Exhibit
10.50




NICOR ANNUAL INCENTIVE
COMPENSATION PLAN FOR OFFICERS
  Nicor
Inc. (the “Company”, or “Nicor”) has established the Nicor Annual Incentive
Compensation Plan for Officers (the “Plan”) to link participant incentive
compensation to the accomplishment of corporate and operating unit financial
performance, as well as to non-financial measures of operating performance
across the Company and operating units.  It ties the pay an individual
receives to Company performance and non-financial goals.  This plan is
intended to provide a framework for a performance-based bonus program for Nicor,
and is effective January 1, 2008.
  Purpose
 The
purpose of this Plan is to provide meaningful annual incentive award opportunity
to the participants.  Awards will be directly tied to the achievement
of corporate financial and goals and non-financial objectives.
  Eligible
Group
 Officers
of Nicor are eligible for participation.  As such, participation is
limited to employees in positions which enable them to make significant
contributions to the performance and growth of the Company.
  Compensation
Objective
 Base
Salary + Bonus Target = Short-Term Compensation Objective
  An
individual’s short-term compensation objective will be based on salary plus a
bonus, expected to be earned if established performance targets are
met.  Short-term compensation above (or below) target levels may be
paid in the event performance exceeds (or falls short of) goals.
  Base
Salary
 Standards
for base salaries will be targeted to the 50th
percentile of the appropriate blend of general and industry survey
data.  Base salaries are reviewed annually by the Compensation
Committee of the Board of Directors (the “Compensation Committee”).
  Bonus
Targets
 The bonus
target amount varies according to pay, job responsibilities and ability to
impact the organization and is consistent with the bonus opportunity ranges set
by officer salary bands.  Higher responsibility and impact levels
result in greater dollars at risk.
  Performance
Targets
 Performance
criteria focus on the achievement of established and documented strategic
goals.  Performance targets may include measures of corporate
financial and operating performance, defined group objectives or individual
performance objectives.  Each particular performance target will be
assigned weighting reflected as a percentage of compensation
objectives.
  
  Goal Setting
Guidelines
 The most
important aspect of this Plan will be the establishment of effective
goals.  In addition to measures of corporate financial and operating
performance, other non-financial measures of performance will also be
established.  The goals should be realistic and measurable wherever
possible by quantifiable performance criteria.  It is recognized that
measurement of some goals will require subjective assessments of
performance.  Goals must be consistent with the longer-term strategic
plan.
  A set of
guidelines will be devised by the Nicor Human Resources Department to aid in
this process.  These guidelines will provide direction as to the
formulation and reporting of non-financial goals.
  Amount of
bonus payment for financial/budget related goals can vary above and below target
based upon results achieved.  For targets met, bonus amount will be
100% of target.  When targets are exceeded or are not reached, bonus
will be proportionately more or less than the target.
  The
Compensation Committee may make appropriate upward or downward adjustments if,
after taking into consideration all of the facts and circumstances of the
performance period, it determines that adjustments are warranted.
  Plan Schedule and Bonus
Payment
 The Plan
runs on a calendar year basis, with the strategic planning cycle and budgeting
process serving as the primary link to performance and bonus
targets.  The Accounting Department is responsible for the
determination of actual financial results.  Performance will be
reviewed at least twice a year to monitor progress and adjust
accruals.
  Year-end
results should be available and evaluated as early as possible in the following
year.  No bonus shall be paid until the Compensation Committee
approves such payment.
  Subject
to the provisions of the “Bonus Deferral” section below, bonuses will be paid to
participants in a single lump sum.  Payment will be made between
January 1 and March 15 of the calendar year following the calendar year in which
the services were performed (or, in the event that payment is not made by March
15, no later than December 31 of such calendar year).  Bonus payments
under this Plan are intended to satisfy either the short-term deferral exemption
under Treas. Reg. Sec. 1.409A-1(b)(4) or be compliant with Section 409A of the
Internal Revenue Code.  All awards will be paid in cash, except as
provided below.
  Bonus
Deferral
 Deferral under the Stock Deferral
Plan or Salary Deferral Plan.  A participant in the Stock
Deferral Plan may elect to defer up to 50% of his bonus award into that plan and
a participant in the Salary Deferral Plan may elect to defer 10% to 20% of his
bonus award into that plan.  All such elections must be made in
accordance with the terms of the Stock Deferral Plan and/or Salary Deferral Plan
in order to be effective.  In the event of conflict between the terms
of the Stock Deferral Plan or the Salary Deferral Plan and this Plan, the terms
of the Stock Deferral Plan or the Salary Deferral Plan, as applicable, shall
  
  control.  Appropriate
taxes for the entire award amount will be withheld from the portion of the award
being paid in cash.
  Deferral under this
Plan.In addition, a participant may elect to have all or a
portion of his bonus award under the Plan to be deferred by submitting a written
request to the Compensation Committee no later than the last day of the calendar
year immediately preceding the year in which the services relating to the bonus
are to be performed (the “deferral election”).  The deferral election
shall be irrevocable following the last day of the calendar year immediately
preceding the year in which the services relating to the bonus are to be
performed.  All such deferred amounts shall be credited with
compounded interest equal to the prime rate applied on a quarterly
basis.
  1. Form of
Payment.  The deferral election shall specify whether the
deferred bonus award (and interest thereon) shall be paid in either (a) annual
installments over a period of not more than five years, or (b) a lump
sum.  For purposes of Section 409A of the Code, installment payments
shall be treated as a single payment.
  2. Time of Payment.
Payment shall be made upon the earlier of “separation from service” or such
other date as the participant shall specify in the
election.  “Separation from service” means the date of termination of
the participant’s services to the Company and all affiliates, whether
voluntarily or involuntarily, other than by reason of death, as determined in
accordance with Treas. Reg. Sec. 1.409A-1(h).
  If
payment is made upon separation from service, such payment will commence on the
first regularly scheduled Company payroll date following the six month
anniversary of the participant’s separation from service.  If payment
is made upon a specified date, then distribution will be made within ninety (90)
days of such date.  In any situation in which the Company is unable to
determine the method of payment because of incomplete, unclear or uncertain
participant instructions or if no deferral election is on file, then the
deferred bonus and any interest thereon will be paid in a single lump sum on the
first regularly scheduled Company payroll date following the six-month
anniversary of the participant’s separation from service.
  3. Modification of Time of
Payment.  The participant may submit a written request to the
Compensation Committee in order to change the elected time of payment; provided,
however, that any such change (a) must be made at least twelve months prior to
the previously designated initial payment date, (b) will not be effective for a
period of twelve months, and (c) must defer payment for at least five years
beyond the originally elected date of payment, except with respect to payment
upon death of the participant.  A participant’s modified election
shall not be considered to be made until the date on which the election becomes
irrevocable.  Such an election shall become irrevocable no later than
the date that is twelve months prior to the participant’s previously designated
initial payment date.
  
  Notwithstanding
anything contained herein to the contrary, if any portion of any bonus which
would otherwise be payable to a “covered individual” (within the meaning of
Section 162(m) of the Code) is not deductible by reason of Section 162(m) of the
Code, such portion shall automatically be deferred under this Plan and paid to
the covered individual in a lump sum on the first regularly scheduled payroll
date of Nicor following the six month anniversary of the covered individual’s
separation from service.
  Integration with Existing
Programs
 Base
salaries will be managed with range bands at the appropriate blend of general
and industry data for comparable positions, with total compensation objectives
to be managed at a level appropriate with the performance of the company, as
determined by the Compensation Committee.  Salaries will be monitored
each year and increases granted based on merit and range band.  Bonus
targets will be set as a percentage of base salary.  A change, other
than the annual salary review, in the compensation objective will customarily
occur during the year only through promotion to various levels, at which time
the base salary and bonus target are also likely to change.
  Promotion
of an employee during the year or reassignment to responsibilities in which new
performance objectives apply will result in proration of the existing
performance objectives and bonus target and assignment of new performance
objectives as determined by the Compensation Committee.  Promotion
into an Executive Salary Band would create eligibility for bonus at a prorated
amount, based on the effective date of the promotion.
  If a
participant voluntarily terminates or is terminated for cause prior to the end
of the performance period, then no award shall be granted.  In the
event a participant shall die, become disabled, retire or is terminated without
cause before the end of the performance period, then the Compensation Committee
will authorize payment of an award to the participant, or beneficiary, in such
amount as the Committee deems appropriate.
  Responsibility
 The Human
Resources Department will be responsible for the administration of the process
for the company.  This will include:
  1.
              monitoring
      market salary and total compensation
levels;
  2.
              recommending
      structural changes in base salary and compensation objective
      adjustments;
  3.
              reviewing
      eligibility and performance
targets;
  4.
              monitoring
      financial performance targets through the Accounting
      Department;
  5.
              communicating
      progress reports to participants;
  6.
              progress
      and exception reporting to Compensation
  Committee;
  7.
              monitoring
      compliance with related financial controls;
and
  
  8.
              maintaining
      the accuracy of the plan documents(s) governing the
  plan.
  The Plan
and changes to its performance targets and measurement criteria will be reviewed
and approved by the Compensation Committee.
  In
determining the actual bonus awards to be made, the Compensation Committee may
take into account all of the facts and circumstances which exist during the year
and may make appropriate upward or downward revisions in performance criteria,
add or delete objectives, or change the relative percentages assigned to the
various performance objectives.
  Amendment and
Termination
 The
Compensation Committee may amend or terminate the Plan at any time without the
consent of the participants.  No such amendment or termination shall
negatively impact any participant’s amount which accrued under the Plan prior to
the calendar year in which the amendment is made.