Exhibit 10.9.8
SEMCO ENERGY, INC.
2004 Stock Award and Incentive Plan

EMPLOYEE PERFORMANCE SHARE UNIT AWARD AGREEMENT

 
Grantee:
 
[First Middle Last]
Target Grant:
[ ] units
Performance Period
_____________ through
_____________
Grant Date:
_______________

THIS PERFORMANCE SHARE UNIT AGREEMENT (“Agreement”) is effective as of the Grant
Date stated above, by and between SEMCO Energy, Inc. and the Grantee.
WHEREAS, the Performance Share Units described in this Agreement have been
granted pursuant to, and are governed by, the Plan;
NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

1.     Performance Share Unit Grant. Subject to the terms and conditions of this
Agreement, the Company hereby grants to Grantee a Target Grant of Performance
Share Units as specified above.
2.     Award of Performance Share Units.
(a)     The Grantee will receive an award of a percentage of his Target Grant of
Performance Share Units as of the last day of the Performance Period if he
remains actively employed with the Company on such date and if the threshold
level of performance is met or exceeded with respect to at least one of the
performance goals established by the Committee for such Performance Period.

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(b)     Schedule A to this Agreement sets forth Grantee’s performance goals, the
portion of the Target Grant that will be available for an award with respect to
each performance goal (the “Performance Target”) and the percentage of that
Performance Target that will be awarded based upon the actual performance level
achieved with respect to such performance goal during the Performance Period.
The total Performance Share Units awarded pursuant to this Agreement shall equal
the sum of the Performance Share Units awarded with respect to each performance
goal.
3.     Awards on Certain Events. Notwithstanding the requirement in Section 2 of
this Agreement that a Grantee be actively employed on the last day of the
Performance Period:

a)  
Performance Share Units shall be awarded at the end of the Performance Period
pursuant to Section 2 to any Grantee who terminates employment during the
Performance Period:

  (i) on the Grantee’s Retirement Date;   (ii) on the Grantee’s Disability
Retirement Date;   (iii) on the date of the Grantee’s death prior to his
termination of employment from the Corporation; or   (iv) as a result of a
Change in Control.

The number of Performance Share Units awarded pursuant to this Section 3(a)
shall equal the product of the Performance Share Units that would otherwise be
awarded had the Grantee remained employed until the last day of the Performance
Period multiplied by (1) the number of days the Grantee was employed during the
Performance Period over (2) the number of days in the Performance Period.

b)  
In the event that a transaction constituting a Change in Control is consummated,
as of the date on which such a transaction is effective, as provided in the
agreement therefore, Section 3(a)(iv) of this Agreement is superseded and the
following shall occur:

 
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The performance goals established in Section 2(b) of this Agreement shall be
deemed to have been met at target, and all Performance Shares Units under this
Agreement may be adjusted by the Committee in accordance with the terms of the
Plan including, but not limited to, its authority to do so under Section 11(c)
thereof. 
4.     Delivery of Shares. Upon certification by the Committee of the achieved
performance under the established performance goals for the Performance Period,
the Performance Share Units awarded pursuant to Section 2 shall be paid to the
Grantee in shares of Stock. Payment of such Shares shall in no event be made
later than the date which is 2 ½ months after the end of the taxable year in
which the Performance Period ends. Certificates representing such shares of
Stock shall be delivered to the Grantee as soon as practicable after such
payment.
5.     Ownership Rights. Upon certification by the Committee in accordance with
Section 4 above, the Grantee shall exercise all ownership rights (including,
without limitation, the right to vote and the right to receive dividends) with
respect to such shares, provided that voting and dividend rights with respect to
the shares will be exercisable only if the record date for determining
shareholders entitled to vote, or to receive dividends, falls on or after the
date of such certification.
6.     Deferral of Exercise or Delivery of Shares. Notwithstanding any provision
in this Agreement to the contrary, if any law or regulation of any governmental
authority having jurisdiction in the matter requires the Company, the Committee
or the Grantee to take any action or refrain from action in connection with the
award of or delivery of Performance Share Units or Stock under this Agreement,
or to delay such award or delivery, then the award or delivery of such shares
shall be deferred until such action has been taken or such restriction on action
has been removed.
7.     General Provisions. The Grantee acknowledges that he has read,
understands and agrees with all of the provisions in this Agreement and the
Plan, including (but not limited to) the following:
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(a)     Authority of Committee. The Committee shall have all the authority set
forth in the Plan including, but not limited to, the authority to administer the
Agreement and the Plan; to make all determinations with respect to the
construction and application of the Agreement, the Plan, and the resolutions of
the Board of Directors establishing the Plan; to adopt and revise rules relating
to the Agreement and the Plan; and to make other determinations which it
believes are necessary or advisable for the administration of the Agreement and
the Plan. Any dispute or disagreement which arises under this Agreement or the
Plan shall be resolved by the Committee in its absolute discretion. Any such
determination, interpretation, resolution, or other action by the Committee
shall be final, binding and conclusive with respect to the Grantee and all other
persons affected thereby.
(b)     Notices. Any notice which is required or permitted under this Agreement
shall be in writing (unless otherwise specified in the Agreement or in writing
from the Company to the Grantee), and delivered personally or by mail, postage
prepaid, addressed as follows: (i) if to the Company, at 1411 Third Street, Ste.
A, Port Huron, Michigan 48060, Attention: Corporate Secretary, or at such other
address as the Company by notice to the Grantee may have designated from time to
time; (ii) if to the Grantee, at the address indicated in the Grantee's
then-current personnel records, or at such other address as the Grantee by
notice to the Company may have designated from time to time. Such notice shall
be deemed given upon receipt.
(c)     Taxation. The Grantee shall be responsible for all applicable income and
withholding taxes and the employee share of FICA taxes with respect to any
compensation income generated upon the award of his vested Performance Shares
under this Agreement. The Company may reduce the number of Performance Share
Units awarded (and shares of Stock delivered) to the Grantee to pay the
applicable FICA withholding taxes on the vested Performance Share Units and any
federal and state income tax withholdings related to such FICA amount.
(d)     Non-transferability. This Agreement and the Performance Share Units
granted to the Grantee shall be nontransferable and shall not be sold,
hypothecated or otherwise assigned or conveyed by the Grantee to any other
person, except as specifically permitted in this Agreement. No assignment or
transfer of this Agreement or the rights represented thereby, whether voluntary
or involuntary, or by operation of law or otherwise, shall vest in the assignee
or transferee any interest or right whatsoever, except as specifically permitted
in this Agreement. The Agreement shall terminate, and be of no force or effect,
immediately upon any attempt to assign or transfer the Agreement or any of the
Performance Share Units to which the Agreement applies.
 
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(e)     Designation of Beneficiary. Notwithstanding anything in Section 7(d) to
the contrary, the Grantee may designate a person or persons to receive, in the
event of his death, any rights to which he would be entitled under this
Agreement. Such a designation shall be filed with the Company in accordance with
uniform procedures specified by the Committee. The Grantee may change or revoke
a Beneficiary designation at any time by filing a written statement of such
change or revocation with the Company in accordance with uniform procedures
specified by the Committee. No Beneficiary designation or change of Beneficiary
designation will be effective until notice thereof is received. If Grantee fails
to designate a Beneficiary or if the Beneficiary predeceases the Grantee, the
legal representative of Grantee's estate shall be deemed to be his Beneficiary
for purposes of this Agreement. The Grantee is not required to obtain spousal
consent to designate someone other than the spouse as beneficiary.
(f)     No Shareholder Rights. Except as otherwise specifically provided in
Section 5 of this Agreement, the Grantee shall have no rights as a shareholder
of the Company and shall not be deemed to be a shareholder of the Company for
any purpose.
(g)     Not an Employment Contract. This Agreement shall not be deemed to limit
or restrict the right of the Company to terminate the Grantee's employment at
any time, for any reason, with or without cause, or to limit or restrict the
right of the Grantee to terminate his employment with the Company at any time.
(h)     Fractional Shares. Notwithstanding anything in this Agreement to the
contrary, in the event that any adjustment to the Target Grant or an award of
Performance Share Units or the calculation of an award pursuant to this
Agreement would otherwise result in the creation of a fractional share interest,
the affected Target Grant or Performance Share Unit award shall be rounded up to
the nearest whole share.
 
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(i)     Amendment or Termination. This Agreement may be amended or terminated at
any time by the mutual agreement and written consent of the Grantee and the
Committee, but only to the extent permitted under the Plan.
(j)     Governing Instrument. This Agreement is subject to all terms and
conditions of the Plan and shall at all times be interpreted in a manner that is
consistent with the intent, purposes, and specific language of the Plan.
(k)     Severability. If any provision of this Agreement should be held illegal
or invalid for any reason by the Committee or court of applicable jurisdiction,
such determination shall not affect the other provisions of this Agreement, and
it shall be construed as if such provision had never been included herein.
(l)     Headings/Gender. Headings in this Agreement are for convenience only and
shall not be construed to be part of this Agreement. Any reference to the
masculine, feminine or neuter gender shall be a reference to other genders as
appropriate.
(m)     Governing Law. This Agreement shall be construed, and its provisions
enforced and administered, in accordance with the laws of the State of Michigan
and, where applicable, federal law.
8.     Definitions. All capitalized terms shall have the meaning set forth in
the Plan or, if not defined in the Plan, shall be defined as set forth below.
(a)     Change of Control has the meanings specified in Section 9(c) of the
Plan.
(b)     Company means SEMCO Energy, Inc., its successors and assigns, and any
other Company or other entity, whether foreign or domestic, in which the Company
has or obtains, directly or indirectly, a proprietary interest of more than
eighty percent (80%) by reason of stock ownership or otherwise.
 
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(c)     Disability Retirement Date means the date of the Grantee’s termination
of employment from the Company due to Disability. For purposes of this
Agreement, Disability means a “disability” as defined under the SEMCO Energy,
Inc. Long-Term Disability Plan (whether or not the Grantee is covered under such
plan).
(d)     Grant Date means the date set forth on the first page of this Agreement.
(e)     Grantee means the Eligible Person named on the first page of this
Agreement.
(f)     Retirement Date means the Grantee’s date of termination from the Company
on which Grantee is eligible to receive an immediate annuity under the terms of
the SEMCO Energy, Inc. Retirement Plan (or any successor tax-qualified
retirement plan maintained for salaried employees of the Company).
(g)     Performance Period means the period during which the performance goals
established by the Committee will be measured to determine whether any of the
Performance Share Units will be awarded to Grantee pursuant to Section 2, which
period is specified on the first page of this Agreement.
(h)     Performance Share Units means the measurement unit, representing shares
of Stock, which is granted under the terms and conditions of this Agreement.
(i)     Plan means the SEMCO Energy, Inc. 2004 Stock Award and Incentive Plan,
as adopted by the Board of Directors on March 12, 2004, and approved by the
Company’s shareholders on May 24, 2004, and as amended from time to time.
(j)     Target Grant means the number of Performance Share Units specified on
the first page of this Agreement.
 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officers under its corporate seal, and the Grantee has executed
this Agreement, as of the day and year first above written.
 

        SEMCO ENERGY, INC.  
   
   
  By:      

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ATTEST:   
   
   
 

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    Corporate Secretary   

 

  GRANTEE    
 
 
 

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  Name:      

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Schedule A

LTIP Performance Cycle
Performance Share Target(s)

Weighting
Performance Target
       

Determination of Award

 
Achievement Level of Performance
Award as Percentage of Performance Target
Threshold
25.0%
25.0%
 
30.0%
30.0%
 
35.0%
35.0%
 
40.0%
40.0%
 
45.0%
45.0%
 
50.0%
50.0%
 
55.0%
55.0%
 
60.0%
60.0%
 
65.0%
65.0%
 
70.0%
70.0%
 
75.0%
75.0%
 
80.0%
80.0%
 
85.0%
85.0%
 
90.0%
90.0%
 
95.0%
95.0%
Target
100%
100%
 
105.0%
105.0%
 
110.0%
110.0%
 
115.0%
115.0%
 
120.0%
120.0%
 
125.0%
125.0%
 
130.0%
130.0%
 
135.0%
135.0%
 
140.0%
140.0%
 
145.0%
145.0%
Maximum
150.0%
150.0%

GRANTEE ACKNOWLEDGEMENT

I, the undersigned, hereby affirm that I have read the Performance Share Unit
Award Agreement and this Schedule A and understand the terms and conditions of
this award.
 

        Printed Name    Date   
 
 
      Signature      

 
 

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