EXHIBIT 10(b)
AMENDMENT TO SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
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Effective January 1, 2005
WHEREAS, ALLETE, Inc. (the "Company") maintains the ALLETE Supplemental
Executive Retirement Plan (the "SERP" or "Plan"); and
WHEREAS, the American Jobs Creation Act of 2004 added a new section
409A to the Internal Revenue Code establishing new rules regarding the taxation
of non-qualified deferred compensation plans, effective for amounts deferred
after December 31, 2004 (the "New Law"); and
WHEREAS, under the new law, amounts deferred on and after January 1,
2005 under the SERP would be immediately taxable to participants; and
WHEREAS, the Executive Compensation Committee of the Board of Directors
of the Company has instructed management to prepare a new deferred compensation
plan (a "New SERP") that will comply with the New Law to be adopted by the
Company no later than December 31, 2005; and
WHEREAS, recent guidance issued by the Internal Revenue Service
specifies that bonuses earned by the SERP participants in 2004 that become
payable in 2005 will, if subject to a deferral election, be treated as amounts
deferred after December 31, 2004 for purposes of the New Law; and
WHEREAS, such recent guidance also allows deferred compensation plans
to be amended to give participants the opportunity to revoke, in whole or in
part, certain outstanding elections to defer compensation; and
WHEREAS, such recent guidance also allows participants to elect to
defer certain performance-based compensation based on services performed over a
period of at least 12 months no later than 6 months before the end of that
period; and
WHEREAS, it is desirable to preserve the deferral of taxes on 2004
bonuses, 2005 bonuses, and 2005 salary subject to deferral elections for SERP
participants who do not revoke their elections to defer such compensation; and
WHEREAS, it is therefore desirable to amend the SERP (1) to reflect the
cessation of further deferrals thereunder after 2004; (2) to provide SERP
participants with the opportunity to revoke their deferral elections for their
2004 bonuses and 2005 salary and make new deferral elections for their 2005
bonuses; and (3) to the extent that any such deferral elections are not so
revoked, to redirect the deferral of 2004 deferred bonuses, 2005 deferred
salary, and 2005 deferred bonuses to a new SERP.
NOW, THEREFORE, effective as of January 1, 2005, the SERP is hereby
amended as follows:
1. Article 4 of the SERP is hereby amended by adding the following new
sections 4.16 and 4.17 to the end thereof:
4.16 CESSATION OF DEFERRALS.
Notwithstanding any other Plan provision to the contrary, no amount of
Annual Makeup Award, Salary Deferral, Bonus Deferral, Severance
Deferral, Non-qualified Stock Option Gain Deferral, or Retirement
Benefit (collectively "Deferral") earned for services performed in Plan
years beginning after December 31, 2004 shall be deferred under this
Plan. Accordingly, any election to make any Deferral under this plan
shall terminate as to future Deferrals as of December 31, 2004 and
shall no longer have any force or effect under this Plan. Subject to
Section 4.17 hereof, Bonus Deferrals that were earned in 2004 and
Deferrals earned in 2005, in each case, that are subject to Deferral
elections made under the terms of this Plan shall not be credited under
this Plan, but shall be credited under a new plan to be adopted in 2005
(a "New SERP") in accordance with the terms of the New SERP and shall
be subject to the terms and conditions of such New SERP, including,
without limitation, its distribution provisions. No new Deferral
elections shall be made under this Article 4 with respect to amounts
earned after December 31, 2004. Investment earnings (and losses) shall
continue to be credited (or debited) to each participant's EDA account
as provided in this Article 4.
4.17 OPPORTUNITY TO REVOKE ELECTION.
Notwithstanding anything contained herein to the contrary, (i) any
Participant who elected a 2004 Bonus Deferral may revoke his or her
election in its entirety; (ii) any Participant who elected a 2005
Salary Deferral may revoke his or her election in part or in its
entirety; and (iii) any Participant who elected a 2005 Bonus Deferral
may file a new deferral election with respect to such 2005 Bonus
Deferral, in each case as provided in this Section 4.17. Such
revocation election with respect to 2004 Bonus Deferral and/or 2005
Salary Deferral or new deferral election with respect to 2005 Bonus
Deferral must be in writing on a form provided by the administrator and
must be filed with the administrator on or before January 28, 2005. Any
participant who revokes his or her 2004 Bonus Deferral Election as
provided herein shall receive such bonus in cash at or about the same
time that such award is paid to other employees of the Company. Any
Participant who revokes his or her 2005 Salary Deferral will be paid in
accordance with the Company's standard payroll practices.
IN WITNESS WHEREOF, ALLETE, Inc. has caused this instrument to be executed by
its duly authorized officers.
ALLETE, Inc.
/s/ Donald J. Shippar
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Donald J. Shippar
President and Chief Executive Officer
ATTEST:
/s/ Deborah A. Amberg
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Deborah A. Amberg
Vice President, General Counsel
and Secretary