Exhibit 10(a)1
ALLETE
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
NONQUALIFIED STOCK OPTION GRANT
[ELIGIBLE EXECUTIVES EXCLUDING PRESIDENT OF ALLETE PROPERTIES, LLC]
Name
SS#
In accordance with the terms of ALLETE's Executive Long-Term Incentive
Compensation Plan (the "Plan"), as determined by and through the Executive
Compensation Committee of ALLETE's Board of Directors, ALLETE hereby grants to
you (the "Participant"), subject to the terms and conditions set forth in this
Grant (including Annex A hereto and all documents incorporated herein by
reference) the rights and options (the "Options") to purchase from ALLETE,
shares of its common stock, without par value, as set forth below:
Number of Options Granted:
Number of Shares to which Options
Pertain:
Date of Grant: February 1, 2006
Option Price:
Vesting: 33% on February 1, 2007
33% on February 1, 2008
34% on February 1, 2009
Expiration Date: Close of business on February 1, 2016
Exercise Period: Date of Vesting through Expiration Date
Further terms and conditions of the Grant are set forth in Annex A hereto, which
is an integral part of this Grant. This Grant is made in accordance with the
Plan, which was approved by ALLETE's shareholders at the 2005 Annual Meeting.
All terms, provisions and conditions applicable to the Options set forth in the
Plan and not set forth herein are incorporated by reference. To the extent any
provision hereof is inconsistent with a provision of the Plan, the provisions of
the Plan will govern.
These Options are not intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, ALLETE has caused this Grant to be executed by its Chairman,
President and Chief Executive Officer as of the date and year first above
written.
ALLETE
By:
------------------------------------------------
Chairman, President and CEO
Attachment: Annex A
ANNEX A
TO
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
NONQUALIFIED STOCK OPTION GRANT
[ELIGIBLE EXECUTIVES EXCLUDING PRESIDENT OF ALLETE PROPERTIES, LLC]
1. FURTHER TERMS AND CONDITIONS OF OPTIONS. The Grant of Options
evidenced by the Grant to which this is annexed is subject to the following
additional terms and conditions:
(a) EXERCISE OF OPTIONS. Except as otherwise provided in subsection
(b) hereof, upon a Change in Control as set forth in the Plan or as the
Executive Compensation Committee (the "Committee") may determine, the
Participant must be in the employ of ALLETE or a Subsidiary thereof at the time
the Options are exercised. Subject to the foregoing and to subsection (b)
hereof, after vesting, the Options may be exercised in whole or in part from
time to time by written or electronic notice of exercise delivered to
Computershare, such notice to be received and effective not later than the
Expiration Date, specifying the number of Shares to be purchased. In the event
that the Expiration Date shall fall on a day that is not a regular business day
at ALLETE's executive offices in Duluth, Minnesota, such notice must be
delivered to Computershare no later than the last regular business day prior to
the Expiration Date.
(b) EXERCISE UPON DEATH, RETIREMENT, OR DISABILITY; FORFEITURE UPON
TERMINATION OF EMPLOYMENT FOR CAUSE, DEMOTION, OR UNSATISFACTORY JOB
PERFORMANCE.
(1) If the Participant retires pursuant to the terms of a tax-
qualified retirement plan of ALLETE or a Subsidiary or upon such
other retirement as may be approved by the Committee, the
Options, to the extent not yet vested, shall vest in full and
all Options covered by the Grant, to the extent not yet
exercised, shall be exercisable by the Participant in full at
any time during the three-year period immediately following his
retirement, but in no event after the Expiration Date.
(2) In the event of the death of the Participant while in the employ
of ALLETE or a Subsidiary, the Options, to the extent not yet
vested, shall vest in full and all Options covered by the Grant,
to the extent not yet exercised, shall be exercisable by the
executors, administrators, legatees or distributees of his
estate, as the case may be, in full at any time during the
one-year period following his death, but in no event after the
Expiration Date.
(3) In the event of the termination of the employment of the
Participant due to Disability (as defined in Section 22(e)(3) of
the Code), the Options, to the extent not yet vested, shall vest
in full and all Options covered by the Grant, to the extent not
yet exercised, shall be exercisable in full at any time during
the one-year period following such termination of employment,
but in no event after the Expiration Date.
(4) If the Participant's employment or service with the Company
terminates for any reason other than for Cause (defined below).
Participant shall have ninety (90) days from the date of
termination of employment or service to exercise vested options
and all unvested options will be forfeited as of the date of
termination.
(5) If the Participant's employment with the Company or any
Subsidiary is terminated for Cause, all outstanding unvested and
vested Options shall be forfeited as of the date of such
termination of employment or service. Cause is defined as (a)
any conduct by the Participant that causes or threatens a loss
to the Company; (b) any violation of any Company policy; (c)
Participant's refusal or neglect to substantially perform his or
her obligations and services; (d) violation of the Company's
code of business conduct and ethics; or (e) Participant's
arrest, conviction or admission of any crime involving injury to
persons, misappropriation of money, or damage to property.
(6) If the Participant is demoted, or if ALLETE or a Business Unit
determines in its sole discretion that the Participants job
performance is unsatisfactory, ALLETE reserves the right to
cancel any grants and unvested options.
(7) Notwithstanding the foregoing, the Committee may, in its
discretion and at any time, provide that the Options may be
exercisable during a period of up to 5 years following
termination of employment but in no event after the Expiration
Date.
2. RATIFICATION OF ACTIONS. By receiving the Grant or other benefit
under the Plan, the Participant and each person claiming under or through him
shall be conclusively deemed to have indicated the Participant's acceptance and
ratification of, and consent to, any action taken under the Plan or the Grant by
ALLETE, the Board or the Committee.
3. NOTICES. Any notice hereunder to ALLETE shall be addressed to its
office, 30 West Superior Street, Duluth, Minnesota 55802, Attention: Manager -
Executive Compensation and Employee Benefits, Human Resources, and any notice
hereunder to the Participant shall be directed to the Participant's address as
indicated by ALLETE's records, subject to the right of either party to designate
at any time hereafter in writing some other address.
4. DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the meanings given them in the Plan.
5. GOVERNING LAW AND SEVERABILITY. To the extent not preempted by
Federal law, the Grant will be governed by and construed in accordance with the
laws of the State of Minnesota, without regard to conflicts of law provisions.
In the event any provision of the Grant shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Grant, and the Grant shall be construed and enforced as if the illegal or
invalid provision had not been included.
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