EXHIBIT 10(c)
AMENDMENT TO ALLETE DIRECTOR COMPENSATION DEFERRAL PLAN
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Effective January 1, 2005
WHEREAS, ALLETE, Inc. (the "Company") maintains the ALLETE Director
Compensation Deferral Plan (the "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 Plan 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 Plan") 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 amounts earned by Plan 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
compensation (which is payable in 2005), and 2005 compensation subject to
deferral elections for Plan participants who do not revoke their elections to
defer such compensation; and
WHEREAS, it is therefore desirable to amend the Plan (1) to reflect the
cessation of further deferrals thereunder after 2004; (2) to provide Plan
participants with the opportunity to revoke their deferral elections for their
2004 compensation (which is payable in 2005) and 2005 compensation and make new
deferral elections for their 2005 compensation; and (3) to the extent that any
such deferral elections are not so revoked, to redirect the deferral of 2004
deferred compensation (which is payable in 2005) and 2005 deferred compensation
to a New Plan.
NOW, THEREFORE, effective as of January 1, 2005, the Plan is hereby
amended as follows:
1. Section 3 of the Plan is hereby amended by adding the following new
sections 3.4 and 3.5 to the end thereof:
3.4 CESSATION OF DEFERRALS.
Notwithstanding any other Plan provision to the contrary, no amount of
compensation as a Director which is payable by the Company in cash
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 cash
compensation as of December 31, 2004 and shall no longer have any force
or effect under this Plan as to future cash compensation. Subject to
Section 3.5 hereof, cash compensation that was earned in 2004 but paid
in 2005 and cash compensation that was 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 Plan") in accordance with the
terms of the New Plan and shall be subject to the terms and conditions
of such New Plan, including, without limitation, its distribution
provisions. No new deferral elections shall be made under this Article
3 with respect to amounts earned after December 31, 2004. Investment
earnings (and losses) shall continue to be credited (or debited) to
each Director's account as provided in this Article 3.
3.5 OPPORTUNITY TO REVOKE ELECTION.
Notwithstanding anything contained herein to the contrary, (i) any
Director who elected to defer 2004 cash compensation which is payable
in 2005 may revoke his or her election in its entirety; (ii) any
Director who elected a 2005 deferral may revoke his or her election in
part or in its entirety; and (iii) any Director who elected a 2005
deferral may file a new deferral election with respect to such 2005
deferral, in each case as provided in this Section 3.5. Such revocation
election with respect to a 2004 deferral and/or 2005 deferral or new
deferral election with respect to 2005 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 Director who revokes
his or her 2004 deferral election as provided herein shall receive such
compensation in cash at or about the same time that such amount is paid
to other Directors of the Company. Any Director who revokes his or her
2005 deferral election will be paid in accordance with the Company's
standard Director compensation 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