Exhibit 10.2.1 - Directors Deferred Comp. Plan Amend. 1


     

    Exhibit
      10.2.1


    FIRST
      AMENDMENT TO THE SEMCO ENERGY, INC.

    DEFERRED
      COMPENSATION AND STOCK PURCHASE PLAN

    FOR
      NON-EMPLOYEE DIRECTORS

    


    


    THIS
      FIRST AMENDMENT is made as of this 18th day of October, 2005, by SEMCO ENERGY,
      INC. (the “Company”), a corporation organized and existing under the laws of the
      State of Michigan.

    


    W I T N E S S E T H:

    


    WHEREAS,
      the Company maintains the SEMCO Energy, Inc. Deferred Compensation and Stock
      Purchase Plan for Non-Employee Directors (the “Plan”), which was last amended
      and restated as of December 13, 2002;

    


    WHEREAS,
      the Company desires to amend the Plan effective as of January 1, 2005 solely
      to
      comply with the requirements of Section 409A of the Internal Revenue Code of
      1986, as amended; and

    


    WHEREAS,
      pursuant to Q&A 18(a) of Notice 2005-1, such amendment does not constitute a
      material modification of the Plan for purposes of Code Section 409A and thus
      any
      deferrals made prior to January 1, 2005 are grandfathered and not subject to
      Code Section 409A.

    


    NOW,
      THEREFORE, the Plan is hereby amended, effective as of January 1, 2005, as
      follows:

    


    1.  By
      deleting the first sentence of the third paragraph of Article II in its entirety
      and substituting therefor the following: 

    


    “Separate
      deferral elections, investment elections, and distribution elections must be
      made for each calendar year in which a Director chooses to defer
      compensation.”

    


    2.  By
      deleting the existing Article VII in its entirety and substituting therefor
      the
      following:

    


    “ARTICLE
      VII

    Distributions

    


    Common
      shares shall be distributed in certificate form if such shares are restricted
      pursuant to Rule 144 or
      if a
      certificate is requested. If such shares are not restricted pursuant to Rule
      144, they may be distributed in book entry form into an existing or newly
      created account with the Company’s transfer agent. If the distribution is in
      certificate form, any fractional share shall be paid out at the price that
      would
      be paid for such fractional share pursuant to a DRIP withdrawal effected on
      that
      date.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      Company shall have the right to withhold from any payment an amount sufficient
      to satisfy any federal, state or local tax withholding requirements in
      connection with such payment or any other payment previously made to, or for
      the
      benefit of, Director (whether effected pursuant to this Agreement or
      otherwise).

    


    The
      Director may elect to receive amounts in the Account attributable to That Year's
      Deferred Compensation in a Lump Sum or via a Graduated Payout of a varying
      Distribution Amount as described below. Each payment will be made within a
      30-day period ("Payment Period") after the date the amount becomes payable,
      in
      accordance with such election. 

    


    If
      in
      a Lump Sum payable:

    
      	 	 	 	
              (i)

            	
              the
                date the Director separates from service as a Director of the Company
                or
                any business entity controlling, controlled by or under common control
                with the Company ("Separation from Service
                Date").

            


    

    


    OR

    


    
      	 	 	 	
              (ii)

            	
              January
                1 of any specified year. 

            


    

    


    OR

    


    
      	 	 	 	
              (iii)

            	
              the
                earlier of either of (i) or (ii) above.


            


    

     

    


    If
      in
      a Graduated Payout:

    
      	 	 	 	
              (i)

            	
              In
                3 annual payments as follows:

            


    

    a. one-third
      as of Separation From Service Date; 

    b. one-half
      of remaining balance as of the one-year anniversary of Separation From Service
      Date; and 

    c. the
      balance as of the two-year anniversary of Separation From Service
      Date.

    


    OR

    


    
      	 	 	 	
              (ii)

            	
              In
                5 annual payments as follows:

            


    

    a. one-fifth
      as of Separation From Service Date; 

    b. one-fourth
      of remaining balance as of the one-year anniversary of Separation From Service
      Date; 

    c. one-third
      of remaining balance as of the two-year anniversary of Separation From Service
      Date; 

    d. one-half
      of remaining balance as of the three-year anniversary of Separation From Service
      Date; and 

    e. the
      balance as of the four-year anniversary of Separation From Service Date.


     

    2

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      a
      Graduated Payout is chosen, and the Director has both an interest-bearing
      account and a Common Stock account with respect to That Year’s Deferred
      Compensation, distributions will be effected pro-rata based on the sub-accounts'
      values as of the beginning of the Payment Period (or, if no value is easily
      determinable for such date, as of the most recent date prior thereto for which
      a
      value is easily determinable). 

    


    Once
      an
      election pursuant to this Article VII is made for That Year's Deferred
      Compensation, it can only be changed if all the following conditions are
      met:

    
      	(i)  	
              the
                Administrator consents in writing;

            


    

    
      	(ii)  	
              the
                change will not take effect until at least twelve (12) months after
                the
                date the new election is made;

            


    

    
      	(iii)  	
              the
                change is made at least twelve (12) months before the date of the
                first
                scheduled payment of That Year's Deferred Compensation;
                

            


    

    
      	(iv)  	
              the
                effect of the change is to delay distribution, provided that the
                new
                election must delay distribution at least five (5) years from the
                date
                such distribution otherwise would have been made.
                

            


    

    


    If
      the
      Director dies prior to any given Payment Period, payment of the amount relating
      to that Payment Period shall be made to the primary beneficiary. However, if
      the
      primary beneficiary dies prior to any given Payment Period, payment of the
      amount relating to that Payment Period shall be made, to the alternate
      beneficiary. If any payee is alive at the beginning of the Payment Period and
      dies prior to distribution of the amount relating to that Payment Period, such
      amount shall be paid to such payee's estate.

    


    If
      the
      Director and all beneficiaries have died prior to any Payment Period with
      respect to any That Year’s Deferred Compensation, the entire balance
      attributable to That Year’s Deferred Compensation will be paid in a lump sum as
      soon as administratively practicable to the estate of the last surviving payee.
      

    


    The
      Director may change beneficiaries at any time by submitting written notice
      to
      the Administrator.”

    


    3.  By
      deleting the second paragraph of Article XI in its entirety and substituting
      therefor the following: 

    


    “The
      Board may terminate the Plan (or any aspect of the Plan) at any time. Upon
      termination, Directors shall be paid the balance in their Accounts in accordance
      with their most current elections under the Plan.”

     

    4.  By
      adding
      the following to the end of Article XII:

    


    “It
      is
      intended that any distribution which is provided pursuant to or in connection
      with the Plan which is considered to be non-qualified deferred compensation
      subject to Section 409A of the Internal Revenue Code of 1986, as amended, (the
      “Code”) shall be provided and paid in a manner, and at such time and in such
      form, as complies with the applicable requirements of Section 409A of the Code
      to avoid the unfavorable tax consequences provided therein for
      non-compliance.”

     

    3

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Except
      as
      specifically amended hereby, the Plan shall remain in full force and effect
      as
      prior to this First Amendment.

    


    IN
      WITNESS WHEREOF, the Company has caused this First Amendment to be executed
      as
      of the day and year first above written.

    


    
      
        	 	 	 
	 	SEMCO
                ENERGY, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Lance
                Smotherman
	 	
                

              
	 	Title: 
                Vice President of H. R. 


      



     

    


    


    


    


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