Nicor Inc.
                                                                 Form 10-K
                                                                 Exhibit 10.25


January 14, 2000



PERSONAL AND HIGHLY CONFIDENTIAL

Via In-Person Delivery

Mr. Thomas A. Nardi
Senior Vice President
   Market Development
NICOR GAS
1844 Ferry Road
Naperville, IL  60563-9600

Dear Tom:

As you know,  on December  28, 1999, I provided you with a letter that set forth
the terms and conditions  related to your separation from employment with Nicor,
Inc. and Nicor Gas (Nicor). Based on our subsequent discussions,  we have agreed
to revise and  supplement  several of those terms and  conditions.  Accordingly,
this letter (letter agreement) and its attachments entirely supercede my earlier
letter  to you  and  confirms  our  agreement  regarding  your  separation  from
employment with Nicor. Our agreement and the separation arrangements are set out
below and  contained  in the  attached  waiver and release  agreement  and trade
secrets-confidentiality agreement.

1. Separation From Employment

   You agree to resign your  employment  effective  January 19, 2000.  Until the
   effective date of your resignation,  Nicor shall continue to pay your current
   salary,  less applicable federal and state taxes and payroll  deductions,  in
   accordance with its regular payroll procedures.

   Nicor agrees to pay or make  available to you all salary and any benefits due
   to you as of your  resignation date according to Nicor's  established  plans,
   policies  and  procedures.  Upon  your  resignation,  your  qualification  or
   disqualification 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,  except as set forth in Section 2
   below.  Upon your  resignation  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.


<PAGE>


Mr. Thomas A. Nardi                                        Highly Confidential
January 14, 2000
Page 2

2. Separation-Related Payments & Benefits

   On the  condition  that (i) no later than  twenty-one  days after January 14,
   2000 you sign,  date and return a copy of this letter  agreement,  the waiver
   and   release   agreement   attached   as   Attachment   A  and   the   trade
   secrets-confidentiality agreement attached as Attachment B, and (ii) you have
   not revoked the  agreements  pursuant to Section 3 of  Attachment A, you will
   receive the following separation-related payments and benefits:

   a. Separation Pay

      Nicor  agrees to provide you with twelve  months of base salary  ($217,000
      less applicable federal and state taxes and payroll deductions) payable in
      accordance  with its regular  payroll  procedures  covering  the period of
      January 19, 2000 through January 19, 2001 or a lump sum payment. You agree
      that this separation pay is over and above that to which you otherwise are
      entitled and is in exchange for and contingent  upon your signing (and not
      revoking) this letter agreement and its two attachments.

   b. Medical, Dental and Life Insurance

      Nicor agrees to permit you to participate in the Nicor medical, dental and
      company provided life insurance plans in which you currently are enrolled,
      subject  to (i) the same  terms and  conditions  as if you were an regular
      full-time  employee and (ii) your payment of the  applicable  contribution
      for  such  coverage  pursuant  to the  same  cost  sharing  formula  as is
      available to Nicor's regular  full-time  employees,  until the earliest of
      (1) January 19, 2001,  after which you will have the opportunity to obtain
      other benefit continuation coverage in accordance with the requirements of
      COBRA;  or (2) the date you become  eligible to  participate  in any other
      benefit  plan  provided by another  employer.  You agree that the medical,
      dental and life  insurance  benefits  are over and above that to which you
      otherwise  are entitled and are in exchange for and  contingent  upon your
      signing (and not revoking) this letter agreement and its two attachments.

   c. Outplacement Services

      Nicor agrees to provide you with twelve  months of executive  outplacement
      services,  beginning  on January 19, 2000 and ending on January 19,  2001.
      Nicor exclusively shall determine the provider, nature, amount and cost of
      outplacement  services and shall pay the service provider directly for its
      services.  The outplacement  services are a benefit over and above that to
      which you  otherwise  are entitled and are in exchange for and  contingent
      upon your signing (and not  revoking)  this letter  agreement  and its two
      attachments.


<PAGE>


Mr. Thomas A. Nardi                                        Highly Confidential
January 14, 2000
Page 3

   d. Car Allowance

      Nicor  agrees to provide  you with 12 months of  automobile  allowance  --
      $7,200 -- payable in a lump sum  covering  the period of January  19, 2000
      through  January 19,  2001.  You agree that the car  allowance is over and
      above that to which you  otherwise are entitled and is in exchange for and
      contingent upon your signing (and not revoking) this letter  agreement and
      its two attachments.

   e. Long-Term Incentive Benefits

      Nicor  agrees  that for each vested  share of Nicor  common  stock  (Nicor
      stock) that you are eligible to purchase by exercising a stock option that
      was awarded to you under the Nicor, Inc. 1989 Long-Term Incentive Plan and
      the Nicor, Inc. 1997 Long-Term Incentive Plan (the Incentive Plans), Nicor
      will award you one Stock Appreciation Unit, as described below, and cancel
      all such stock options without  exercise.  You currently have  outstanding
      vested stock options to purchase  51,000 shares.  Each Stock  Appreciation
      Unit that Nicor issues you under this Section  shall give you the right to
      receive an amount equal to the excess, if any, of:

      (i)the Fair Market Value (as  determined  under the Incentive  Plans) of a
         share of Nicor stock (as  adjusted  in  accordance  with the  Incentive
         Plans' rules relating to reorganizations, recapitalizations and similar
         events)  determined  as of the  exercise  date  elected by you (or your
         estate) under this Section

                        over

      (ii) the  option  price of such a share of Nicor  stock  under the  option
         replaced by the Stock Appreciation Unit.

      Your right to  exercise  any Stock  Appreciation  Unit under this  Section
      shall  begin on  January  19,  2000 and end on  January  19,  2003 (if not
      exercised  before that date).  Any exercise date that you elect under this
      Section  must be in writing and  delivered  to Nicor's  Vice  President of
      Human Resources at Nicor's  principal  administrative  office on or before
      the elected  exercise date.  You agree that the benefit  described in this
      Section is over and above that to which you  otherwise are entitled and is
      in exchange for and  contingent  upon your signing (and not revoking) this
      letter agreement and its two attachments.


<PAGE>


Mr. Thomas A. Nardi                                        Highly Confidential
January 14, 2000
Page 4

3. Use And Return Of Nicor Property And Information

   You  have  returned  or  will  immediately   return  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.

4. Confidentiality Of This Agreement And Its Two Attachments

   You and Nicor agree to keep the facts underlying your resignation this letter
   agreement's   existence  and  its  terms  and   conditions   (including   the
   attachments)  strictly  confidential  at all times and that disclosure to any
   person, organization, newspaper, company, or current or former Nicor employee
   is strictly  prohibited.  For you, the only  exceptions  to this  restriction
   shall be a disclosure made to your immediate family, attorneys, tax advisors,
   state and federal taxing authorities,  or as required by the express terms of
   a lawful  subpoena or court order.  For Nicor,  the only  exceptions  to this
   restriction shall be a disclosure made to its attorneys,  tax advisors, state
   and federal taxing authorities, Nicor employees in a "need-to-know" position,
   or as required by the express terms of a lawful subpoena or court order.

   Except as provided in Section 5 below,  if inquiries  arise  concerning  your
   resignation by anyone other than those listed,  you and Nicor will state that
   you have chosen "to seize the opportunity to pursue other  interests" or make
   a "career move" and will make no other comment.

   You further agree that you shall not take any actions or make any  statements
   that  disparage  or reflect  negatively  on Nicor,  its  officers,  director,
   employees,  operations  and/or  customers.  You further agree that, except as
   compelled  under  legal  process,  you will  never  aid in any  contemplated,
   threatened or actual litigation of any kind against Nicor. Additionally,  you
   and Nicor agree that, because the exact amount of potential damages to


<PAGE>


Mr. Thomas A. Nardi                                        Highly Confidential
January 14, 2000
Page 5

   Nicor  resulting  from  your  breach  of this  confidentiality  agreement  is
   difficult to  determine  with any  precision,  if a court finds that you have
   breached this confidentiality  agreement in any respect, you will pay Nicor's
   costs and attorneys' fees incurred in obtaining an injunction and/or judgment
   against you.

5. Employment Reference

   Nicor agrees that,  in response to a request for a reference  regarding  your
   employment,  it shall confirm your dates of employment,  your  position,  and
   provide a positive written reference.

6. General Matters

   You also agree that:

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

   *  you are  encouraged  to consult an  attorney  before  signing  this letter
      agreement and the  waiver/release  agreement and you acknowledge  that, by
      and including  February 4, 2000, Nicor will have given you twenty-one days
      within which to consider this letter agreement and its two attachments;

   *  you are  entering  into  this  letter  agreement  and its two  attachments
      knowingly and voluntarily and with full knowledge of their significance;

   *  you have not been coerced, threatened, or intimidated into signing
      this letter agreement and its two attachments;

   *  if any part of this letter  agreement and/or its two attachments are found
      to be illegal or invalid,  the rest of the letter agreement and/or its two
      attachments will be enforceable;

   *  this  letter  agreement  and its two  attachments  set  forth  the  entire
      agreement  between you and Nicor regarding your separation from employment
      and supersede  any written or oral  understanding,  promise,  or agreement
      that is not  referred to and  incorporated  herein.  No other  promises or
      agreements  shall be binding  unless made in writing and signed by you and
      me;

   *  this letter agreement and its two attachments shall be governed by
      Illinois law and may be changed only by a writing signed by you and
      me; and


<PAGE>


Mr. Thomas A. Nardi                                        Highly Confidential
January 14, 2000
Page 6

   *  this  letter  agreement  and its two  attachments  have been  individually
      negotiated  between  you  and  Nicor  and are  not  part  of a group  exit
      incentive or other group employment termination program.

Please do not hesitate to contact me if you would like further  clarification of
any aspect of these arrangements or their implementation.

Please indicate your agreement to and acceptance of these  provisions by signing
and dating the enclosed copy of this letter  agreement  and its two  attachments
and returning  them to me by February 4, 2000. So there is no  misunderstanding,
if for any reason I do not received the signed copy of this letter agreement and
its attachments from you by February 4, 2000, the separation  benefits described
in this letter agreement will be deemed to be withdrawn and the letter agreement
shall be entirely ineffective.

I wish you the best of luck in your future endeavors.

                                    Sincerely yours,

                                    NICOR GAS

                                    By    CLAUDIA J. COLALILLO
                                          Claudia J. Colalillo
                                          Vice President Human Resources

AGREED AND ACCEPTED:

THOMAS A. NARDI
Thomas A. Nardi

Date January 19,2000


<PAGE>



                                    Attachment A

                        WAIVER AND RELEASE AGREEMENT

In exchange for the promises  made in Claudia  Colalillo's  letter dated January
14, 2000, Thomas A. Nardi, on behalf of himself, his spouse,  heirs,  executors,
administrators  and agents (You), and Nicor Gas, on behalf of itself, its parent
company  (and  all  of its  subsidiaries),  predecessors,  successors,  assigns,
trustees, officers, directors,  fiduciaries, agents and employees (collectively,
Nicor), enter into this waiver/release agreement (Waiver/Release  Agreement) and
agree as follows:

1. General Waiver And Release Of All Claims

   You  agree  not  to  sue  Nicor  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  Waiver/Release
   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:

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

   *  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, union activities, or entitlement to benefits, in
      violation of local,  state or federal  laws,  constitutions,  regulations,
      ordinances or executive orders; and/or

   *  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 is any claim or right which  cannot be
   waived by law, including claims arising after the date of this Waiver/Release
   Agreement  and  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.

2. Covenant Not To Sue

   You agree never to institute any suit,  complaint,  proceeding,  grievance or
   action of any kind at law, in equity,  or  otherwise  in any state or federal
   court, or in any federal, state, county, or municipal  administrative agency,
   or before any other public or private tribunal,


<PAGE>


   against  Nicor  arising  from your  employment  with  Nicor  and/or any other
   occurrence to the date you sign this Waiver/Release 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 3 below,
   then you shall be liable for  Nicor's  attorneys'  fees and other  litigation
   costs incurred in defending against such a suit.

3. Waiver And Release Of Age Discrimination Claims

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

   *  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. Section 626(f);

   *  you understand the terms of this release;

   *  the money and  benefits  promised  in  Section  2 of  Claudia  Colalillo's
      January 14, 2000 letter are over and above that to which you otherwise are
      entitled  upon the  resignation  of your  employment,  that the  money and
      benefits would not have been provided had you not signed this release, and
      that the  money  and  benefits  is in  exchange  for the  signing  of this
      release;

   *  Nicor is hereby advising you in writing to consult with an attorney
      prior to executing this release;

   *  Nicor is giving you a period of  twenty-one  days (from  January 14, 2000)
      within which to consider this release;

   *  after you sign this  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, 1844 Ferry Road, Naperville,  Illinois 60563-9600, no later than 4:00
      p.m. on the seventh day after you sign this release; and

   *  if you revoke it, this  entire  Waiver/Release  Agreement,  all of Claudia
      Colalillo's January 14, 2000 letter and the trade  secrets-confidentiality
      agreement are of no force or effect, but if you do not revoke it, you will
      receive the consideration described in Section 2 of her letter.



<PAGE>


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

4. Various Matters

   You further agree that:

   *  the money and  benefits  promised  in  Section  2 of  Claudia  Colalillo's
      January 14, 2000 letter are over and above that to which you otherwise are
      entitled upon the resignation of your employment;

   *  you are entering into this Waiver/Release Agreement knowingly and
      voluntarily and with full knowledge of its significance;

   *  you have not been coerced, threatened, or intimidated into signing
      this Waiver/Release Agreement;

   *  you  have  been  given  a  reasonable  amount  of time  to  consider  this
      Waiver/Release  Agreement and Nicor is hereby advising you to consult with
      an attorney before signing this Agreement;

   *  if any part of this Agreement is found to be illegal or invalid, the
      rest of the Waiver/Release Agreement will be enforceable; and

   *  this Waiver/Release Agreement shall be governed by Illinois law and may be
      changed  only by a writing  signed by you and  Claudia  Colalillo  (or her
      designee).



THOMAS A. NARDI                           CLAUDIA J. COLALILLO
Thomas A. Nardi                           Claudia J. Colalillo
                                          Vice President of Human Resources
Dated January 19,2000
                                          Dated January 19, 2000


<PAGE>



                                                                 Attachment B

January 17, 2000

Personal And Highly Confidential

Via In-Person Delivery

Mr. Thomas A. Nardi
Senior Vice President
   Market Development
NICOR GAS
1844 Ferry Road
Naperville, IL  60563-9600

Dear Tom:

As you know, on January 14, 2000, I provided you with a revised  letter  (letter
agreement) and two attachments  that set forth the terms and conditions  related
to your separation from employment with Nicor, Inc. and Nicor Gas (Nicor). Based
on our subsequent  discussions,  we have agreed to revise the second  attachment
(the trade secrets-confidential  information agreement) to the letter agreement.
In particular, we agreed to clarify the distinction between information that, on
one  hand,  constitutes  covered  trade  secrets-confidential   information  and
information  that,  on the other hand,  constitutes  information  that is in the
public  domain  and  not  covered  by the  agreement.  Accordingly,  this  trade
secrets-confidentiality  agreement  entirely  supercedes  the  January  14, 2000
version of the agreement.

                                  Background

I.   You and Nicor agree that,  during your  employment,  you have been afforded
     special access to Trade Secrets-Confidential Information (as defined below)
     that   constitute  a  valuable  and  unique  asset  to  Nicor,   Inc.,  its
     subsidiaries and affiliates (collectively, 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.

II.  You and Nicor agree that, by virtue of your position with Nicor, after your
     separation  from  employment  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.


<PAGE>


Mr. Thomas A. Nardi                                       Highly Confidential
January 17, 2000
Page 2

III. You and Nicor  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.

IV.  You and Nicor  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.

V.   You and Nicor agree that, upon your separation  from  employment,  you will
     continue to comply with the attached  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 (as  acknowledged on October 19, 1999),  and not violate
     the Illinois Trade Secrets Act, 765 ILCS 1065/1 et seq., to the extent that
     the Policy Orders,  Code of Ethics and/or the Act apply to your  possession
     and use of Trade Secrets-Confidential Information.

VI.  You and Nicor agree that the January 14, 2000 letter agreement  promises to
     provide  you with  money  and  benefits  over and  above  that to which you
     otherwise  are entitled and that the money and benefits are in exchange for
     your signing (and not revoking) the letter  agreement,  the  waiver/release
     agreement and this trade secrets-confidentiality agreement.

     In light of the foregoing  and in  consideration  of the mutual  promises
     set forth in the letter agreement, you and Nicor agree as follows:

     1. Trade Secrets-Confidential Information

      "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);  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


<PAGE>


Mr. Thomas A. Nardi                                       Highly Confidential
January 17, 2000
Page 3

      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  the   foregoing   definition   of  "trade
      secrets-confidential information" does not include information and/or data
      that is  legitimately  in the public domain,  i.e.,  generally known to or
      accessible by the public through legitimate origins and means.

      You   acknowledge   that  this  Trade   Secrets-Confidential   Information
      constitutes  a valuable and unique asset of Nicor that has been  developed
      over  considerable  time and at a substantial  expense to Nicor. Upon your
      separation    from    employment,    you   agree   to   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.

      2. Miscellaneous Provisions

      You and Nicor  agree that  Nicor may  enforce  any breach or  anticipatory
      breach of this agreement 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 Sections 1 and/or
      2 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.

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

      You and Nicor agree that this agreement  shall be governed by Illinois law
      and that if a court of competent jurisdiction  determines that any part of
      this  agreement  is illegal or invalid  (e.g.,  overbroad  with  regard to
      duration,  activity or subject matter),  the rest of the agreement will be
      enforceable to the full extent of applicable law.

      You and  Nicor  agree  that  this  agreement,  the  letter  agreement  and
      waiver/release  agreement set forth the entire  agreement  between you and
      Nicor regarding your


<PAGE>


Mr. Thomas A. Nardi                                       Highly Confidential
January 17, 2000
Page 4

      separation   from   employment   and   supersede   any   written  or  oral
      understanding,   promise,  or  agreement  that  is  not  referred  to  and
      incorporated  herein.  You and  Nicor  agree  that no  other  promises  or
      agreements  shall be binding  unless made in writing and signed by you and
      me (or my  designee).  You and Nicor also agree that you (i) are  entering
      into this agreement  knowingly and  voluntarily and with full knowledge of
      its significance;  (ii) have not been coerced,  threatened, or intimidated
      into  signing this  agreement;  and (iii) you have been given a reasonable
      amount of time to consider this agreement.

So there is no  misunderstanding,  if for any reason I do not receive the signed
copy of this  agreement  (as well as the  letter  agreement  and  waiver/release
agreement)  from you by February 4, 2000, the separation  benefits  described in
Section 2 of the letter  agreement will be deemed to be withdrawn and the letter
agreement shall be entirely ineffective.

                                    Sincerely yours,

                                    NICOR GAS

                                    By     CLAUDIA J. COLALILLO
                                           Claudia J. Colalillo
                                           Vice President Human Resources


AGREED AND ACCEPTED:

THOMAS A. NARDI
Thomas A. Nardi

Date January 19, 2000