April 24, 2000




Mr. David L. Cyranoski
Nicor Inc.
1844 Ferry Road
Naperville, IL  60566-9600

Re:  Retirement Agreement

Dear David:

This letter  memorializes the agreement between you and Nicor,  Inc.,  ("Nicor")
concerning  your  retirement.  We wish to thank you for your long,  faithful and
diligent service with the Company, and wish you the best in the years to come.

1. Benefit and Financial Plan Items

   We have agreed that your retirement will become  effective May 1, 2000. As of
   that date, your  qualification for pension,  401K, stock option and all other
   benefits under  applicable Nicor policies and benefit plans shall be governed
   in accordance  with the terms of those policies and plans.  In recognition of
   your  length of service  and  commitment  to Nicor,  you will  receive a cash
   payment of $230,000  less  legally  required  withholding  deductions.  Also,
   enhancements  under the non-qualified  retirement plan will be paid to you in
   the amount of $340,000.

2. Use And Return Of Nicor Property And Information.

   You have  returned  or will  return  on or  before  May 1,  2000 to Nicor all
   "company  information"  (as defined  below) and related  documents,  reports,
   files  (including  data stored in computer  memory or other  storage  media),
   memoranda and records;  credit  cards;  cell phones;  portable  computers and
   related  equipment;  card-key  passes;  door and file keys;  computer  access
   codes;  software  and all  other  physical  or  personal  property  that  you
   received,  prepared or helped prepare in connection with your employment. You
   also  agree  that you have not  retained  and  will not  retain  any  copies,
   duplicates,  reproductions  or excerpts of the above items. The term "company
   information"   means:  (i)  confidential   and/or   proprietary   information
   including, without limitation,  information received from third parties under
   confidential  conditions and/or (ii) other technical,  business, or financial
   information, the use or disclosure of which may reasonably be construed to be
   contrary  to  Nicor's  interest.  You  agree to keep  all  such  confidential
   information  confidential  and not to  disclose  such  information  to anyone
   except to the extent you are compelled to do so by legal process.

3. Confidentiality Of Trade Secrets And Other Confidential Information.



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   As  used  below,  "trade  secrets-confidential  information"  means,  without
   limitation: customer lists of Nicor Inc. and all of its affiliates, including
   but not limited to Nicor Gas, Nicor Energy, L.L.C., Nicor Enerchange, L.L.C.,
   and  Birdsall,  Inc. and its  affiliates  (collectively,  Nicor);  pricing of
   products and/or services;  performance-based strategies;  trading activities;
   proprietary,   technical  and/or  business  information  related  to  Nicor's
   business  plans;  analyses,  techniques  or strategies  concerning  actual or
   potential  acquisitions and/or new ventures;  development and/or introduction
   plans for products and/or  services;  unannounced  products and/or  services;
   operation  costs;  research  and  development  processes;  data  relating  to
   research, design,  implementation and/or marketing of Nicor's products and/or
   services;    non-public   information   concerning   the   requirements   and
   specifications  of Nicor's  agents,  vendors,  suppliers,  trading  partners,
   transporters,  contractors and/or potential  customers;  non-public financial
   information;  business and marketing plans;  quotations or proposals given to
   agents  and/or  customers   and/or  received  from  suppliers;   methods  for
   developing  and  maintaining  business  relationships  with past,  present or
   potential partners and/or customers; procedure manuals; employee training and
   review manuals;  confidential  personnel data; and all other information that
   is  sufficiently  secret to create  economic  value from not being  generally
   known.

   You and Nicor agree that, during your employment, you have had special access
   to trade  secrets-confidential  information  that  constitute  a valuable and
   unique asset to Nicor. You and Nicor agree that the energy industry is highly
   competitive,  that  Nicor has  invested  significant  time and  resources  in
   developing  trade  secrets-confidential  information,  and that  Nicor  would
   suffer  a  significant  economic  loss  if  its  trade   secrets-confidential
   information were disclosed to Nicor's  competitors and/or the general public.
   You and Nicor also agree that Nicor does business  throughout  the Midwestern
   United States and that Nicor has national  interests in protecting  its trade
   secrets-confidential  information and  safeguarding  its customer and partner
   relationships.

   You and Nicor agree that, by virtue of your  position with Nicor,  after your
   retirement you will have the  opportunity  to use trade  secrets-confidential
   information  that  Nicor  developed  at its  expense  and  that  Nicor  has a
   sufficient  basis to protect its  interest in its trade  secrets-confidential
   information.  You and Nicor also agree  that Nicor has  invested  substantial
   resources to develop  relationships  with its existing and potential partners
   and  customers and that those  relationships  have been to the benefit of you
   and Nicor.

   In light of the  foregoing,  you and Nicor agree that to the extent that they
   apply to your possession of trade secrets-confidential information, upon your
   retirement you will continue to comply with Nicor Policy Order A-1 (conflicts
   of  interest),  Policy  Order  A-2  (improper  use of  company  cash or other
   assets),  Policy Order A-46  (disclosure of  confidential  information),  and
   Standard  Practice  General 9  (release  of  information  concerning  company
   activities), and Code of Ethics, and the Illinois Trade Secrets Act, 765 ILCS
   1065/1 et seq.

   In addition,  you and Nicor agree that, upon your retirement,  you shall hold
   all trade  secrets-confidential  information in trust for the sole benefit of
   Nicor and that you shall not,  without  Nicor's prior written  consent,  make
   available   or  disclose  in  any  way   (directly   or   indirectly)   trade
   secrets-confidential  information to any person (including  current or former
   Nicor employees),  organization,  newspaper, firm, partnership,  association,
   corporation or business entity or use trade secrets-confidential  information
   to your benefit or the benefit of another.

   You and Nicor agree that Nicor may enforce any breach or anticipatory  breach
   of this Section by seeking an injunction,  money damages and all other relief
   available  under the law. You and Nicor further agree that, in the event that
   a court of competent jurisdiction determines that the exact amount of damages
   to Nicor resulting from your breach of this Section is difficult to determine
   with any reasonable precision, you will pay Nicor's costs and attorneys' fees
   incurred in obtaining an injunction and/or judgment against you.



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   Finally,  you and Nicor agree that Nicor and all of its related  entities are
   this Section's  intended  beneficiaries and that Nicor and all of its related
   entities are entitled to enforce this Section as if they were  signatories to
   it.

4. General Waiver And Release Of All Claims.

   You and Nicor agree that the payments  reflected above are  consideration  in
   excess of that to which you otherwise would be entitled upon your retirement.
   You and Nicor further agree that normal  business  prudence  requires that in
   return for such  payments,  you agree to a release of claims and covenant not
   to sue. Accordingly,  you agree not to sue Nicor (including its subsidiaries,
   predecessors,    successors,    assigns,   trustees,   officers,   directors,
   fiduciaries, agents and employees, past and present) in any federal, state or
   local court, administrative agency or tribunal, and you waive and release all
   claims  and  causes  of  action  you may  have,  as of the day you sign  this
   Agreement,  against Nicor arising from your employment with Nicor. The claims
   and causes of action  you are  releasing  and  waiving  include,  but are not
   limited to, any and all claims and causes of action that Nicor:

o     has violated its personnel policies, any covenant of good faith and
      fair dealing or any employment contract between you and it;

o     has discriminated  against you on the basis of your age, race, color, sex,
      national origin, ancestry, disability,  religion, marital status, parental
      status,  source of income or  entitlement  to  benefits,  in  violation of
      local, state or federal laws,  constitutions,  regulations,  ordinances or
      executive orders; and/or

o     has violated  public  policy or common law  (including  but not limited to
      claims for: personal injury;  invasion of privacy;  retaliatory discharge;
      negligent  hiring,  retention or supervision;  defamation;  intentional or
      negligent   infliction  of  emotional   distress  and/or  mental  anguish;
      intentional interference with contract; negligence;  detrimental reliance;
      loss of consortium to you or any member of your family;  and/or promissory
      estoppel).

   Excluded from this waiver and release are (1) any claim or right which cannot
   be waived by law, (2) a claim for breach of this  agreement  by Nicor,  (2) a
   claim for  failure to pay you vested  benefits  pursuant  to the terms of any
   benefit plan,  (3) any claims arising after the date of this  Agreement,  and
   (4) the  right  to file a  charge  with or  participate  in an  investigation
   conducted by the Equal Employment  Opportunity  Commission.  You are waiving,
   however,  your right to any monetary recovery if the EEOC or any other agency
   pursues any claim on your behalf. In the event Nicor is finally determined by
   a court of competent  jurisdiction  to have  breached this  agreement,  Nicor
   shall be  liable  to you for  attorneys'  fees  and  other  litigation  costs
   incurred in prosecuting such a legal claim.

5. Covenant Not To Sue.



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   You agree never to institute any suit,  complaint,  proceeding,  grievance or
   action of any kind in any state or federal court,  or in any federal,  state,
   county,  or municipal  administrative  agency,  or before any other public or
   private  tribunal,  against  Nicor  arising from your  employment  with Nicor
   and/or any other  occurrence  to the date you sign this  Agreement.  You also
   waive  any  right  to  recover  any  relief  as a  result  of any  proceeding
   instituted  on your  behalf.  If you violate  this  Agreement by suing Nicor,
   other than under the Age  Discrimination  in  Employment  Act of 1967  (ADEA)
   challenging  the  validity of the waiver and release  agreement  set forth in
   Section 5 below,  then you shall be liable for  Nicor's  attorneys'  fees and
   other litigation costs incurred in defending against such a suit.

6. Waiver And Release Of Claims Under The ADEA.

   You agree to  release  Nicor from all claims or rights you may have as of the
   date you sign this Agreement arising under the ADEA. You further agree that:

o     your waiver of rights under this release is knowing and  voluntary  and in
      compliance  with the Older  Workers  Benefit  Protection  Act of 1990,  29
      U.S.C. ' 626(f);

o     you understand the terms of this waiver and release;


<PAGE>


   themoney and  benefits  promised  in  Agreement  Section 1 are over and above
      that to which you otherwise are entitled  upon your  retirement,  that the
      money and  benefits  would not have been  provided had you not signed this
      waiver and  release,  and that the money and  benefits are in exchange for
      the signing of this waiver and release;

o     Nicor is hereby advising you in writing to consult with an attorney
      before executing this waiver and release;

o     Nicor is giving you  twenty-one  days (from April , 2000)  within which to
      consider this waiver and release;

o     after you sign this  waiver and  release you have seven days to revoke it.
      If you want to  revoke  it,  you must do so in  writing  and  deliver  the
      writing to Claudia  Colalillo (or her assistant),  Vice President of Human
      Resources,  Nicor Gas,  East-West  Tollway at Route 59,  Aurora,  Illinois
      60507-0190, no later than 5:00 p.m. on the seventh day after you sign this
      waiver and release; and

o     if you revoke this waiver and  release,  this  entire  Agreement  is of no
      force or effect,  but if you do not revoke it, you will  receive the money
      and benefits described in Agreement Section 1.

   By signing this waiver and release, you are not waiving rights or claims that
   may arise under the ADEA after the date you sign this waiver and release.



<PAGE>


7. General Matters.

   You also agree that:

o     As of May 1,  2000,  you shall  neither  be  authorized  to act on Nicor's
      behalf nor  represent to third  parties that you are  authorized to act on
      Nicor's behalf;

o     you have not suffered any on-the-job injury for which you have not
      already filed a claim;

o     you are entering into this Agreement knowingly and voluntarily and with
      full knowledge of its significance;

o     if any part of this Agreement is found to be illegal or invalid, the
      rest of the Agreement will be enforceable;


<PAGE>



o     this  Agreement  sets forth the  entire  agreement  between  you and Nicor
      regarding your retirement and supersede any written or oral understanding,
      promise,  or agreement  that is not referred to and  incorporated  in this
      Agreement. No other promises or agreements shall be binding unless made in
      writing and signed by you and Nicor;

o     this Agreement shall be governed by Illinois law and may be changed
      only by a writing signed by you and Nicor; and

o     this Agreement has been individually  negotiated between you and Nicor and
      is  not  part  of  a  group  exit  incentive  or  other  group  employment
      termination program.


AGREED AND ACCEPTED:

NICOR, INC.                               DAVID L. CYRANOSKI

By    CLAUDIA J. COLALILLO                DAVID L. CYRANOSKI
      --------------------                ------------------
      Claudia J. Colalillo
      Vice President Human Resources      Date  5/2/00
      And Corporate Communications              ------


Date   5/2/00
       ------