Document:

Exhibit 10.13.1 - First Amendment dated February 22, 2007, to the Severance
      Agreement dated June 29, 2005, between SEMCO Energy, Inc. and Michael V. Palmeri

    
      Exhibit
        10.13.1

       
FIRST
      AMENDMENT TO THE SEVERANCE AGREEMENT

    BETWEEN
      SEMCO ENERGY, INC. AND

    MICHAEL
      V. PALMERI

    

    THIS
      FIRST AMENDMENT to the Severance Agreement (the “Agreement”) dated June 29, 2005
      by and between SEMCO Energy, Inc. (the “Company”), a corporation organized and
      existing under the laws of the State of Michigan, and Michael V. Palmeri
      (“Executive”) is made as of this 22nd
      day of
      February, 2007.

    

    W I T N E S S E T H:

    

    WHEREAS,
      the Company and the Executive entered into the Agreement as of June 29,
      2005;

    

    WHEREAS,
      Section 3 of the Agreement provides for Executive’s compensation;

    

    WHEREAS,
      the Company’s Board of Directors has, from time to time since the execution of
      the Agreement approved adjustments to the Long-Term Incentive Award Target
      set
      forth in the Agreement; and

    

    WHEREAS,
      the Company and Executive desire to amend the Agreement to include the
      previously approved changes in the Long-Term Incentive Award Target for the
      Executive and to allow for increases in the short-term and long-term incentive
      opportunity levels from time to time without further amendments to the
      Agreement.

    

    NOW,
      THEREFORE, the Agreement is hereby amended as follows:

    

    1.  By
      adding
      the following to the end of Section 3.2:

    

    The
      percentage set forth in Exhibit C shall be reviewed annually by the Board of
      Directors, and may be increased from time to time to reflect market changes
      in
      the compensation paid to similarly-situated executives but may not be decreased
      without Executive’s express written consent.

    

    2.  By
      adding
      the following to the end of Section 3.3.2:

    

    The
      Long-Term Incentive Award Target set forth in Exhibit D shall be reviewed
      annually by the Board of Directors, and may be increased from time to time
      to
      reflect market changes in the compensation paid to similarly-situated executives
      but may not be decreased without Executive’s express written
      consent.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.  Exhibit
      D
      to the Agreement is amended as follows:

    

    Effective
      as of January 1, 2006, Executive’s Long-Term Incentive Award Target is increased
      from 50% multiplied by his Base Salary to 65% multiplied by his Base
      Salary.

    

    Except
      as
      expressly amended hereby, the Agreement shall remain in full force and
      effect.

    

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

    
      
         

        
          
            	 	 	 
	 	SEMCO
                    ENERGY, INC.
	 
 	 
 	 
 
	 	By:  	/s/ George
                    A. Schreiber, Jr.
	 	 	
                    

                  
	 	Title: 	President
                    and CEO 
	 	
                    

                  

          

           

          
            	 	 	 
	 	EXECUTIVE
	 
 	 
 	 
 
	 	/s/
                    Michael V. Palmeri
	 	
                    

                  
	 	 

          

        

         

         

        2Exhibit 10.14.1 - First Amendment dated February 22, 2007, to the Severance
      Agreement dated June 29, 2005, between SEMCO Energy, Inc. and Lance S. Smotherman

    
      Exhibit
        10.14.1

       
FIRST
      AMENDMENT TO THE SEVERANCE AGREEMENT

    BETWEEN
      SEMCO ENERGY, INC. AND

    LANCE
      S. SMOTHERMAN

    

    THIS
      FIRST AMENDMENT to the Severance Agreement (the “Agreement”) dated June 29,
      2005, by and between SEMCO Energy, Inc. (the “Company”), a corporation organized
      and existing under the laws of the State of Michigan, and Lance S. Smotherman
      (“Executive”) is made as of this 22nd
      day of
      February, 2007.

    

    W I T N E S S E T H:

    

    WHEREAS,
      the Company and the Executive entered into the Agreement as of June 29,
      2005;

    

    WHEREAS,
      Section 3 of the Agreement provides for Executive’s compensation;

    

    WHEREAS,
      the Company’s Board of Directors has, from time to time since the execution of
      the Agreement approved adjustments to the Target Annual Bonus opportunity and
      Long-Term Incentive Award Target set forth in the Agreement; and

    

    WHEREAS,
      the Company and Executive desire to amend the Agreement to include the
      previously approved changes in the Target Annual Bonus opportunity and Long-Term
      Incentive Award Target for the Executive and to allow for increases in the
      short-term and long-term incentive opportunity levels from time to time without
      further amendments to the Agreement and to make certain other changes in the
      Agreement;

    

    NOW,
      THEREFORE, the Agreement is hereby amended as follows:

    

    1.  By
      adding
      the following to the end of Section 3.2:

    

    The
      percentage set forth in Exhibit C shall be reviewed annually by the Board of
      Directors, and may be increased from time to time to reflect market changes
      in
      the compensation paid to similarly-situated executives but may not be decreased
      without Executive’s express written consent.

    

    2.  By
      adding
      the following to the end of Section 3.3.2:

    

    The
      Long-Term Incentive Award Target set forth in Exhibit D shall be reviewed
      annually by the Board of Directors, and may be increased from time to time
      to
      reflect market changes in the compensation paid to similarly-situated executives
      but may not be decreased without Executive’s written consent.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.  Exhibit
      A
      to the Agreement is amended as follows:

    

    Effective
      February 22, 2007, Executive’s title shall be: Senior Vice President of Human
      Resources and Administration.

    

    Executive
      shall report to the Company’s President and Chief Executive
      Officer.

    

    Executive’s
      functions, authority, duties, and responsibilities shall include (without
      limitation): Overall responsibility for, and supervision of, all Human
      Resources, Information Technology, Safety, Training, and Communications matters
      involving or otherwise affecting the Company, including (without limitation)
      advising the Board of Directors with respect to all such matters, determining
      and implementing the Company’s Human Resources, Information Technology, Safety,
      Training, and Communications strategies and activities, and controlling all
      expenditures related thereto. Executive shall at all times be a member of the
      Company’s senior executive group, for purpose of providing the benefit of his
      business experience to the Company.

    

    4.  Exhibit
      C
      to the Agreement is amended as follows:

    

    Effective
      as of February 23, 2006, Executive’s Target Annual Bonus shall be 35% multiplied
      by his Base Salary.

    

    Effective
      as of January 1, 2007, Executive’s Target Annual Bonus shall be 40% multiplied
      by his Base Salary.

    

    5.  Exhibit
      D
      to the Agreement is amended as follows:

    

    Effective
      as of February 23, 2006, Executive’s Long-Term Incentive Award Target is
      increased from 40% multiplied by his Base Salary to 50% multiplied by his Base
      Salary.

    

    Effective
      as of January 1, 2007, Executive’s Long-Term Incentive Award Target is increased
      from 50% multiplied by his Base Salary to 55% multiplied by his Base
      Salary.

    

    Except
      as
      expressly amended hereby, the Agreement shall remain in full force and
      effect.

     

    2

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    
       

      
        
          	 	 	 
	 	SEMCO
                  ENERGY, INC.
	 
 	 
 	 
 
	 	By:  	/s/ George
                  A. Schreiber, Jr.
	 	 	
                  

                
	 	Title: 	President
                  and CEO 
	 	
                  

                

        

         

        
          	 	 	 
	 	EXECUTIVE
	 
 	 
 	 
 
	 	/s/
                  Lance S. Smotherman
	 	
                  

                
	 	 

        

      

       

      3Exhibit 10.18 - Short-Term Incentive Plan Amended and Restated effective January
      1, 2007

    
      Exhibit
        10.18

    

    

    

    
      	 

              

               

               

              
 

              Short-Term

              Incentive
                Plan

              

               

              

              

              

              

              

              

              Amended
                and Restated Effective 1/1/2007

               

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      1

    Philosophy,
      Strategy and Purpose

    

    1.1     Incentive
      Compensation Philosophy.
      The
      goal of the Company’s compensation policies and incentive plans is to inspire
      and reward achievement of the Company’s strategic objectives, by encouraging
      balanced and sound business decision-making for the long-term benefit of the
      Company. The Company believes that this approach aligns the interests of
      eligible participants with those of the shareholders.

    

    1.2     Strategy.
      The
      incentive strategy of the Company is to benchmark peer group, industry, and
      appropriate labor market criteria as a component of total remuneration. The
      target compensation position is the 50th
      percentile of market consensus.

    

    1.3     Purpose.
      The
      purpose of the Short-Term Incentive Plan (the “Plan”) is to aid SEMCO Energy,
      Inc. (the “Company”) in attracting, retaining, motivating and rewarding
      employees of the Company or its subsidiaries or affiliates who participate
      in
      the Plan (the “Participants”), to provide for equitable and competitive
      compensation opportunities, to recognize individual contributions and reward
      achievement of the Company’s annual goals, and to promote the creation of value
      for shareholders. The Plan authorizes the payment of cash incentives to
      Participants.

    

    

    ARTICLE
      2

    Performance
      Levels, Opportunity Levels, Weightings

    

    2.1     Incentive
      Performance Levels.
      The
      threshold, target, and maximum performance levels and related payouts for the
      Plan shall be determined annually by the Compensation Committee and approved
      by
      the Board of Directors. Such annual performance targets and payouts shall be
      appropriate for the particular annual metrics chosen to measure performance
      under the Plan and shall take into consideration any other facts and
      circumstances the Compensation Committee deems it necessary or appropriate
      to
      consider in making these determinations.

    

    -
      2
      -

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.2     Incentive
      Opportunity Levels.
      The
      following table delineates at
      target
      individual incentive opportunity levels as a percentage of base salary for
      each
      Participant group. The threshold and maximum levels are established annually
      by
      the Compensation Committee.

    

    
      	
              Group

            	
              Target

            
	
              President
                & CEO

            	
              60.0%

            
	
              SVP
                & COO

            	
              50.0%

            
	
              SVP
                & CFO 

            	
              40.0%

            
	
              SVP
                & General Counsel

            	
              40.0%

            
	
              VP
                of HR & Administration

            	
              40.0%

            
	
              VP
                & Deputy General Counsel

            	
              30.0%

            
	
              VP
                & Controller / Regional VP

            	
              25.0%

            
	
              Employee
                Director

            	
              20.0%

            
	
              Manager
                

            	
               6.0%

            
	
              Supervisor

            	
               3.0%

            
	
              Salaried
                Professional Positions

            	
               2.0%

            

    

    

    2.3     Performance
      Measurement Weightings.
      The
      Plan metrics are a combination of annual Corporate and Balanced Scorecard
      results as measured on each eligible Participant’s annual Performance
      Assessment. The following table delineates the performance measurement
      weightings:

    

    
      	
              Group

            	
              Corporate
                Results

              (Financial
                Targets)

            	
              Individual
                Results

              (Balanced
                Scorecard)

            
	
              President
                & CEO

            	
              70%

            	
              30%

            
	
              SVP
                & COO 

            	
              70%

            	
              30%

            
	
              SVP
                & CFO

            	
              70%

            	
              30%

            
	
              SVP
                & General Counsel 

            	
              60%

            	
              40%

            
	
              VP
                of HR & Administration

            	
              60%

            	
              40%

            
	
              VP
                & Deputy General Counsel

            	
              50%

            	
              50%

            
	
              VP
                & Controller / Regional VP

            	
              40%

            	
              60%

            
	
              Employee
                Director

            	
              30%

            	
              70%

            
	
              Manager

            	
              20%

            	
              80%

            
	
              Supervisor

            	
              20%

            	
              80%

            
	
              Salaried
                Professional Positions

            	
              20%

            	
              80%

            

    

    

    

    ARTICLE
      3

    Participants
      and Payouts

    

    3.1     Participants.
      Participation in the Plan shall be based on job title. Exceptions shall be
      approved by the Compensation Committee and the Board of Directors.

     

    -
      3
      -

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Employees
      who become Participants in the Plan for a portion of a Plan year will have
      their
      opportunity level prorated. Employees must be employed at the time of the Plan
      payout to be eligible for a payout, except for the case of death, total
      disability or retirement (in which case payout will be prorated based on the
      last day of active employment). Employees who voluntarily leave the Company
      or
      are released for cause prior to Plan payout are not eligible to receive any
      payout under the Plan.

    

    3.2     Payouts.
      Payouts
      under the Plan will be accrued on the books of the Company during the Plan
      year.
      Accruals must be adjusted prior to or at year-end to accommodate above target
      performance. The performance level for Incentive Opportunity must reflect all
      of
      the appropriate accrued payout. The CEO shall submit to the Compensation
      Committee recommendations for payout under the Plan. The CEO may recommend
      the
      payout to be less than the formulas reflect considering the following factors:
      difficulty of objectives, unusual occurrences, windfalls, or other extenuating
      circumstances; provided, however, that the payout recommendation may not be
      increased. Payouts will be reviewed and approved by the Compensation Committee
      and the Board, generally at their February meetings following the Plan year,
      and, if approved, will be paid no later than March 15th.

    

    

    ARTICLE
      4

    Administration

    

    4.1     Administration.
      The
      Compensation Committee is responsible for recommending the compensation for
      senior management. The Compensation Committee will report periodically to the
      Board of Directors about the work of the Compensation Committee. The
      Compensation Committee will meet from time to time to establish Plan goals,
      threshold, target and maximum performance levels, review progress, and (if
      appropriate) recommend to the Board of Directors approval of Plan goals,
      threshold, target and maximum performance levels, and payouts.

    

    4.2     CEO’s
      Participation.
      Although not a member of the Compensation Committee, the CEO attends
      Compensation Committee meetings in an advisory capacity. The CEO’s participation
      allows the Compensation Committee to remain fully independent of management
      while at the same time receive input from the CEO on the Plan.

    

    IN
      WITNESS WHEREOF, the Company has caused this
      Amended
      and Restated Short-Term Incentive Plan, which is effective as of January 1,
      2007, to be executed as of the 22nd
      day of
      February, 2007.

    
       

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

              
	 	Title: 	Sr.V.P.
                of H.R. & Admin.
	 	
                

              

      

      
-
        4
        -

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