Negative Pledge Agreement

Exhibit 10.2





October 1, 2006





Semco Energy, Inc.

2301 West Big Beaver Road, Suite 212

Troy, MI 48084



Gentlemen:



This Negative Pledge Agreement (the " Agreement ") is made by SEMCO ENERGY, INC., a Michigan corporation (herein the " Borrower "), located at 2301 West Big Beaver Road, Suite 212, Troy, MI 48084, in favor of COMERICA BANK, a Michigan banking corporation (herein the " Bank "), located at 500 Woodward Avenue, Detroit, Michigan 48226, pertaining to certain loans and other credit which Bank has made or may from time to time hereafter make available to Borrower, which are evidenced by that certain Master Revolving Note dated as of October 1, 2006, made in the principal amount of $15,000,000 by Borrower, payable to Bank, as may be amended, restated supplemented or replaced from time to time (the "Master Note").



In consideration of all present and future loans and credit from time to time made available by Bank to or in favor of Borrower under the Master Note and all obligations and liabilities of Borrower under this Agreement (herein collectively called the "Liabilities"), Borrower covenants and agrees as follows:



1. So long as Bank shall have any obligation (if at all) to make any advance under the Master Note and thereafter, until the Liabilities have been paid in full, the Borrower covenants and agrees that it will not create, incur, assume or suffer to exist any mortgage, pledge, encumbrance, security interest, lien or charge of any kind upon the of its assets other than Permitted Liens. ? Permitted Liens " shall mean:



a. Liens, mortgages, security interests and other encumbrances to or in favor of Bank;




b. Liens for taxes, assessments or other governmental charges incurred in the ordinary course of business and for which no interest, late charge or penalty is attaching or which is being contested in good faith by appropriate proceedings and, if requested by the Bank, bonded in an amount and manner satisfactory to the Bank;




c. Liens, not delinquent, created by statute in connection with worker's compensation, unemployment insurance, social security and similar statutory obligations;




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d. Liens of mechanics, materialmen, carriers, warehousemen or other like statutory or common law liens securing obligations incurred in good faith in the ordinary course of business that ...