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EXHIBIT 99
ALLETE
EXECUTIVE LONG-TERM
INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 2006
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ALLETE
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2006
ARTICLE 1.
ESTABLISHMENT, PURPOSE AND DURATION
1.1 ESTABLISHMENT OF
THE PLAN. ALLETE, Inc., a Minnesota
corporation, formerly Minnesota Power &
Light Company (hereinafter referred to
as the "Company"), established an incentive compensation plan known as the
"ALLETE Executive Long-Term Incentive
Compensation Plan"
(hereinafter
referred
to as the "Plan"), as set forth in this
document. The Plan
permits the grant of
nonqualified stock options ("NQSO"), incentive stock options
("ISO"), stock
appreciation rights ("SAR"), restricted stock, performance units, performance
shares and other grants. Capitalized terms
are defined in Article 17.
The Plan first became
effective as of January 1, 1996,
and
shall remain in effect as provided in
Section 1.3 herein.
This Plan document
reflects the amendment and restatement of the Plan which will
become effective
upon shareholder approval as of January 1, 2006
(the "Effective
Date"), and
applies to Grants issued on or after
January 1, 2006, and Grants exercised on or
after January 1, 2006.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote
the success and enhance the value of the Company by linking the personal
interests of Participants to those of Company shareholders and customers,
providing Participants with an incentive
for outstanding performance.
The Plan is further
intended to assist the Company in its
ability to motivate, attract and retain the services of
Participants upon
whom
the successful conduct of its operations is
largely dependent.
1.3 DURATION
OF THE PLAN.
The Plan shall
remain in effect,
subject to the right of the Board of
Directors to terminate the Plan at any time
pursuant to Article 13 herein, until all Shares subject to it shall have been
purchased or acquired according to the
Plan's provisions;
provided, however, in
no event may a Grant be made under the Plan
on or after the tenth anniversary of
the Effective Date.
ARTICLE 2.
ADMINISTRATION
2.1 THE COMMITTEE.
The Plan shall be administered by the
Executive Compensation Committee of the
Board consisting of not less than three
(3) Directors. The members of the Committee
shall be appointed from time to time
by, and shall serve at the discretion of,
the Board of Directors.
The Committee,
to the extent
necessary,
shall be comprised
solely of Directors who are: (a)
"non-employee
directors" as
contemplated
by
Rule 16b-3 under the Exchange Act; (b)
"outside directors" as
contemplated
by
Section 162(m) of the Code; and (c)
"independent
directors" as
contemplated by
Section 303A.02 of the New York Stock
Exchange Listed Company Manual.
2.2 AUTHORITY OF THE COMMITTEE. The Committee shall have full
power except as limited by law, the
Articles of Incorporation and the Bylaws of
the Company, subject to such other restricting
limitations or directions as may
be imposed by the Board and subject to the
provisions herein,
to determine the
size and types of Grants; to determine the terms and
conditions of such
Grants
in a manner consistent with the Plan; to
construe and interpret the Plan and any
agreement or instrument entered into under the Plan;
to establish, amend or
waive rules and regulations for the Plan's
administration;
and (subject to
the
provisions of Article 13 herein) to amend the terms and
conditions
of any
outstanding Grant; provided, however, the Committee may award or grant
only
those types of Grants that either
comply with the
applicable
requirements
of
Section 409A of the Code and related
guidance, or do not
result in the deferral
of compensation within the meaning of Section 409A of the Code and related
guidance. Further, the Committee shall make all other
determinations which may
be necessary or advisable for the administration of the Plan. As permitted by
law, the Committee may delegate its
authorities as identified hereunder.
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2.3 DECISIONS BINDING.
All determinations and
decisions made
by the Committee pursuant to the provisions of the Plan and all
related orders
or resolutions of the Board shall be final, conclusive and binding on all
persons, including the Company, its
shareholders,
Employees,
Participants and
their estates and beneficiaries.
2.4 COSTS. The Company
shall pay all costs of
administration
of the Plan.
ARTICLE 3.
SHARES SUBJECT TO THE PLAN
3.1 NUMBER OF SHARES. Subject to Section 3.2 herein, the total
number of Shares available for grant under the Plan shall not exceed three
million, two hundred thirty three thousand, three hundred thirty three
(3,233,333) Shares as authorized at the time of the annual meeting of
shareholders on May 10, 2005 reduced by the
number of Shares as to which Options
or Shares have been granted or exercised. Shares may be (i) authorized but
unissued Shares of common stock,
or (ii) Shares
purchased on the open
market.
Shares underlying lapsed or forfeited Grants, Grants that are not paid in
shares, previously acquired Shares tendered to exercise an Option,
or Shares
withheld in accordance with Section 14.2 to
satisfy tax withholding obligations
may be re-used for other Grants.
Subject to Section 3.2 herein, to the extent consistent with
Sections 422 and 424 of the Code,
not more than an
aggregate of three
million,
two hundred thirty three thousand, three
hundred thirty three (3,233,333) Shares
may be issued under Incentive Stock
Options.
3.2 ADJUSTMENTS
IN AUTHORIZED SHARES. In the event of any
merger, reorganization,
consolidation, recapitalization,
separation,
liquidation, stock dividend, split-up, share
combination or other change in the
corporate structure of the Company affecting
the Shares, such
adjustment shall
be made in the number and class of Shares
which may be delivered under the Plan,
and in the number and class of and/or price of Shares subject to outstanding
Grants made under the Plan, as may be
determined to be appropriate and equitable
by the Committee, in its sole discretion,
to prevent dilution or
enlargement of
rights; provided, however, that the number of Shares
subject to any Grant shall
always be a whole number. Notwithstanding
the foregoing or any Plan provision to
the contrary, any substitution of a new Option pursuant to a corporate
transaction for an outstanding Option or
the assumption of an outstanding Option
shall meet the requirements of Treasury Regulation Section 1.424-1. The
preceding sentence shall apply to "incentive stock options" as that term is
defined in Section 422 of the Code and
nonqualified stock options.
ARTICLE 4.
ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY.
Persons eligible to
participate in the Plan
include all officers and key employees of
the Company and its
Subsidiaries, as
determined by the Committee, including Employees who are members of the
Board,
but excluding Directors who are not
Employees.
4.2 ACTUAL
PARTICIPATION. Subject
to the provisions
of the
Plan, the Committee may, from time to time,
select from all
Eligible Employees
those to whom Grants shall be made and
shall determine the
nature and amount of
each Grant.
ARTICLE 5.
STOCK OPTIONS
5.1 GRANT OF OPTIONS.
Subject to the terms and conditions of
the Plan, Options may be granted to an
Eligible Employee at any time and from
time to time, as shall be determined by the
Committee. The
Committee shall have
complete discretion in determining the number of Shares subject to Options
granted to each participant (subject to Article 3 herein) and
consistent with
the provisions of the Plan, in determining
the terms and
conditions
pertaining
to such Options; provided, however, the maximum number of Shares subject to
Options which may be granted to any single
Participant
during any one
calendar
year is one hundred thousand (100,000). The
Committee may grant ISOs, NQSOs or a
combination thereof.
5.2 OPTION
GRANT AGREEMENT. Each Option grant shall be
evidenced by an Option Grant Agreement that
shall specify the Option Price, the
duration of the Option, the number of Shares to which the
Option pertains,
the
Exercise Period and such other provisions
as the Committee shall determine. The
Option Grant Agreement also shall specify
whether the Option is
intended to be
an ISO or a NQSO.
5.3 OPTION PRICE.
The Option
Price for each Option
granted
under the Plan shall be the Fair
Market Value of a Share on the date of
grant,
or such higher price as the Committee may
determine.
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5.4 DURATION OF OPTIONS. Each Option shall expire at such time
as the Committee shall determine at the
time of grant;
provided, however,
that
no Option shall be exercisable later than the tenth (10th)
anniversary of its
date of grant.
5.5 DIVIDEND
EQUIVALENTS. To the
extent permitted by Section
2.2 herein, simultaneously with the grant of an Option, the Participant
receiving the Option may be granted
Dividend Equivalents with respect to the
Shares subject to such Option. Dividend Equivalents shall constitute
rights to
amounts equal to the dividends declared on
equal number of outstanding Shares on
all payment dates occurring during the period between the grant date of an
Option and the date the Option is
exercised. The
Committee shall
determine at
the time Dividend Equivalents are granted the
conditions, if any, to
which the
payment of such Dividend Equivalents is
subject.
5.6 EXERCISE OF AND PAYMENT FOR OPTIONS. Options granted under
the Plan shall be exercisable at such times
and be subject to such
restrictions
and conditions as the Committee shall in
each instance approve,
which need not
be the same for each Grant or for each
Participant. However,
in no event may an
Option granted under the Plan become exercisable prior to six (6) months
following the date of its grant.
A Participant
may exercise an Option at any time
during the
Exercise Period. Options shall be exercised by the
delivery of a written notice
of exercise to the Company or its
designated agent,
setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
provisions for full payment for the
Shares.
The Option Price upon
exercise of any Option shall be payable
to the Company in full either: (a) in cash
or its equivalent, (b)
by tendering,
either by actual or constructive delivery,
previously acquired
Shares having an
aggregate fair market value at the time of exercise
equal to the total
Option
Price (provided that the Shares which are tendered
must have been held by
the
Participant for at least six months prior to
their tender to satisfy the Option
Price), (c) by Share withholding or (d) by a
combination of (a),
(b), and/or
(c).
To the extent not prohibited by Section 402 of the
Sarbanes-Oxley Act of 2002, the Committee
also may allow
cashless exercise
as
permitted under Federal Reserve Board's Regulation T, subject to
applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of a written notification
of exercise of an Option and provisions for
full payment therefor,
the Company
shall deliver to the Participant, in the Participant's name, Shares in an
appropriate amount based upon the number of Shares purchased under the
Option(s).
5.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
impose such restrictions on any Shares
acquired pursuant to
the exercise of an
Option under the Plan as it may deem
advisable, including,
without
limitation,
restrictions to comply with applicable Federal securities laws, with the
requirements of any stock exchange or market upon which such Shares are
then
listed and/or traded and with any blue sky
or state securities
laws applicable
to such Shares.
5.8 TERMINATION
OF EMPLOYMENT.
Each Option Grant
Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's
employment with
the Company and its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Option Grant
Agreement entered into with Participants,
need not be uniform
among all Options
granted pursuant to the Plan or among
Participants and may reflect distinctions
based on the reasons for termination of
employment.
5.9 NONTRANSFERABILITY OF OPTIONS. No Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of
descent and
distribution.
Further, all Options granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by
such Participant
or his or her
legal representative.
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ARTICLE 6.
STOCK APPRECIATION RIGHTS
6.1 GRANT OF SARs. To
the extent
permitted by Section 2.2
herein, and subject to the terms and conditions of the Plan, an SAR may be
granted to an Eligible Employee at any time and from time
to time, as shall
be
determined by the Committee. The Committee may grant
Freestanding SARs,
Tandem
SARs or any combination of these forms of
SARs.
The Committee shall have complete discretion in determining
the number of SARs granted to each Participant (subject to Article 3 herein)
and, consistent with the provisions of the Plan,
in determining the
terms and
conditions pertaining to such SARs;
provided, however, the maximum number of
SARs which may be granted to any single
Participant during any one calendar year
is one hundred thousand (100,000).
The Base Value of a
Freestanding
SAR shall equal the Fair
Market Value of a Share on the
date of grant of the SAR. The Base Value of
Tandem SARs shall equal the Option Price of the related Option. In no event
shall any SAR granted hereunder become exercisable within the first six (6)
months of its grant.
6.2 SAR GRANT AGREEMENT. Each SAR grant shall be evidenced
by
a SAR Grant Agreement that shall specify the number of
SARs granted, the
Base
Value, the term of the SAR (not to exceed
ten (10) years), the
Exercise Period
and such other provisions as the Committee
shall determine.
6.3 EXERCISE OF TANDEM SARs. Tandem SARs may be exercised
for
all or part of the Shares subject to the related
Option upon the
surrender of
the right to exercise the equivalent
portion of the related Option. A Tandem SAR
may be exercised only with respect to the
Shares for which its related Option is
then exercisable.
Notwithstanding any
other provision of the Plan to the
contrary, with respect to a Tandem SAR
granted in connection
with an ISO: (i)
the Tandem SAR will expire no later than
the expiration of the
underlying ISO;
(ii) the value of the payout with respect to the Tandem SAR may be
for no more
than one hundred percent (100%) of the difference between the Option Price of
the underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR
is exercised; and (iii) the Tandem SAR
may be exercised only when the Fair Market
Value of the Shares
subject to the
ISO exceeds the Option Price of the
ISO.
6.4 EXERCISE OF FREESTANDING SARs. Freestanding SARs may be
exercised upon whatever terms and conditions the Committee, in its sole
discretion, imposes upon them.
6.5 EXERCISE AND PAYMENT OF SARs. A Participant may exercise
an SAR at any time during the Exercise Period. SARs shall be exercised by the
delivery of a written notice of exercise to
the Company or its designated agent,
setting forth the number of SARs being
exercised.
Upon exercise of an SAR, a
Participant shall be entitled to receive
payment from the
Company in an amount
equal to the product of:
(a) the excess of (i) the Fair Market Value of a Share on
the date of exercise over (ii) the Base Value of the
SAR, multiplied by
(b) the number of
Shares with respect to which the SAR is
exercised.
The payment upon SAR exercise shall be in Shares of equivalent
value.
6.6 TERMINATION OF EMPLOYMENT. Each SAR Grant Agreement shall
set forth the extent to which the
Participant
shall have the right
to exercise
the SAR following termination of the
Participant employment with the Company and
its Subsidiaries. Such provisions shall be
determined in the sole discretion of
the Committee, shall be included in the SAR Grant
Agreement entered into with
Participants, need not be uniform among all
SARs granted pursuant to the Plan or
among Participants and may reflect distinctions based on the reasons for
termination of employment.
6.7 NONTRANSFERABILITY
OF SARs. No SAR granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of
descent and
distribution.
Further, all SARs granted to a Participant
under the Plan shall
be exercisable
during his or her lifetime only by such Participant or his or her legal
representative.
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ARTICLE 7.
RESTRICTED STOCK
7.1 GRANT OF
RESTRICTED STOCK.
To the extent permitted by
Section 2.2 herein, and subject to the terms and conditions of the Plan,
Restricted Stock may be granted to Eligible
Employees at any time
and from time
to time, as shall be determined by the Committee. The Committee shall have
complete discretion in determining the number of shares of
Restricted
Stock
granted to each Participant (subject to Article 3 herein) and,
consistent with
the provisions of the Plan, in determining
the terms and
conditions
pertaining
to such Restricted Stock; provided, however, the maximum number of shar
