Document:

Exhibit 10.10 - Form of RSU Award Agreement

    Exhibit
      10.10 - Form of Restricted Stock Unit Award Agreement

    

    SEMCO
      ENERGY, INC. 

    2004
      Stock Award and Incentive Plan

    

    RESTRICTED
      STOCK UNIT AWARD AGREEMENT

    

    

    
      	
               

              Grantee:

            	
               

              [Insert
                Name]

            
	
              Grant:

            	
              [Insert
                # Units] 

            
	
              Grant
                Date:

            	
              [Insert
                Date]

            

    

    

    THIS
      RESTRICTED STOCK UNIT AWARD AGREEMENT is effective as of the Grant Date stated
      above, by and between SEMCO Energy, Inc. and the Grantee.

    WHEREAS,
      the Restricted Stock 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. Restricted
      Stock Unit Grant.
      Subject
      to the terms and conditions of this Agreement, the Company hereby grants to
      Grantee the Restricted Stock Units as specified above.

    2. Vesting.
      Except
      as stated in Section 3 of this Agreement, the Grantee shall become vested in
      the
      Restricted Stock Units in accordance with the following schedule:

    (a) [Insert
      #] Units shall become vested on [Insert 1st
      Anniversary Date], provided that Grantee remains actively employed by the
      Company on such date; 

    (b) [Insert
      #] Units shall become vested on [March 31, 2006], provided that the performance
      objectives established by the Committee for the performance period beginning
      on
      [March 31, 2005] and ending on [March 31, 2006] (as set forth in Schedule A
      to
      the Agreement) have been satisfied as of such date; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c) [Insert
      #] Units shall become vested on [March 31, 2007], provided that the performance
      objectives established by the Committee for the performance period beginning
      on
      [March 31, 2006] and ending on [March 31, 2007] (as set forth in Schedule A
      to
      the Agreement) have been satisfied as of such date. 

    3. Accelerated
      Vesting.
      Notwithstanding the vesting requirements specified in Section 2 of this
      Agreement, all Restricted Stock Units shall become 100% vested upon the earliest
      to occur of the following vesting dates:

    
       

      
        	 	(i)	the
                Grantee’s Retirement Date;

        	 	
                (ii)

              	
                the
                  Grantee’s Disability Retirement
                  Date;

              

      

      
        	 	
                (iii)

              	
                the
                  date of the Grantee’s death prior to his termination of employment from
                  the Company;

              

      

      
        	 	
                (iv)

              	
                the
                  date the Company terminates the Grantee’s employment without Cause;
                  

              

      

      
        	 	
                (v)

              	
                the
                  date the Grantee terminates his employment with Good Reason;
                  or

              

      

      
        	 	
                (vi)

              	
                the
                  date of a Change in Control.

              

      

    

    4. Delivery of Shares.
      On
      [June 1, 2007], the Company shall pay to Grantee a number of shares of Stock
      equal to the number of Restricted Stock Units that have vested pursuant to
      Sections 2(a), 2(b) and 2(c). Certificates representing such shares of Stock
      shall be delivered to the Grantee as soon as practicable thereafter.

    5. Ownership
      Rights.
      Upon
      payment of the Shares 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 payment. 

    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 Restricted Stock
      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.

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    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:

    (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 a 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 with respect to his vested Restricted Stock Units under this
      Agreement. The Company may reduce the number of Restricted Stock Units (and
      shares of Stock) to pay the applicable FICA withholding taxes on the vested
      Restricted Stock Units and any federal and state income tax withholdings related
      to such FICA amount.

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    (d) Nontransferability.
      This
      Agreement and the Restricted Stock 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 Restricted Stock Units to which
      the Agreement applies.

    (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. 

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    (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) 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. 

    (i) 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.

    (j) 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. 

    (k) 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.

    (l) 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) Cause
      has the
      meaning specified in Section 4.1.3 of the Severance Agreement. 

    (b) Change
      in Control has
      the
      meaning specified in Section 4.6 of the Severance Agreement.

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    (c) 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. 

    (d) Disability
      Retirement Date
      means
      the date of the Optionee’s termination of employment from the Company due to
      Disability. For purposes of this Agreement, Disability is defined as, the
      Employee (a) is unable to engage in any substantial gainful activity by reason
      of any medically determinable physical or mental impairment which can be
      expected to result in death or can be expected to last for a continuous period
      of not less than 12 months or (b) is, by reason of any medically determinable
      physical or mental impairment which can be expected to result in death or can
      be
      expected to last for a continuous period of not less than 12 months, receiving
      income replacement benefits for a period of not less than 3 months under an
      accident and health plan covering employees of the Company. 

    (e) Severance
      Agreement
      means
      the severance agreement entered into as of [Insert Date] by and between SEMCO
      Energy, Inc. and Grantee.

    (f) Good
      Reason
      has the
      meaning specified in Section 4.2.1 of the Severance Agreement.

    (g) Grant
      means
      the
      number of Restricted Stock Units specified on the first page of this
      Agreement.

    (h) Grant
      Date
      means
      the date set forth on the first page of this Agreement.

    (i) Grantee
      means
      the Eligible Person named on the first page of this Agreement. 

    (j) 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.

    (k) Restricted
      Stock Units
      means
      the measurement unit, representing shares of Stock, which is granted under
      the
      terms and conditions of this Agreement.

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    (l) 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).

    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:____________________________ 

            
	
              ATTEST: 

               

              __________________________

              Corporate
                Secretary

            	 	 
	 	 	
              GRANTEE 

               

              _______________________________

              Name:__________________________

            

    

     

     

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    SCHEDULE
      A

    

    PERFORMANCE
      TARGETS

    

    Performance
      Requirement for the vesting of units identified in Article 2 (b) [Insert #
      Units] 

    

    _________________________________________________________________________________________________________________________________________________________________________________________________________

    

    

    Performance
      Requirement for the vesting of units identified in Article 2 (c) [Insert #
      Units] 

    

    _________________________________________________________________________________________________________________________________________________________________________________________________________

    

    

    

    GRANTEE
      ACKNOWLEDGMENT

    

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

    

    
      	
              
Printed
              Name 	 	
              
Date
	 	 	 
	 	 	 
	
              
Signature 	 	 

    

     

     

     

    8Exhibit 10.11 - Form of Stock Option Agreement - executive agr.

    Exhibit
      10.11 - Form of Stock Option Agreement pursuant to executive
      agreements

    

    SEMCO
      ENERGY, INC.

     

    2004
      Stock Award and Incentive Plan

    

    STOCK
      OPTION AGREEMENT

    

    

    
      	
              Optionee:

            	
              [Insert
                Name]

            
	
              Total
                Shares Under Option:

            	
              [Insert
                # Shares]

            
	
              Option
                Price:

            	
              [Insert
                price per share]

            
	
              Grant
                Date:

            	
              [Insert
                Date]

            

    

    

    THIS
      STOCK OPTION AGREEMENT is effective as of the Grant Date stated above, by and
      between SEMCO Energy, Inc. and the Optionee.

    WHEREAS,
      the options described in this Agreement have been granted pursuant to, and
      are
      governed by, the Plan;

    NOW,
      THEREFORE, SEMCO Energy, Inc. and the Optionee hereby agree as
      follows:

    

    1. Option
      Grant.
      Subject
      to the terms and conditions of this Agreement, the Company hereby grants an
      option to the Optionee to purchase from the Company, at the Option Price, the
      number of shares of Stock equal to the Total Shares Under Option.

    2. Vesting. 

    (a) Regular
      Vesting.
      Except
      as stated in Sections 2(b) and 2(c) of this Agreement, the Optionee shall become
      vested in a percentage of the Total Shares Under Option in accordance with
      the
      following schedule:

    

    
      	
              Vesting
                Date

            	
              Percentage
                of Total Shares Under Option

            
	
              [Insert
                1st
                Anniversary date]

            	
              33%

            
	
              [Insert
                2nd
                Anniversary date]

            	
              33%

            
	
              [Insert
                3rd
                Anniversary date]

            	
              34%

            

    

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
      number of shares granted to the Optionee under this Agreement which become
      vested on a Vesting Date in accordance with the above schedule will be
      determined by multiplying the Total Shares Under Option by the percentage
      specified in the above schedule, and then rounding the resulting number up
      to
      the nearest whole number, provided that the aggregate number of the Optionee’s
      vested shares under this Agreement shall not exceed the Total Shares Under
      Option. Notwithstanding anything in this Agreement to the contrary, no Vesting
      Date will occur following Optionee’s termination of employment with the
      Company.

    (b) Accelerated
      Vesting.
      Notwithstanding the vesting schedule specified in Section 2(a) of this
      Agreement, the Total Shares Under Option shall become 100% vested upon the
      earliest to occur of the following Vesting Dates:

    

      (i) the
        Optionee’s Retirement Date;

      
        	 	
                (ii)

              	
                the
                  Optionee’s Disability Retirement
                  Date;

              

      

      
        	 	
                (iii)

              	
                the
                  date of the Optionee’s death prior to his termination of employment from
                  the Company;

              

      

      
        	 	
                (iv)

              	
                the
                  date the Company terminates the Optionee’s employment without
                  Cause;

              

      

      
        	 	
                (v)

              	
                the
                  date the Optionee terminates his employment with Good Reason;
                  or

              

      

      
        	 	
                (vi)

              	
                the
                  date of a Change in Control.

              

      

    

     

    If
      more
      than one of the accelerated vesting rules specified in this Section 2(b) can
      apply to the Optionee, the Optionee will be deemed to have elected the available
      accelerated vesting rule which provides the longest exercise
      period.

    (c) Termination
      for Cause.
      Notwithstanding anything in this Agreement to the contrary, if the Company
      terminates the Optionee’s employment for Cause prior to a Change in Control,
      this Agreement shall be terminated and all options granted to the Optionee
      under
      this Agreement shall be forfeited, regardless of whether a Vesting Date has
      occurred on or before such termination date, unless and to the extent that
      the
      Committee determines that such forfeiture would violate applicable
      law.

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    3. Exercise
      of Options.
      

    (a) General.
      Except
      as otherwise specified by the Committee in accordance with Sections 3(c) and
      3(d), the Optionee (or his Representative, as the case may be) may exercise
      the
      options granted under the Agreement, in whole or in part, at any time on or
      after the Vesting Date for such options and prior to their Expiration Date,
      by
      complying with the procedures described in this Section 3. The Optionee shall
      forfeit all rights to any option under this Agreement, whether or not then
      vested, which is not exercised prior to its Expiration Date.

    (b) Exercise
      Procedure.
      The
      Optionee or his Representative (if applicable) may exercise all or a portion
      of
      his vested options under this Agreement by delivering notice to the Company.
      The
      notice shall specify the number of shares of Stock that the Optionee desires
      to
      purchase by exercise of his vested options, and shall include payment for the
      Exercise Amount of such shares in one of the following ways:

    
      	 	 	
              (i)

            	
              The
                Optionee may tender payment of the Exercise Amount on the date of
                exercise
                in the form of cash, certified check, bank draft, or postal or express
                money order made payable to the order of the Company and denominated
                in
                U.S. dollars; or

            

    

    
      	 	 	
              (ii)

            	
              The
                Optionee may tender payment of the Exercise Amount on the date of
                exercise
                in the form of shares of Stock having a Fair Market Value on the
                date of
                exercise equal to the Exercise Amount (if such shares were acquired
                upon
                exercise of an option, they must have been held by the Optionee for
                at
                least six months at the time of tender);
                or

            

    

    
      	 	 	
              (iii)

            	
              The
                Optionee may tender payment of the Exercise Amount on the date of
                exercise
                in a combination of (A) shares of Stock (subject to the holding period
                described in paragraph (ii) above); and (B) cash, certified check,
                bank
                draft, or postal or express money order made payable to the order
                of the
                Company and denominated in U.S. dollars, equal to the difference
                between
                the Exercise Amount and the Fair Market Value of the tendered shares
                of
                Stock on the date of exercise; or

            

      	 	 	(iv)	The
              Optionee may initiate a cashless exercise in accordance with procedures
              promulgated by the Committee, if any.

    

     

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    Within
      30
      days after the date of such exercise, the Company shall make available to the
      Optionee a certificate registered in the Optionee’s name or a book entry in a
      depository institution for the Optionee’s account, representing the aggregate
      number of shares of Stock purchased by the Optionee as a result of such
      exercise.

    (c) Exercise
      of Options During Leave
      of Absence. Notwithstanding
      any provision of this Agreement to the contrary, if the Optionee is on a leave
      of absence or is absent on military or government service at any time on or
      after the Grant Date and prior to the Expiration Date, the Optionee may not
      exercise any part of the Total Shares Under Option prior to the date the
      Optionee returns to active employment with the Company, and vesting of any
      options under this Agreement which would normally vest on a date during the
      absence shall be postponed until the Optionee returns to active work at the
      end
      of the absence (in which case, the date of return to active employment shall
      be
      a Vesting Date). The provisions of this subsection (c) shall not affect any
      of
      Optionee’s rights in the event one of the Vesting Dates specified in Section
      2(b) occurs during such an absence.

    (d) 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, Committee, Optionee, or Representative to take any action
      or refrain from action in connection with the exercise of any option under
      this
      Agreement or the delivery of shares of Stock to the Optionee, or to delay such
      exercise or delivery, then the exercise or delivery of such shares shall be
      deferred until such action has been taken or such restriction on action has
      been
      removed.

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    4. Rules
      Governing the Expiration Date.
      The
      Expiration Date for options granted to the Optionee under this Agreement shall
      be subject to the following rules:

    (a) Termination
      of Employment.
      If the
      Optionee voluntarily or involuntarily terminates employment with the Company
      (for reasons other than termination without Cause, Good Reason, death, Change
      in
      Control, Retirement, or Disability), the Expiration Date for exercising any
      options under this Agreement which were vested as of his date of termination
      shall be the three month anniversary of the date of such
      termination.

    (b) Termination
      of Employment without Cause.
      If the
      Company terminates the Optionee’s employment without Cause, the Expiration Date
      for exercising his vested options under this Agreement shall be the third
      anniversary of such termination.

    (c) Termination
      of Employment for Good Reason. If
      the
      Optionee terminates his employment for Good Reason, the Expiration Date for
      exercising his vested options under this Agreement shall be the third
      anniversary of such termination.

    (d) Retirement.
      If the
      Optionee terminates employment with the Company on his Retirement Date, the
      Expiration Date for exercising his vested options under this Agreement shall
      be
      the third anniversary of his Retirement Date.

    (e) Disability.
      If the
      Optionee terminates employment with the Company on his Disability Retirement
      Date, the Expiration Date for exercising his vested options under this Agreement
      shall be the third anniversary of his Disability Retirement Date.

    (f) Optionee’s
      Death.
      If the
      Optionee dies while actively employed by the Company, the Expiration Date for
      exercising his vested options under this Agreement shall be the first
      anniversary of the Optionee’s death.

    (g) Change
      in Control.
      The
      Expiration Date for all of the Optionee’s vested options shall be the tenth
      anniversary of the Grant Date if a Change in Control takes place while the
      Optionee is actively employed by the Company. Notwithstanding the foregoing,
      if
      the Optionee’s employment is terminated for Cause following a Change in Control,
      the Expiration Date for all of the Optionee’s vested options shall be the date
      of such termination.

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    (h) Maximum
      Expiration Date.
      Notwithstanding any provision in this Section 4 of the Agreement to the
      contrary, no
      option
      shall be exercisable on or after the tenth anniversary of the Grant
      Date.

    5. General
      Provisions.
      The
      Optionee 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:

    (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 Optionee 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 a writing from the Company
      to
      the Optionee), 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 Optionee may have designated from time to time; (ii)
      if
      to the Optionee, at the address indicated in the Optionee's then-current
      personnel records, or at such other address as the Optionee by notice to the
      Company may have designated from time to time. Such notice shall be deemed
      given
      upon receipt.

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    (c) Taxation.
      The
      Optionee shall be responsible for all applicable withholding taxes and the
      employee share of FICA taxes with respect to compensation income generated
      upon
      the exercise or surrender of his vested options under this
      Agreement.

    (d) Nontransferability.
      This
      Agreement and the options granted to the Optionee hereto shall be
      nontransferable and shall not be sold, hypothecated or otherwise assigned or
      conveyed by the Optionee 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 options to which the Agreement
      applies.

    (e) Designation
      of Beneficiary.
      The
      Optionee 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 Optionee 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 an Optionee
      fails to designate a beneficiary or if the beneficiary predeceases the Optionee,
      the beneficiary shall be the legal representative of the Optionee’s estate. The
      Optionee is not required to obtain spousal consent to designate someone other
      than the spouse as beneficiary.

    (f) No
      Shareholder Rights.
      The
      Optionee 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, as a result of the
      options granted to the Optionee under this Agreement, until the date that shares
      of Stock have been issued or transferred to the Optionee following the exercise
      of an option in accordance with this Agreement. The Optionee shall not be
      entitled to any dividends or other rights for which the record date is prior
      to
      the date of such issuance, transfer, or receipt.

    7

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g) Not
      an Employment Contract.
      This
      Agreement shall not be deemed to limit or restrict the right of the Company
      to
      terminate the Optionee's employment at any time, for any reason, with or without
      Cause, or to limit or restrict the right of the Optionee to terminate his
      employment with the Company at any time.

    (h) Forfeiture
      Provisions. This
      Award is subject to all of the forfeiture conditions set forth in Section 10
      of
      the Plan. 

    (i) Amendment
      or Termination.
      This
      Agreement may be amended or terminated at any time by the mutual agreement
      and
      written consent of the Optionee and the Committee, but only to the extent
      permitted under the Plan. 

    (j) Not
      Considered Incentive Stock Options.
      The
      options granted under this Agreement do not constitute and shall not be
      construed to constitute "incentive stock options" with the meaning of section
      422 of the Internal Revenue Code of 1986, as amended.

    (k) 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.

    (l) 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.

    (m) 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.

    (n) 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.

    6. 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. 

    8

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a) Cause
      has the
      meaning specified in Section 4.1.3 of the Severance Agreement. 

    (b) Change
      in Control has
      the
      meaning specified in Section 4.6 of the Severance Agreement.

    (c) 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. 

    (d) Disability
      Retirement Date
      means
      the date of the Optionee’s termination of employment from the Company due to
      Disability. For purposes of this Agreement, Disability is defined as,
      the
      Employee (a) is unable to engage in any substantial gainful activity by reason
      of any medically determinable physical or mental impairment which can be
      expected to result in death or can be expected to last for a continuous period
      of not less than 12 months or (b) is, by reason of any medically determinable
      physical or mental impairment which can be expected to result in death or can
      be
      expected to last for a continuous period of not less than 12 months, receiving
      income replacement benefits for a period of not less than 3 months under an
      accident and health plan covering employees of the Company.   

    (e) Severance
      Agreement
      means
      the severance agreement entered into as of [Insert Date], by and between SEMCO
      Energy, Inc. and Optionee.

    (f) Exercise
      Amount
      means
      the sum of (a) the Option Price multiplied by the number of vested options
      being
      exercised plus (b) an amount sufficient to pay all applicable FICA and
      withholding taxes on the difference between the Fair Market Value of Company
      Stock for which the vested options are being exercised (determined as of the
      exercise date) and their Option Price, as calculated by the
      Committee.

    (g) Expiration
      Date
      means
      the tenth anniversary of the Grant Date, unless an earlier Expiration Date
      is
      established by operation of Section 4 of this Agreement.

    (h) Fair
      Market Value
      has the
      meaning specified in Section 2(n) of the Plan.

    9

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i) Good
      Reason
      has the
      meaning specified in Section 4.2.1 of the Severance Agreement.

    (j) Grant
      Date
      means
      the date set forth on the first page of this Agreement, upon which the options
      described in this Agreement were granted to the Optionee.

    (k) Option
      Price
      means
      the price per share set forth on the first page of this Agreement.

    (l) Optionee
      means
      the Eligible Person named on the first page of this Agreement. 

    (m) 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.

    (n) Representative
      means,
      in the event of the Optionee’s Disability, his duly authorized legal guardian or
      representative; or, in the event of the Optionee’s death, his estate, legal
      representative, or beneficiary as designated pursuant to Section
      5(e).

    (o) Retirement
      Date
      means
      the date of Optionee’s termination of employment from the Company on which
      Optionee 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).

    (p) Total
      Shares Under Option
      means
      the number of options granted to the Optionee as set forth on the first page
      of
      this Agreement.

    (q) Vesting
      Date
      means
      any one of the dates upon which options granted to the Optionee under this
      Agreement become exercisable in accordance with this Agreement.

    

    10

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

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

    
 

    
      	 	 	
              SEMCO
                ENERGY, INC.

               

              By:__________________________

            
	
              ATTEST:

               

              ____________________________

              Corporate
                Secretary

            	 	 
	 	 	
              OPTIONEE

               

              _____________________________

              [Insert
                Name] 

            

    

     

     

     

     

     

    11

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