the sale of, all or any portion of any Series 2001-1 Trust Estate to payment of principal of or interest on the Series 2001-1 Notes, or change any place of payment where, or the coin or currency in which,
any Series 2001-1 Note or the interest thereon is payable;

	impair the right to institute suit for the enforcement of the provisions of the Indenture requiring the application of funds available therefor, as provided in Article V of the Indenture, to the payment of any such amount due on
the Series 2001-1 Notes on or after the respective due dates thereof;

	reduce the percentage of the Outstanding Amount of the Series 2001-1 Notes, the consent of the Holders of which is required for this Series 2001-1 Supplement, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of the Indenture or certain defaults hereunder and their consequences provided for in the Indenture;

	modify or alter the provisions of the proviso to the definition of the term "Outstanding";

	reduce the percentage of the Outstanding Amount of the Notes required to direct the Trustee to direct the Issuer to sell or liquidate the Series 2001-1 Trust Estate pursuant to Section 5.4 of the Indenture;

	modify any provision of this Section except to increase any percentage specified herein or to provide that certain additional provisions of the Indenture or the Basic Documents cannot be modified or waived without the consent of
the Holder of each Outstanding Series 2001-1 Note affected thereby;

	modify any of the provisions of the Indenture in such manner as to affect the calculation of the amount of any payment of interest or principal due on any Series 2001-1 Note on any Distribution Date (including the calculation of
any of the individual components of such calculation) or to affect the rights of the Holders of Series 2001-1 Notes to the benefit of any provisions for the mandatory redemption of the Series 2001-1 Notes contained herein; or

	permit the creation of any lien ranking prior to or on a parity with the lien of the Indenture with respect to any part of the Series 2001-1 Trust Estate or, except as otherwise permitted or contemplated herein or the Series 2001-1
Related Documents, terminate the lien of the Indenture on any property at any time subject hereto or deprive the Holder of any Series 2001-1 Note of the security provided by the lien of the Indenture.

It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of an amendment to this Series 2001-1 Supplement, but it shall be sufficient if such Act shall approve the substance thereof.

Promptly after the execution by the Issuer and the Indenture Trustee of an amendment to this Series 2001-1 Supplement, the Indenture Trustee shall mail to the Series 2001-1 Noteholders a notice setting forth in general terms the
substance hereof.  Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any amendment to the Series 2001-1 Supplement.

Prior to the execution of any amendment to this Supplement, the Indenture Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Supplement.  The Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects the Indenture Trustee's own rights, duties or immunities under this Supplement.

By its acceptance of its interest in the Series 2001-1 Notes, each owner of a beneficial interest in a Note shall be deemed to have agreed that prior to the date which is one year and one day after the termination of the Indenture,
such Person shall not acquiesce, petition or otherwise invoke or cause the Issuer or the Seller to invoke the process of any governmental authority for the purpose of commencing or sustaining a case against the Seller or Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of or for the Issuer or the Seller or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Issuer or the Seller.

	Authority to Register Notes and File Reports.

The Issuer hereby authorizes the Seller to prepare and execute on behalf of the Issuer, filings with the Securities and Exchange Commission and any applicable state agencies of documents required to register or qualify the Notes for
public distribution and to file on a periodic basis, such documents as may be required by rules and regulations prescribed by such authorities.

	Authority to Perform Duties of the Issuer.

	The Issuer hereby designates the Master Servicer its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required by the Trustee pursuant to Section 3.5 of the Indenture, 
provided that, such designation shall not be deemed to create a duty in the Trustee to monitor the compliance of the Master Servicer with respect to its duties under Section 3.5 of the Indenture or the adequacy of any financing statement, continuation
statement or other instrument prepared by the Master Servicer.

	The Issuer hereby appoints the Master Servicer to assist the Issuer in performing its duties under the Series 2001-1 Related Documents, including, but not limited to, Sections 2.13 and 3.9 of the Indenture, and the Master
Servicer hereby accepts such appointment.

IN WITNESS WHEREOF, the parties hereto have caused this Series 2001-1 Supplement to be fully executed by their respective officers as of the day and year first above written.
HOUSEHOLD FINANCE CORPORATION,

  as Master Servicer

 

By

Name:  B.B. Moss, Jr.

Title:  Vice President

 

HOUSEHOLD AUTOMOTIVE TRUST 2001-1, 

  as Issuer

 

By WILMINGTON TRUST COMPANY
Not in its individual capacity but solely as Owner Trustee

 

By

Name:

Title:

 

HOUSEHOLD AUTO RECEIVABLES

  CORPORATION

 

By

Name:  Steven H. Smith

Title:  Vice President

 

U.S. BANK NATIONAL ASSOCIATION, 

  as Indenture Trustee 

 

By

Name:

Title:

[Signature Page for Series 2001-1 Supplement]

 

 

 
WILMINGTON TRUST COMPANY,

  as Owner Trustee

 

By

Name:

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page for Series 2001-1 Supplement]

Schedule I

Eligibility Criteria

"Eligible Receivable" means a Series 2001-1 Receivable with respect to which each of the following is true as of the Closing Date:

(a)that (i) was originated directly by HAFC (or any predecessor or Affiliate of HAFC) with the consumer or was originated by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of such Dealer's business and
(A) in the case of a Dealer originated receivable, such Dealer had all necessary licenses and permits to originate receivables in the state where such Dealer was located, and such receivable was purchased by HAFC (or any predecessor or Affiliate of
HAFC) from such Dealer under an existing Dealer Agreement with HAFC (or any predecessor or Affiliate of HAFC), and (B) in the case of a Dealer originated receivable or a receivable originated by HAFC (or any predecessor or Affiliate of HAFC) such
receivable was purchased (x) by HARC pursuant to the terms of the Master Receivables Purchase Agreements, (y) by the Issuer pursuant to the Master Sale and Servicing Agreement; and each Series 2001-1 Receivable was validly assigned (1) 
if Dealer originated, by such Dealer to HAFC (or any predecessor or Affiliate of HAFC), (2) by HAFC to HARC pursuant to the terms of the Master Receivables Purchase Agreements, (3) by HARC to the Issuer pursuant to the Master Sale and Servicing Agreement and (4) by the Issuer to the Trustee pursuant to the Indenture, (ii) was fully and properly executed by the parties thereto, (iii) contains customary and
enforceable provisions such as to render the rights and remedies of the holder thereof adequate for realization against the collateral security, and (iv) is fully amortizing and provides for level monthly payments (provided that the first and final payment of the Series 2001-1 Receivable may be minimally different from the level payment) which, if made when due, shall fully amortize the Amount Financed over the original term;

(b)that if originated by a Dealer, was sold by the Dealer to HAFC (or any predecessor or Affiliate of HAFC) without any fraud or material misrepresentation on the part of such Dealer in either case or on the part of the Obligor;

(c)with respect to which all requirements of applicable federal, state and local laws, and regulations thereunder (including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief
Act of 1940 and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and other consumer credit laws and equal credit opportunity and disclosure laws) in respect of all of the Series 2001-1 Receivables, each and every sale
of Financed Vehicles and the sale of any physical damage, loss, credit life and credit accident and health insurance and any extended service contracts, have been complied with in all material respects, and each Series 2001-1 Receivable and the sale of
the Financed Vehicle evidenced by each Series 2001-1 Receivable and the sale of any physical damage, loss, credit life and credit accident and health insurance and any extended service contracts complied at the time it was originated or made and now
complies in all material respects with all applicable legal requirements;

(d)that was originated in the United States of America and, at the time of origination materially conformed to all requirements of the Dealer Underwriting Guides (or such similar guidelines of any predecessor or affiliate of HAFC)
applicable thereto;

(e)which represents the genuine, legal, valid and binding payment obligation of the Obligor thereon, enforceable by the holder thereof in accordance with its terms, except (A) as enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or
at law and (B) as such Receivable may be modified by the application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended; and all parties thereto had full legal capacity to execute and deliver such Receivable and all other documents related
thereto and to grant the security interest purported to be granted thereby;

(f)which is not due from the United States of America or any state or from any agency, department, subdivision or instrumentality thereof;

(g)which, as of the Cutoff Date, (i) had an original maturity of at least 18 months but not more than 72 months, (ii) had a remaining Amount Financed of at least $3,000 and not more than $40,000, (iii) had an Annual Percentage Rate
of at least 10.50% and not more than 27%, (iv) was not more than 30 days past due, (v) no funds have been advanced by the Issuer, the Master Servicer, HAFC, any predecessor or Affiliate of HAFC, any Dealer, or anyone acting on behalf of any of them in
order to cause such Series 2001-1 Receivable to qualify under subclause (iv) of this clause (g) and (vi) had no provision thereof waived, altered or modified in any respect since its origination;

(h)with respect to which the information pertaining to such Series 2001-1 Receivable set forth in each Schedule of Receivables is true and correct in all material respects;

(i)with respect  to which HAFC will have caused the portions of HAFC's and the Master Servicer's servicing records relating to such Series 2001-1 Receivable to be clearly and unambiguously marked to show that such Series 2001-1
Receivable has been transferred by HAFC to HARC in accordance with the terms of the Master Receivables Purchase Agreements and by HARC to the Issuer pursuant to the Master Sale and Servicing Agreement, and by the Issuer to the Indenture Trustee pursuant
to the Indenture;

(j)with respect to which the computer tape or listing to be made available by HAFC to HARC, the Master Servicer or the Trustee is complete and accurate and includes a description of the same Series 2001-1 Receivables that are,
or will be, described in the related Schedule of Receivables;

(k)which constitutes chattel paper within the meaning of the UCC;

(l)of which there is only one original executed copy;

(m)with respect to which there exists a Receivable File and such Receivable File contains, without limitation, (a) a fully executed original of such Receivable, (b) a certificate of insurance, application form for insurance signed
by the Obligor, or a signed representation letter from the relevant Obligor named pursuant to which the Obligor has agreed to obtain physical damage insurance for the related Financed Vehicle, (c) the original Lien Certificate or application therefor
showing HAFC (or any predecessor or Affiliate of HAFC) as first lienholder and by HAFC (or any predecessor or Affiliate of HAFC) to HARC and by HARC to the Issuer and by the Issuer to the Trustee) and (d) an original credit application signed by the
Obligor; and (x) each of the documents relating thereto which is required to be signed by the Obligor has been signed by the Obligor in the appropriate spaces and (y) all blanks on any form relating thereto by HAFC (or any predecessor or Affiliate of
HAFC) to be completed have been properly filled in and each form has otherwise been correctly prepared; and, notwithstanding the above, with respect to which, a copy of the complete Receivable File for such Series 2001-1 Receivable, which fulfills the
documentation requirements of the Dealer Underwriting Guides as in effect at the time of purchase is in the possession of the Master Servicer or Sub-Servicer;

(n)which has not been satisfied, subordinated or rescinded, and the Financed Vehicle securing such Series 2001-1 Receivable has not been released from the lien of such Series 2001-1 Receivable in whole or in part;

(o)which was not originated in, and is not subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer and assignment of such Series 2001-1 Receivable and with respect to
which neither HAFC (nor any predecessor or affiliate of HAFC) nor the Issuer has entered into any agreement with any account debtor that prohibits, restricts or conditions the assignment of any portion of such Series 2001-1 Receivable;

(p)which has not been sold, transferred, assigned or pledged to any Person other than to (i) HAFC (or any predecessor or Affiliate of HAFC) by a Dealer, (ii) HARC by HAFC pursuant to the terms of the Master Receivables
Purchase Agreements, (iii) the Issuer by HARC pursuant to the terms of the Master Sale and Servicing Agreement and (iv) the Trustee by the Issuer pursuant to the terms of the Indenture.  No Dealer has a participation in, or other right to
receive, proceeds of any Series 2001-1 Receivable and with respect to which neither HAFC (nor any predecessor or Affiliate of HAFC), HARC nor the Issuer has taken any action to convey any right to any Person that would result in such Person having a right
to payments received under the related Insurance Policy or the related Dealer Agreement or Dealer Assignment or to payments due under such Series 2001-1 Receivable;

(q)which creates or shall create a valid, binding and enforceable first priority security interest in favor of HAFC in the Financed Vehicle;

(r)which is secured by an enforceable and perfected first priority security interest in the Financed Vehicle in favor of HAFC as secured party, which security interest is prior to all other Liens upon and security interests in such
Financed Vehicle which now exist or may hereafter arise or be created (except, as to priority, for any Lien for taxes, labor or materials affecting a Financed Vehicle); and, with respect to which there are no Liens or claims for taxes, work, labor or
materials affecting the related Financed Vehicle which are or may be Liens prior or equal to the lien of such Receivable;

(s)as to which all filings (including, without limitation, UCC filings) required to be made by any Person and actions required to be taken or performed by any Person in any jurisdiction to give the Trustee a first priority
perfected lien on, or ownership interest in, the Series 2001-1 Receivables and the proceeds thereof have been made, taken or performed;

(t)as to which HAFC (or any predecessor or Affiliate of HAFC), HARC or the Issuer has not done anything to convey any right to any Person that would result in such Person having a right to payments due under such Series 2001-1
Receivable or otherwise to impair the rights of the Trustee, the Noteholders or the Certificateholders in such Series 2001-1 Receivable or the proceeds thereof;

(u)which is not assumable by another Person in a manner which would release the Obligor thereof from such Obligor's obligations with respect to such Receivable;

(v)which is not subject to any right of rescission, setoff, counterclaim or defense and no such right has been asserted or threatened with respect thereto;

(w)as to which there has been no default, breach, violation or event permitting acceleration under the terms of such Series 2001-1 Receivable (other than payment delinquencies of not more than 30 days) and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of such Series 2001-1 Receivable, and there has been no waiver of any of the
foregoing, and with respect to which the related Financed Vehicle had not been repossessed;

(x)at the time of the origination of which, the related Financed Vehicle was covered by a comprehensive and collision insurance policy (i) in an amount at least equal to the lesser of (a) its maximum insurable value and
(b) the principal amount due from the Obligor thereunder, (ii) naming HAFC (or any predecessor or Affiliate of HAFC) and its successors and assigns as loss payee and (iii) insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision coverage and with respect to which the Obligor is required to maintain physical loss and damage insurance, naming HAFC (or any predecessor or Affiliate of HAFC) and its successors
and assigns as additional insured parties, and such Receivable permits the holder thereof to obtain physical loss and damage insurance at the expense of the Obligor if the Obligor fails to do so;

(y)with respect to which the following is true:

The Lien Certificate for the related Financed Vehicle shows, or if a new or replacement Lien Certificate is being applied for with respect to such Financed Vehicle the Lien Certificate will be received within 180 days of the
Series 2001-1 Closing Date and will show, HAFC (or any predecessor or Affiliate of HAFC) named as the original secured party under such Series 2001-1 Receivable and, accordingly, HAFC will be the holder of a first priority security interest in such
Financed Vehicle.  With respect to each Series 2001-1 Receivable for which the Lien Certificate has not yet been returned from the Registrar of Titles, HAFC has received written evidence from the related Dealer or the Obligor that such Lien Certificate
showing HAFC as first lienholder has been applied for.  If the Series 2001-1 Receivable was originated in a state in which a filing or recording is required of the secured party to perfect a security interest in motor vehicles, such filings or recordings
have been duly made to show HAFC named as the original secured party under the related Series 2001-1 Receivable; and

(z)as to which no selection procedures adverse to the Noteholders or the Certificateholder have been utilized in selecting such Series 2001-1 Receivable from all other similar Receivables purchased by HAFC or any predecessor or
Affiliate of HAFC. 

Schedule II-A

Schedule of Receivables (New) on File in Electronic Form 

at Dewey Ballantine

Schedule II-B

Schedule of Receivables (2000-B Warehouse) on File in Electronic Form 

at Dewey Ballantine

Schedule II-C

Schedule of Receivables (2000-C Warehouse) on File in Electronic Form 

at Dewey Ballantine

Exhibit A

Form of Master Servicer's CertificateNicor 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

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