Document:

<PAGE>
                   [MEMORY PHARMACEUTICALS CORP. LETTERHEAD]

March 3, 2005

Joseph Donabauer

Dear Mr. Donabauer:

         We are pleased to provide you with the terms and conditions of your
recent promotion to the position of Vice President & Controller. We look forward
to you continuing to be a part of our team, and are confident that you will
contribute significantly to the value of our organization. The terms of your
promotion by the Company are as follows.

         1. Position. Your position will be Vice President & Controller, based
out of the Company's offices currently located in Montvale, New Jersey, and you
will report directly to the Company's Chief Executive Officer unless otherwise
directed by the CEO. As Vice President & Controller, you will be part of the
Company's senior management team. In addition to performing duties and
responsibilities associated with the position of Vice President & Controller,
from time to time the Company may assign you other duties and responsibilities
and/or may assign you to a different location.

         As a full-time employee of the Company, you will be expected to devote
your full business time and energies to the business and affairs of the Company.
Your performance will be reviewed formally after six months of employment and
annually thereafter at the end of each calendar year.

         2. Starting Date/Nature of Relationship. Your promotion shall be
effective as of December 14, 2004. No provision of this letter shall be
construed to create an express or implied employment contract for a specific
period of time. Either you or the Company may terminate the employment
relationship at any time and for any reason, by giving at least thirty (30)
days' prior written notice to the other party.

         3. Compensation.

         (a) Effective January 1, 2005, your initial salary will be at the
bi-weekly rate of $6,923.08 (annualized at $180,000).

         (b) You will be eligible to receive annual bonus payments dependent on
the performance of the Company and your individual performance, subject to the
discretion of the Board of Directors. Effective January 1, 2005, your target
bonus will be equal to twenty-five percent (25%) of your base salary, assuming
the achievement of such Company and individual performance objectives.

         (c) Upon termination for any reason, the Company will pay you within
two weeks of such termination, your current base salary earned through the
termination date, plus accrued vacation, if any,
<PAGE>
MEMORY PHARMACEUTICALS CORP.

and other benefits or payments, if any, to which you are entitled. In the event
that you are terminated by the Company without "Cause" (as hereinafter defined),
then the Company will continue to pay you your bi-weekly rate in effect at the
time of termination and provide and pay the Company's portion of your medical
insurance for a period of six (6) months. Further, for the period commencing
seven months following such termination and ending twelve months after such
termination, the Company will continue to pay you your bi-weekly rate in effect
at the time of termination and provide and pay the Company's portion of your
medical insurance, except that such severance payments made to you during this
period will be reduced by all 1099 and W-2 income earned or received by you
during such period, including income earned or received from consulting services
or temporary employment, and the Company's payments for your medical insurance
will terminate when you have such coverage through any new employer before the
end of the twelve month period following your termination. The Company will
reconcile such payments with you quarterly, and any additional payments owed to
you by the Company, and any payments owed to the Company by you, will be paid
respectively within two weeks following such reconciliation period. The Company
will not be obligated to continue any such payments to you under this paragraph
3(d) in the event you materially breach the terms of the Confidentiality
Agreement (as defined below). Notwithstanding any termination of your employment
(with or without Cause), you shall continue to be bound by the provisions of the
Confidentiality Agreement.

         (d) For the purposes of this Section 3, "Cause" shall include (i) your
conviction of a felony, either in connection with the performance of your
obligations to the Company or otherwise, which adversely affects your ability to
perform such obligations or materially adversely affects the business
activities, reputation, goodwill or image of the Company, (ii) your willful
disloyalty, deliberate dishonesty, breach of fiduciary duty, (iii) your breach
of the terms of this Agreement, or your failure or refusal to carry out any
material tasks assigned to you by the Company in accordance with the terms
hereof, which breach or failure continues for a period of more than thirty (30)
days after your receipt of written notice thereof from the Company, (iv) the
commission by you of any act of fraud, embezzlement or deliberate disregard of a
rule or policy of the Company known to you or contained in a policy and
procedure manual provided to you which results in material loss, damage or
injury to the Company, or (v) the material breach by you of any of the
provisions of the Confidentiality Agreement.

         4. Benefits. You will be entitled as an employee of the Company to
receive such benefits as are generally provided its employees and executives and
for which you are eligible in accordance with Company policy as in effect from
time to time. The Company retains the right to change, add or cease any
particular benefit relating to its employees and executives generally. At this
time, the Company is offering a benefit program, consisting of medical, dental,
life and short/long term disability insurance, as well as a 401(k) retirement
plan and flexible spending plan. You will be eligible for eleven paid holidays,
four floating holidays and four (4) weeks paid vacation per year. You will
accrue additional vacation days in accordance with Company policy

         5. Confidentiality. The Company considers the protection of its
confidential information and proprietary materials to be very important.
Therefore, the Confidentiality and Non-Competition Agreement you entered into
with the Company, dated as of June 17, 2002 (the "Confidentiality Agreement"),
shall remain in full force and effect. You agree that nothing contained in this
amendment or in this letter shall be deemed to alter your status as an "at-will"
employee.

         6. General.

         (a) This letter, when executed, together with the Confidentiality
Agreement will constitute our entire agreement as to your employment by the
Company and will supersede any prior agreements or understandings, whether in
writing or oral.

         (b) This letter shall be governed by the law of the State of New
Jersey.

                                       2
<PAGE>
MEMORY PHARMACEUTICALS CORP.

         Please sign the enclosed additional copy of this letter, which
execution will evidence your agreement with the terms set forth herein and
therein, and return it to the Company.

MEMORY PHARMACEUTICALS CORP.

By: /s/ Tony Scullion
    ------------------------------
    Name:  Tony Scullion
    Title: Chief Executive Officer

ACCEPTED AND AGREED:

/s/ Joseph M. Donabauer
----------------------------------
Joseph M. Donabauer

Date: March 3, 2005

                                       3<PAGE>

                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

               THIRD AMENDMENT AND CONSENT TO AMENDED AND RESTATED
                                CREDIT AGREEMENT

      This Third Amendment and Consent to Amended and Restated Credit Agreement
(this "Third Amendment") is made as of this 8th day of March, 2005 by and among
SEMCO ENERGY, INC., a Michigan corporation (the "Company"), STANDARD FEDERAL
BANK N.A. ("Standard Federal") and the other banks signatory hereto and Standard
Federal, as agent for the Banks (in such capacity, "Agent").

                                    RECITALS

      A. Company, Agent and the Banks entered into that certain Amended and
Restated Credit Agreement dated as of June 25, 2004 under which the Banks
extended (or committed to extend) credit to the Company, as set forth therein,
as amended by that certain First Amendment to Amended and Restated Credit
Agreement (the "First Amendment") dated as of November 17, 2004 and that certain
Second Amendment to Amended and Restated Credit Agreement dated as of January
21, 2005 (as amended, restated or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Credit Agreement).

      B. Company has requested that Agent and the requisite Banks amend the
Credit Agreement to, among other things, extend the Revolving Loan Termination
Date and the Line of Credit Termination Date, and to amend certain other
definitions in the Credit Agreement and Agent and the requisite Banks are
willing to do so, but only on the terms and conditions set forth in this Third
Amendment.

      NOW, THEREFORE, Company, Agent and Banks agree:

1.    Section 1.1 of the Credit Agreement shall be amended by deleting clause
      (m) of the definition of "Consolidated Net Income" and inserting the
      following in its place:

            (m) any items other than those described in clauses (a) through (l)
            above of this definition which are properly classified under GAAP as
            extraordinary items;

            provided, further, that the Company may add back an amount equal to
            the K-1 Distributions, to the extent they were deducted in the
            Company's calculation of Consolidated Net Income.

2.    Section 1.1 of the Credit Agreement shall be amended by deleting clause
      (m) of the definition of "Consolidated Net Worth" and inserting the
      following in its place:

            Consolidated Net Worth means, as of the date of any determination
            thereof, the stockholders' capital (including any stock issued
            pursuant to the K-1 Replacement Offering, whether or not includible
            under GAAP)

                                       1
<PAGE>

            and surplus of the Company and its Subsidiaries determined on a
            consolidated basis in accordance with GAAP, and which shall exclude
            (whether or not includible under GAAP) the principal amount of the
            Subordinated Notes, but without taking into account the amount of
            any deferred or payable in kind interest, whether or not includible
            under GAAP, and adding back an amount equal to all non-cash charges,
            less any tax deductions or credits on account of such charges, taken
            by the Construction Services Subsidiaries in accordance with GAAP
            under FAS No. 142 or FAS No. 144 occurring on or after September 30,
            2003.

3.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Consolidated Operating Income" therein and inserting the
      following in its place:

            Consolidated Operating Income means, as of the date of any
            determination thereof, the operating revenues minus operating
            expenses of the Company and its Subsidiaries determined on a
            consolidated basis in accordance with GAAP as shown on the financial
            statements delivered to Agent pursuant to Sections 10.1.1 and 10.1.2
            of this Agreement, as applicable but (i) excluding from the
            calculation hereof, whether or not otherwise includable under GAAP,
            the payment of $5,500,000 to Atlas Pipeline Partners, L.P. on
            December 31, 2004 made pursuant to the terms of that certain
            Settlement Agreement dated as of December 31, 2004, (ii) adding back
            an amount equal to all non-cash charges, less any tax deductions or
            credits on account of such charges, taken by the Construction
            Services Subsidiaries in accordance with GAAP under FAS No. 142 or
            FAS No. 144 occurring on or after September 30, 2003 and (iii)
            adding back an amount equal to the K-1 Distributions, to the extent
            they were deducted in calculating operating income.

4.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Current Debt of any Person" therein and inserting the
      following in its place:

            Current Debt of any Person means as of the date of any determination
            thereof (i) all Indebtedness of such Person for borrowed money other
            than Funded Debt of such Person and (ii) Guaranties by such Person
            of Current Debt of others, provided that Current Debt shall not
            include the amount of any stock issued pursuant to the K-1
            Replacement Offering.

5.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Funded Debt" therein and inserting the following in its
      place:

            Funded Debt of any Person means (i) all Indebtedness of such Person
            for borrowed money or which has been incurred in connection with the
            acquisition of assets in each case having a final maturity of one or
            more than one year from the date of origin thereof (or which is
            renewable or extendible at the option of the obligor for a period or
            periods more than one year from the date of origin), including all
            principal payments in

                                       2
<PAGE>

            respect thereof that are required to be made within one year from
            the date of any determination of Funded Debt, whether or not the
            obligation to make such payments shall constitute a current
            liability of the obligor under GAAP; provided, that any notes of
            such Person evidencing Indebtedness of such Person which when issued
            constitute a current liability of such Person under GAAP shall not
            be included as Funded Debt of such Person, (ii) all Capitalized
            Rentals of such Person, (iii) Off Balance Sheet Liabilities and (iv)
            all Guaranties by such Person of Funded Debt of others, provided
            that Funded Debt shall not include the amount of any stock issued
            pursuant to the K-1 Replacement Offering.

6.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Junior Capital" therein and inserting the following in its
      place:

            Junior Capital means the Company's existing Trust Preferred
            Securities, other Subordinated Debt, other Securities issued on
            terms substantially similar thereto, as determined by the Required
            Banks, the Feline Prides and all stock issued pursuant to the K-1
            Replacement Offering.

7.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Line of Credit Commitment Amount" therein and inserting the
      following in its place:

            Line of Credit Commitment Amount shall mean $40,806,452.00, as
            reduced from time to time pursuant to Section 5.1 and as increased
            from time to time pursuant to Section 2.1.2.

8.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Line of Credit Termination Date" therein and inserting the
      following in its place:

            Line of Credit Termination Date shall mean the earlier to occur of
            (a) September 23, 2005, as such date may be extended from time to
            time pursuant to Section 2.1.1 or (b) the date on which the
            Commitment to make the Line of Credit Loans shall be terminated
            pursuant to Section 5 or 11.

9.    Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "New Capital Adjustment" and inserting the following in its
      place

            New Capital Adjustment means that amount to be added to the minimum
            Consolidated Net Worth required to be maintained under Section
            10.6.3 consisting of an amount equal to one hundred percent (100%)
            of the proceeds of each New Capital Offering conducted by the
            Company or any of its Subsidiaries, net of costs of issuance, on or
            after January 1, 2004, on a cumulative basis, less the aggregate
            principal amount (excluding any capitalized interest) of any Junior
            Capital which is retired, prepaid, or redeemed in connection with a
            New Capital Offering, provided, further, that the New Capital
            Adjustment shall not include the K-1 Replacement

                                       3
<PAGE>

            Offering to the extent the proceeds of the K-1 Replacement Offering
            are used to repurchase the K-1 Shares and the Company warrants held
            by K-1 and each other New Capital Offering to the extent the
            proceeds of such offering are used to repurchase stock of the
            Company.

10.   Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Revolving Commitment Amount" therein and inserting the
      following in its place:

            Revolving Commitment Amount shall mean $60,000,000.00 reduced from
            time to time pursuant to Section 5.1 and as increased from time to
            time pursuant to Section 2.2.2.

11.   Section 1.1 of the Credit Agreement shall be amended by deleting the
      definition of "Revolving Loan Termination Date" therein and inserting the
      following in its place:

            Revolving Loan Termination Date means the earlier to occur of (a)
            September 23, 2005 or (b) such other date on which the Commitments
            terminate pursuant to Section 5 or 11.

12.      Section 1.1 of the Credit Agreement shall be amended by inserting the
         following definitions in their appropriate alphabetical order:

            K-1 shall mean K-1 GHM, LLLP.

            K-1 Distributions means all dividends or payments in lieu of
            dividends payable to K-1 and all payments made to K-1 for the
            repurchase of Company warrants, such payments being due, in each
            case, as a result of the Company's repurchase and retirement of the
            K-1 Shares.

            K-1 Replacement Offering means the issuance and sale of additional
            shares of common or convertible preferred stock of the Company (in
            either a single offering, or in several different offerings) the
            proceeds of which are used to repurchase and retire the K-1 Shares
            and pay K-1 Distributions, together with certain other uses as
            specifically consented to by the Agent and the Required Banks.

            K-1 Shares means all Series B Preference Stock issued to K-1.

13.   Section 2.5.1 of the Credit Agreement shall be amended by deleting the
      words "thirty days" in each place that such words appear in the Section,
      and inserting "seven days" in their respective places.

14.   Section 10.10 of the Credit Agreement shall be amended by inserting the
      words "and the cash dividends paid on the stock issued in connection with
      the K-1 Replacement Offering" after the words "Series B Preference Stock."

                                       4
<PAGE>

15.   The last sentence of Section 10.10 of the Credit Agreement is hereby
      deleted and the following is inserted in its place:

            Dividend payments on the Junior Capital (including any dividend paid
            on the stock issued pursuant to the K-1 Replacement Offering) are
            subject to the provisions of this Section 10.10.

16.   Section 10.22 of the Credit Agreement shall be amended by deleting the
      words "Feline Prides" and inserting the words "Junior Capital" in their
      place.

17.   Schedule 2.1/2.2 currently attached to the Credit Agreement shall be
      deleted and the new Schedule 2.1/2.2 attached hereto as Exhibit A shall be
      inserted in its place.

18.   Exhibit C-1 currently attached to the Credit Agreement shall be deleted
      and the new Exhibit C-1 attached hereto as Annex 1 shall be inserted in
      its place.

19.   Exhibit C-2 currently attached to the Credit Agreement shall be deleted
      and the new Exhibit C-2 attached hereto as Annex 2 shall be inserted in
      its place.

20.   The undersigned, by execution and delivery of this Third Amendment, have
      consented to the K-1 Replacement Offering and the Company's repurchase of
      the K-1 Shares and the payment of the K-1 Distributions from the proceeds
      of the K-1 Replacement Offering, provided that (a) the Company, prior to
      such repurchase, completes the K-1 Replacement Offering, (b) all proceeds
      of the K-1 Replacement Offering shall promptly be used first to repurchase
      and retire outstanding K-1 Shares and to pay any related K-1
      Distributions, provided that any proceeds remaining after the repurchase
      and retirement of the K-1 Shares in full and the payment of the K-1
      Distributions shall be used to pay costs and expenses associated with the
      K-1 Replacement Offering, to repurchase, redeem, prepay or retire Junior
      Capital or to prepay the Revolving Loan Facility, (c) the repurchase of
      the K-1 Shares and completion of the K-1 Replacement Offering shall comply
      with all state, federal or local regulations, statutes, or court orders
      and any other third party restrictions on the Company and be on terms and
      conditions which could not reasonably be expected to have a Material
      Adverse Effect and shall otherwise be substantially in accordance with the
      terms set forth in that certain Offering Memorandum dated as of March 8,
      2005, as determined by Agent in its sole discretion, and (d) no Unmatured
      Event of Default or Event of Default shall have occurred and be continuing
      at the time of either the K-1 Replacement Offering or the repurchase and
      retirement of the K-1 Shares, or, in each case, result therefrom. If the
      Company repurchases the K-1 Shares or makes the K-1 Replacement Offering
      on terms not in compliance with this Section, it shall be deemed an
      immediate Event of Default under the Credit Agreement, which may only be
      waived with the written consent of the Required Banks. In no event shall
      the K-1 Shares be repurchased or the K-1 Distributions made with the
      proceeds of Advances under the Credit Agreement.

21.   This Third Amendment shall become effective according to the terms hereof
      and as of such date (the "Third Amendment Effective Date") that the
      Company shall have satisfied the following conditions:

                                        5
<PAGE>

            (a) Agent shall have received:

                  (i) counterpart originals of this Third Amendment and of the
            Revolving Credit Notes and Line of Credit Notes substantially in the
            form attached hereto, in each case duly executed and delivered by
            Company and the requisite Banks, in form satisfactory to Agent and
            the Banks;

                  (ii) Agent shall have received certified copies of resolutions
            of the Board of Directors of the Company authorizing the execution
            and delivery of this Third Amendment and the performance by the
            Company of its obligations under the Credit Agreement as amended by
            this Third Amendment;

                  (iii) Company shall have paid to Agent all interest, fees and
            other amounts owing as of such date, including additional Letter of
            Credit Fees (if applicable) and shall have reimbursed Agent for all
            fees and expenses (including reasonable attorney fees) incurred
            through the Third Amendment Effective Date and

                  (iv) such other documents as Agent may reasonably request.

            (b) No Unmatured Event of Default or Event of Default shall have
      occurred and be continuing or shall result from the execution and delivery
      of this Third Amendment.

            (c) If the Third Amendment Effective Date shall not have occurred on
      or before March 11, 2005, this Third Amendment shall not become effective
      and the offer by the Agent and the Banks to amend the Credit Agreement on
      the terms set forth herein shall be deemed withdrawn.

22.   The Company for itself and each of the Subsidiaries hereby represents and
      warrants that, after giving effect to the amendments contained herein, (a)
      execution and delivery of this Third Amendment, and the performance by the
      Company of its obligations under the Credit Agreement as amended hereby
      are within such undersigned's corporate powers, have been duly authorized,
      are not in contravention of law or the terms of its articles of
      incorporation, bylaws or any other organizational documents of the parties
      thereto, as applicable, and except as have been previously obtained, do
      not require the consent or approval, material to the amendments
      contemplated in this Third Amendment or Credit Agreement, as amended
      hereby, of any governmental body, agency or authority, and this Third
      Amendment and the Credit Agreement, as amended hereby, will constitute the
      valid and binding obligations of such undersigned parties, enforceable in
      accordance with their respective terms, except as enforcement thereof may
      be limited by applicable bankruptcy, reorganization, insolvency,
      moratorium, ERISA or similar laws affecting the enforcement of creditors'
      rights generally and by general principles of equity (whether enforcement
      is sought in a proceeding in equity or at law), and (b) the
      representations and warranties contained in Section 9 of the Credit
      Agreement are true and correct on and as of the date hereof, except to the
      extent such representations and warranties speak only as of another date
      certain.

                                        6
<PAGE>

23.   Except as specifically set forth herein, this Third Amendment shall not be
      deemed to amend or alter in any respect the terms and conditions of the
      Credit Agreement, any of the Notes issued thereunder or any of the Loan
      Documents, or to constitute a waiver by the Banks or Agent of any right or
      remedy under or a consent to any transaction not meeting the terms and
      conditions of the Credit Agreement, any of the Notes issued thereunder or
      any of the other Loan Documents. By execution and delivery of this Third
      Amendment, the Company shall have been deemed to ratify and reaffirm each
      of its covenants, agreements and obligations under the Credit Agreement,
      as amended hereby, under the First Amendment, the Second Amendment and the
      related Loan Documents. Each reference in the Credit Agreement to "this
      Agreement" or "the Credit Agreement" and each reference in the other Loan
      Documents to the Credit Agreement shall be deemed to refer to the Credit
      Agreement as amended by this Third Amendment, the Second Amendment, the
      First Amendment, and each other amendment from time to time executed and
      delivered in connection with the Credit Agreement.

24.   Unless otherwise defined to the contrary herein, all capitalized terms
      used in this Third Amendment shall have the meaning set forth in the
      Credit Agreement, as amended.

25.   This Third Amendment shall be construed in accordance with and governed by
      the laws of the State of Michigan.

26.   This Third Amendment may be executed in any number of counterparts and by
      the different parties hereto on separate counterparts and each such
      counterpart shall be deemed to be an original, but all such counterparts
      shall together constitute but one and the same agreement.

                     [SIGNATURES FOLLOW ON SUCCEEDING PAGES]

                                        7
<PAGE>
      WITNESS the due execution hereof as of the day and year first above
written.

                                 SEMCO ENERGY, INC.

                                 By /s/ Michael V. Palmeri
                                    -----------------------------
                                 Title Senior Vice President and
                                       --------------------------
                                       Chief Financial Officer
                                       --------------------------
                                   8
<PAGE>

                                 STANDARD FEDERAL BANK N.A., A NATIONAL
                                 BANKING ASSOCIATION, as Agent and Arranger

                                 By /s/ Greg Castle
                                    --------------------------------------
                                 Title First Vice President
                                       -----------------------------------

                                 STANDARD FEDERAL BANK N.A., A NATIONAL
                                 BANKING ASSOCIATION, as Issuing Bank, as Swing
                                 Line Bank and as a Bank

                                 By /s/ Greg Castle
                                    --------------------------------------
                                 Title First Vice President
                                       -----------------------------------

                                        9
<PAGE>

                                NATIONAL CITY BANK OF THE MIDWEST,
                                A NATIONAL BANKING ASSOCIATION,
                                FORMERLY KNOWN AS NATIONAL CITY
                                BANK OF MICHIGAN/ILLINOIS, as
                                Syndication Agent for the Line of Credit and as
                                Documentation Agent for the Revolving Loan and
                                as a Bank

                                By /s/ Kenneth Ehrhardt
                                   ------------------------------------------
                                Title Senior Vice President
                                      ---------------------------------------

                                       10
<PAGE>

                                U.S. BANK, N.A., as Documentation Agent for the
                                Revolving Loan and the Line of Credit and as a
                                Bank

                                By /s/ J. J.
                                   --------------------------------------

                                Title Vice President
                                     ------------------------------------

                                       11
<PAGE>

                                 FIFTH THIRD BANK, EASTERN MICHIGAN,
                                 as Documentation Agent for the Line of Credit
                                 and as a Bank

                                 By /s/ Carol C. Gaggos
                                    --------------------------------------

                                 Title  Vice President
                                       -----------------------------------

                                       12
<PAGE>

                                 THE HUNTINGTON NATIONAL BANK, as a Bank

                                 By /s/ Kevin D. Szachta
                                    ------------------------------------------

                                 Title Vice President
                                       ---------------------------------------

                                       13
<PAGE>

                                    Exhibit A

                                SCHEDULE 2.1/2.2

<TABLE>
<CAPTION>
                                                                          REVOLVING LOAN
                                      LINE OF CREDIT     REVOLVING LOAN    FACILITY PRO
                  LINE OF CREDIT PRO  PRO RATA SHARE   FACILITY PRO RATA    RATA SHARE    PRO RATA SHARE
      BANKS        RATA SHARE AMOUNT    PERCENTAGE       SHARE AMOUNT       PERCENTAGE      PERCENTAGE
      -----       ------------------  ---------------  -----------------  --------------  --------------
<S>               <C>                 <C>              <C>                <C>             <C>
STANDARD FEDERAL
      BANK          $14,690,323.30        36.00%        $21,600,000.85        36.00%          36.00%

  NATIONAL CITY     $ 8,161,290.22        20.00%        $11,999,999.74        20.00%          20.00%

     US BANK        $ 6,529,032.17        16.00%        $ 9,599,999.79        16.00%          16.00%

   FIFTH THIRD      $ 6,529,032.17        16.00%        $ 9,599,999.79        16.00%          16.00%

   HUNTINGTON       $ 4,896,774.13        12.00%        $ 7,199,999.83        12.00%          12.00%

     TOTALS         $40,806,452.00       100.00%        $60,000,000.00       100.00%         100.00%
</TABLE>

                                       14
<PAGE>

                                     ANNEX 1

                                   EXHIBIT C-1

                               LINE OF CREDIT NOTE

$_____________                                             ___________, _______

      On the Line of Credit Termination Date, FOR VALUE RECEIVED, SEMCO Energy,
Inc., a Michigan corporation (the "Company"), promises to pay to the order of
[insert Bank] (the "Bank") at Troy, Michigan, care of the Agent (for the account
of the Bank's Eurodollar Office with respect to any Eurodollar Loans hereunder
and for the account of the Bank with respect to any Base Rate Loans hereunder)
in lawful money of the United States of America so much of the sum of [insert
amount derived from Pro Rata Shares] Dollars ($________), as may from time to
time have been advanced by the Bank to the Company and then be outstanding
hereunder pursuant to the Amended and Restated Credit Agreement dated as of June
25, 2004 made by and among the Company and certain banks signatory thereto,
including the Bank, and Standard Federal Bank N.A., a national banking
association, as Agent for such banks, as the same may be amended or otherwise
modified from time to time (the "Credit Agreement"), together with interest
thereon as hereinafter set forth.

      Each of the Loans made hereunder shall bear interest at the interest rate
from time to time applicable thereto under the Credit Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Credit Agreement.

      This Note is a Line of Credit Note under which Line of Credit Loans
(including refundings and conversions), repayments and readvances may be made
from time to time, by Bank, but only in accordance with the terms and conditions
of the Credit Agreement. This Note evidences borrowings under, is subject to,
and may be accelerated or prepaid under, the terms of the Credit Agreement to
which reference is hereby made. Capitalized terms used herein, except as defined
to the contrary, shall have the meanings given them in the Credit Agreement.

      This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.

      This Note amends, restates and replaces in its entirety the Line of Credit
Note made by the Company in favor of the Bank dated June 25, 2004 (the "Prior
Note"), with the intended effect that all indebtedness and other obligations
evidence by the Prior Note shall continue to be outstanding under this Note. The
Company hereby waives presentment for payment, demand, protest and notice of
dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon.

                                       15
<PAGE>

      Nothing herein shall limit any right granted to the Bank by any other
instrument or by law.

                                        SEMCO ENERGY, INC.

                                        By:______________________________

                                        Its:______________________________

                                       16
<PAGE>

                                     ANNEX 2

                                   EXHIBIT C-2

                          FORM OF REVOLVING CREDIT NOTE

$_____________                                              ___________, _______

      On the Revolving Loan Termination Date, FOR VALUE RECEIVED, SEMCO Energy,
Inc., a Michigan corporation (the "Company"), promises to pay to the order of
[insert Bank] (the "Bank") at Troy, Michigan, care of the Agent (for the account
of the Bank's Eurodollar Office with respect to any Eurodollar Loans hereunder
and for the account of the Bank with respect to any Base Rate Loans hereunder)
in lawful money of the United States of America so much of the sum of [insert
amount derived from Pro Rata Shares] Dollars ($___________), as may from time to
time have been advanced by the Bank to the Company and then be outstanding
hereunder pursuant to the Amended and Restated Credit Agreement dated as of June
25, 2004 made by and among the Company and certain banks signatory thereto,
including the Bank, and Standard Federal Bank N.A., a national banking
association as Agent for such banks, as the same may be amended or otherwise
modified from time to time (the "Credit Agreement"), together with interest
thereon as hereinafter set forth.

      Each of the Loans made hereunder shall bear interest at the interest rate
from time to time applicable thereto under the Credit Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Credit Agreement.

      This Note is a Revolving Credit Note under which Revolving Loans of the
Revolving Credit (including refundings and conversions), repayments and
readvances may be made from time to time, by the Bank, but only in accordance
with the terms and conditions of the Credit Agreement. This Note evidences
borrowings under, is subject to, and may be accelerated or prepaid under, the
terms of the Credit Agreement to which reference is hereby made. Capitalized
terms used herein, except as defined to the contrary, shall have the meanings
given them in the Credit Agreement.

      This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.

      This Note amends, restates and replaces in its entirety the Revolving
Credit Note of Credit Note made by the Company in favor of the Bank dated June
25, 2004 (the "Prior Note"), with the intended effect that all indebtedness and
other obligations evidence by the Prior Note shall continue to be outstanding
under this Note. The Company hereby waives presentment for payment, demand,
protest and notice of dishonor and nonpayment of this Note and agrees that no
obligation hereunder shall be discharged by reason of any extension, indulgence,
release, or forbearance granted by any holder of this Note to any party now or
hereafter liable hereon.

                                       17
<PAGE>

      Nothing herein shall limit any right granted to the Bank by any other
instrument or by law.

                                        SEMCO ENERGY, INC.

                                        Its:______________________________

                                       18

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